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Self-Directed SIMPLE IRA

Self-Directed SIMPLE (Savings Incentive Match Plan for Employees)

The SIMPLE IRA is a plan for small businesses with 100 or fewer employees who have no other qualified plans. With a SIMPLE plan, contributions are tax-deductible, and earnings within the account are tax-free until withdrawn.

SIMPLE IRA Contribution Limits

A SIMPLE IRA allows:

Employee contributions in 2023 of up to $15,500 if you are under age 50, and a catch-up contribution of up to $18,500 if you are 50 or older.

Employers are generally required to match each employee’s salary reduction contributions, on a dollar-for-dollar basis, up to 3 percent of the employee’s compensation.

Learn more about SIMPLE IRA contribution limits

Deducting Contributions

You can deduct SIMPLE IRA contributions for the tax year within which the contributions were made.

Details about the Solo 401(k), SEP and SIMPLE IRA plans, contribution and potential deduction amounts, eligibility, and income requirements

SIMPLE IRA Pros and Cons

SIMPLE Eligibility

You can establish a SIMPLE IRA plan if you meet BOTH of the following requirements:

You meet the employee limit
You do not maintain another qualified plan, unless the other plan is for collective bargaining employees

Employee Limit

You can establish a SIMPLE IRA plan only if you had 100 or fewer employees who received $5,000 or more in compensation from you for the preceding year.

Under this rule, you must take into account all employees who were employed at any time during the calendar year, regardless of whether they’re eligible to participate.

The SIMPLE IRA plan generally must be the only retirement plan to which you make contributions, or to which benefits accrue, for service in any year beginning with the year in which the SIMPLE IRA plan becomes effective.

What Makes a SIMPLE IRA Self-Directed?

When a SIMPLE plan is referred to as a self-directed account, it simply means you can use the account invest in areas outside of the traditional stocks and bonds. That’s the primary difference between a self-directed and traditional retirement account — where you put those investment dollars.

With a self-directed IRA or 401(k), you can invest in a variety of areas, including:

Real estate
Private debt like corporate debt offerings, notes secured by deeds of trust or mortgages
Private equity-like stock of C-corporations, limited partnerships, LLCs and REITs
Precious metals, including gold, silver, platinum, and palladium
Cryptocurrency like Bitcoin

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