YOU ASK:

What are the simple IRA contribution limits for 2006, 2007, 2008, and 2009?

WE ANSWER:

Under a SIMPLE IRA, both the employee and the employer make contributions to the retirement plan. Eligible employees may choose to make deferral contributions to their IRA, and the employers' contributions are mandatory.

Employee Contribution Limits

Employees may defer their compensation to their SIMPLE IRAs up to the restrictions that apply. In 2008, the SIMPLE IRA salary-reduction contribution was $10,500, and it experienced a $1,000 rise in 2009, bringing the SIMPLE IRA contribution limit for under-50s to $11,500 and the contribution limit for people over 50 to $14,000.

Employer Contribution Limits

Employers are required to make contributions to their employees' SIMPLE IRAs. They have two funding options:

  • dollar-for-dollar matching contributions (but not more than 3% of the compensation) on behalf of the eligible employees who make deferral contributions;
  • 2 percent non-elective contribution to all eligible employees, regardless of whether they make deferral contributions.
Tax Year Dollar Limit Catch-up contribution limit
2006 $10,000 $2,500
2007 $10,500 $2,500
2008 $10,500 $2,500
2009 $11,500 $2,500

Table. Simple IRA Employee Deferral Limits

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