What is the 2026 SIMPLE IRA contribution limit at Fidelity?

Employees can defer up to $16,500 into a Fidelity SIMPLE IRA in 2026. Workers age 50–59 or 64+ can add a $3,500 catch-up contribution for a total of $20,000. Workers age 60–63 can add a $5,250 super catch-up under SECURE 2.0 for a total of $21,750.

How does the Fidelity SIMPLE IRA employer match work?

Employers choose between two matching options each year: (1) match 100% of employee contributions up to 3% of compensation, or (2) make a 2% non-elective contribution for all eligible employees regardless of whether they contribute. The 3% match can be reduced to 1% for up to 2 out of every 5 years.

What is the SIMPLE IRA 2-year rule?

For the first two years after you first participate in a SIMPLE IRA, withdrawals are subject to a 25% early withdrawal penalty rather than the usual 10%. After two years, the standard 10% penalty applies to withdrawals before age 59½. You also cannot roll a SIMPLE IRA to a traditional IRA during the first two years.

By when must a Fidelity SIMPLE IRA be established?

A SIMPLE IRA must be established by October 1 of the year the plan is to take effect. This is earlier than a solo 401(k) (December 31 deadline) and earlier than a SEP-IRA (tax filing deadline). For a business started after October 1, the plan can be established as soon as administratively feasible.

What are the employee eligibility requirements for a Fidelity SIMPLE IRA?

Employees who earned at least $5,000 in any two prior calendar years and are expected to earn $5,000 in the current year must be eligible to participate. Employers can set less restrictive requirements (e.g., $0 threshold) but not more restrictive ones.

Fidelity SIMPLE IRA 2026 — Limits, Employer Match & Setup Guide

A Fidelity SIMPLE IRA lets small business owners with up to 100 employees offer a retirement plan that is far less expensive and complex to administer than a 401(k). Employees can contribute up to $16,500 in 2026, and the employer is required to make matching contributions. Fidelity charges no setup or annual maintenance fees for SIMPLE IRA plans.

2026 SIMPLE IRA Contribution Limits

Contributor	2026 Limit
Employee deferral	$16,500
Catch-up, age 50–59 or 64+	$3,500 additional → $20,000 total
Super catch-up, age 60–63 (SECURE 2.0)	$5,250 additional → $21,750 total
Employer match (3% option)	Up to 3% of employee compensation
Employer non-elective (2% option)	2% of all eligible employees’ compensation

The IRS sets SIMPLE IRA limits annually. The 2026 figures reflect the cost-of-living adjustment announced in IRS Notice 2025-82. SIMPLE IRA limits are lower than 401(k) limits ($23,500 employee deferral) but the plan requires far less administrative overhead.

Who Can Offer a SIMPLE IRA

A SIMPLE IRA plan is available to employers that:

Have 100 or fewer employees who earned $5,000 or more in the prior year
Do not maintain another employer-sponsored retirement plan (with limited exceptions)

Self-employed individuals without employees can also establish a SIMPLE IRA, though a solo 401(k) typically allows higher contributions for the self-employed. See Fidelity Solo 401(k) and Fidelity SEP-IRA for self-employed alternatives.

Employee Eligibility

Employees must be allowed to participate in the SIMPLE IRA if they:

Earned at least $5,000 in any 2 prior calendar years, AND
Are expected to earn at least $5,000 in the current year

Employers can relax this standard (for example, allow all employees immediately) but cannot make it more restrictive. Certain employees can be excluded — union employees covered by a collective bargaining agreement or non-resident aliens with no US-source income.

Employer Matching: Two Options

Employers choose one of two matching formulas each plan year and must notify employees before the election period:

Option 1 — 3% Matching Contribution Match 100% of each participating employee’s deferral up to 3% of their compensation. Only employees who contribute receive the match.

Example: An employee earning $60,000 who defers $3,000 (5% of pay) receives a $1,800 employer match (3% of $60,000).

The 3% match rate can be reduced to as low as 1% for no more than 2 out of any 5 consecutive years — useful during lean business years. Employees must be notified of any reduction.

Option 2 — 2% Non-Elective Contribution Contribute 2% of compensation for all eligible employees, whether they defer or not. The 2% is capped on compensation up to the annual compensation limit ($350,000 in 2026), so the maximum non-elective contribution per employee is $7,000.

Worked Example: Option 1 vs. Option 2 for a $50,000 Employee

	Option 1 (3% match)	Option 2 (2% non-elective)
Employee contributes $3,000	Employer adds $1,500	Employer adds $1,000
Employee contributes $0	Employer adds $0	Employer adds $1,000
Employee maxes at $16,500	Employer adds $1,500	Employer adds $1,000

Option 1 rewards saving employees more; Option 2 benefits all employees equally regardless of their contribution behavior.

The SIMPLE IRA 2-Year Rule

The 2-year rule is the most important limitation to understand before opening a SIMPLE IRA:

First 2 years of participation: Early withdrawals are subject to a 25% penalty (not 10%)
After 2 years: The standard 10% early withdrawal penalty applies to distributions before age 59½
Rollovers: During the first 2 years, you can only roll a SIMPLE IRA to another SIMPLE IRA. After 2 years, you can roll to a traditional IRA, SEP-IRA, or employer plan

The 2-year clock starts from the date you first participated in any SIMPLE IRA maintained by your employer — not the date you made your first contribution.

How to Establish a Fidelity SIMPLE IRA

Confirm eligibility — Verify your business has 100 or fewer qualifying employees and no other active retirement plan
Establish by October 1, 2026 — SIMPLE IRAs must be in place by October 1 of the plan year; for businesses started after October 1, establish as soon as feasible
Choose your employer contribution formula — 3% match or 2% non-elective; you can switch annually with proper notice
Notify employees — Provide annual notice at least 60 days before the plan year begins, describing the plan terms and employee rights
Open accounts at Fidelity — Fidelity provides a prototype plan document and opens individual IRA accounts for each participating employee
Begin contributions — Employee deferrals are deducted from payroll and transmitted to Fidelity; employer contributions are made separately

Fidelity charges no setup fee and no annual plan fee. Each employee’s IRA is held at Fidelity and invested according to that employee’s elections.

What Employees Can Invest In

Fidelity SIMPLE IRA accounts give each employee access to Fidelity’s full investment lineup:

Fidelity ZERO expense ratio index funds
ETFs with $0 commissions
Stocks, bonds, and mutual funds
Target date funds for hands-off investors

SIMPLE IRA vs. Other Small Business Plans at Fidelity

Feature	SIMPLE IRA	SEP-IRA	Solo 401(k)
Employee deferral	$16,500	None (employer only)	$23,500
Employer required	Yes (match or 2%)	Flexible %	Optional profit-sharing
Max employees	100	Unlimited	0 (self-employed only)
Roth option	No	No	Yes (at Fidelity)
Loans	No	No	Yes
Establishment deadline	October 1	Tax filing + extension	December 31
Complexity	Low	Very low	Moderate

For employers with employees, the SIMPLE IRA is the lowest-friction plan option. For the self-employed, the SEP-IRA or Solo 401(k) typically allows larger contributions.

Written by WealthVieu

WealthVieu researches and writes data-driven personal finance guides using primary sources including the IRS, Bureau of Labor Statistics, Federal Reserve, and Census Bureau.

The content on Wealthvieu is for informational purposes only and should not be considered financial, tax, or investment advice. Consult a qualified professional before making financial decisions. Full disclaimer · Editorial policy