SECURE 2.0 Act and SIMPLE IRA contribution limits

  • Updated

In 2024, the annual contribution limit for employee elective deferrals is $16,000, and the catch-up contribution limit is $3,500 (for those 50 and older). But some employers may be able to increase these amounts by up to 10%. For these eligible employers, the annual contribution limit for employee elective deferrals is $17,600, and the catch-up contribution limit is $3,850 (for those 50 and older).

 

Employer Eligibility

Not all employers are eligible under the SECURE 2.0 Act. For instance, employers are not eligible if an IRC section 401(a), 403(a), or 403(b) plan covering the same employees was maintained within a three-year period prior to establishing the SIMPLE IRA plan. Talk to your IRA provider to verify your eligibility under the guidelines of SECURE 2.0 before establishing or changing your IRA plan. OnPay is not responsible for verifying or ensuring SECURE 2.0 employer eligibility.

Employers with no more than 25 employees

For employers with 25 or fewer employees, the SIMPLE IRA annual deferral limit, and the catch-up contribution limit, have each been increased by 10%, to equal 110% of the 2024 contribution limits.

Employers with 26-100 employees

An employer with 26 to 100 employees may also be eligible to provide these higher deferral limits. To be eligible for this higher limit, employers must offer either:

  • A 3% non-elective employer contribution; or
  • A 4% matching contribution

Additionally, employers with more than 25 eligible employees must make the election to increase limits formally and in writing, and must maintain documentation. 

 

Required written policy updates and notification

Eligible employers of all sizes must notify participants of the newly increased contributions and limits, and must update its company plan in writing. This notice must also be included with the required annual employer notification. Unless such notification was provided by the employer prior to November 2, 2023, the earliest this provision could be implemented to an existing SIMPLE IRA plan is for the 2025 plan year.

 

How to indicate your eligibility for the increased IRA limit in OnPay

Go to Company, then Company Preferences.

 

Verify your eligibility before making this selection

By selecting “Yes”, you are affirming your eligibility for an increased IRA limit under the terms of the SECURE 2.0 Act. Because this has a direct impact on employee withholding calculations throughout the year, this selection can only be disabled by contacting OnPay support.

 

If eligible under the terms of the SECURE 2.0 Act, select “Yes” to increase the SIMPLE IRA limit.

 

Our Tax Accuracy Guarantee

Bottom line: We take the accuracy of our payroll tax calculations very seriously — and our accuracy guarantee ensures we’ll always have your back.

However, because we file on your behalf using information provided by you, it's important that you provide and input accurate information about your company, its employees, and the states and districts in which they live and your business operates, including all IDs and tax rates. Our Tax Accuracy Guarantee picks up where you leave off by covering all our calculations, and the filings and payments we base on them.

In rare circumstances, OnPay may need additional information from you, or may request you take action in order for us to file and pay your taxes. If such information is requested by us, but never provided by you, any affected tax filings and payments will not be covered by our Tax Accuracy Guarantee.

 

Helpful IRS resources

 

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