By Jenny Kiffmeyer, J.D – The Retirement Learning Center
If a SIMPLE IRA plan has the special small employer increased deferral/catch-up limits of 110% of the standard amounts, and someone is also age 60-63 catch-up eligible, does the participant get both the 110% and age 60-63 increases in catch-up contributions?
Highlights of the discussion
The short answer is no – the regulations do not allow double dipping so to speak. In Notice 2024-80, the IRS clearly states that an individual in a SIMPLE IRA plan that is subject to the special small employer increased deferral/catch-up limits, the catch-up limit is $3,850 for individuals age 50-59. For individuals attaining age 60-63, the catch-up limit is $5,250.
Section 117 of SECURE 2.0 increases the standard deferral limit and the age 50 catch-up limit by 10% over the standard limits for employers with 25 or fewer employees. This provision is effective for 2024 and later years. This section also allows an employer with 26-100 employees to elect to apply the 10% increase in the deferral limit and age 50 catch-up limit if the employer provides a larger employer contribution. If an employer with 26-100 employees elects to apply the 10% employee contribution increase, the employer must provide a 4% matching contribution or a 3% non-elective contribution rather than the 3% matching contribution or 2% non-elective contribution required when not electing the 10% increase in employee contributions.
Section 109 of SECURE 2.0 added an increased catch-up contribution limit for individuals attaining the ages of 60-63 that is the greater of 150% of the age 50 catch-up or $5,000 for SIMPLE IRA plans. For 2025, 150% of the age 50 catch-up is $5,250 and is the limit for 2025. The increased amounts will be indexed for inflation after 2025.
Conclusion
For a SIMPLE IRA plan that is subject to the special small employer increased deferral/catch-up limits of 110% of the standard amounts, the catch-up limit is $3,850 for individuals aged 50-59. For individuals attaining age 60-63, the catch-up limit is $5,250 for 2025.
