Secure 2.0 Simple IRA Contribution Provision
- Even though salary deferrals increased from $16k to $16.5k for 2025, the provision for higher contribution limits didn’t adjust, still $17,600?
- Some things I read imply that they needed to have payroll in 2024/preceding calendar year to be eligible for these higher limits in 2025. Thus would a new plan in 2025, first year having EEs, NOT be eligible??
Permalink Submitted by Alan - IRA critic on Sat, 2025-01-11 14:56
Yes, the 2025 salary reduction contribution limit remains 17,600 for plans under 26 employees. Because the inflation adjustment for 2025 was based on a lower inflation period from 2023-2024, when applied to the base 16,500 limit, it generated a figure less than 17,600, but the 17,600 was not reduced.
It appears that sub section (f) of Sec 117 of Secure 2.0 does not allow these increased contributions for employers who maintained a 401a, 401k, 403a, or 403b plan in the 3 years prior to the SIMPLE plan. Therefore, a SIMPLE IRA for a new employer would be eligible, but not for an employer who has maintained these other plans in the last 3 years.