What is the 2026 SIMPLE IRA contribution limit at Merrill Edge?

The 2026 SIMPLE IRA employee deferral limit is $16,500. Workers age 50–59 or 64+ can add a $3,500 catch-up for a $20,000 total. Workers age 60–63 can add $5,250 under SECURE 2.0 for a $21,750 total. Employers must additionally contribute via a 3% match or 2% non-elective formula.

Does a Merrill SIMPLE IRA balance count toward Preferred Rewards?

Yes. SIMPLE IRA balances held at Merrill count toward your combined balance for Bank of America Preferred Rewards qualification. This can help business owners and employees reach the $20,000 Gold, $50,000 Platinum, or $100,000 Platinum Honors thresholds that unlock credit card and banking rewards.

What is the SIMPLE IRA 2-year rule?

During the first two years of SIMPLE IRA participation, early withdrawals (before age 59½) carry a 25% penalty instead of the standard 10%. After two years, the normal 10% early withdrawal penalty applies. Rollovers to a traditional IRA are blocked during the first two years — only transfers to another SIMPLE IRA are permitted.

What is the deadline to establish a Merrill SIMPLE IRA?

A SIMPLE IRA plan must be established by October 1 of the year it covers. This is an IRS-mandated deadline that applies to all providers. Businesses launched after October 1 may establish the plan as soon as administratively feasible.

What are the employer contribution requirements for a SIMPLE IRA?

Employers must make either a matching contribution of up to 3% of each participating employee's compensation, or a 2% non-elective contribution for all eligible employees. The 3% match can be reduced to 1% in up to 2 of every 5 plan years. Employer contributions are mandatory — there is no option to skip them.

Merrill Edge SIMPLE IRA 2026 — Limits, Employer Match & Setup

Merrill Edge, through its connection to Merrill and Bank of America, offers SIMPLE IRA plans to small businesses with up to 100 employees. Employees can defer up to $16,500 in 2026, and SIMPLE IRA balances count toward Bank of America Preferred Rewards — a meaningful added benefit for business owners already banking with Bank of America.

2026 SIMPLE IRA Contribution Limits

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

These limits are set by the IRS (Notice 2025-82) and are identical across all SIMPLE IRA providers. The plan’s employee contribution of $16,500 is lower than a 401(k) ($23,500) but the administrative simplicity can make it the right choice for lean small business operations.

Who Can Offer a SIMPLE IRA at Merrill

100 or fewer employees who received $5,000 or more from the business in the prior year
No other active qualified retirement plan for the same employee group (some exceptions exist)
Self-employed individuals qualify, though those without employees typically benefit more from a Merrill Solo 401(k) or Merrill SEP-IRA

Employer Contribution Options

Employers must contribute using one of two IRS-approved formulas each year:

Option 1 — 3% Matching Contribution Match each employee’s SIMPLE IRA deferral dollar-for-dollar up to 3% of their compensation. Employees who do not contribute receive no match. The 3% rate can be reduced to as low as 1% for up to 2 of every 5 years — useful during business downturns — with proper advance notice.

Option 2 — 2% Non-Elective Contribution Contribute 2% of every eligible employee’s compensation, regardless of whether they participate in the plan. Compensation is capped at $350,000 in 2026, making the maximum non-elective contribution per employee $7,000 per year.

Worked Example: $65,000 Employee

Formula	Employee Contributes	Employer Adds	Total
3% match	$16,500	$1,950	$18,450
3% match	$0	$0	$0
2% non-elective	Any amount	$1,300	Contribution + $1,300

The 3% match creates a strong incentive for employees to save; the 2% non-elective ensures even non-participants receive a retirement contribution.

The 2-Year Rule

The SIMPLE IRA’s 2-year rule is essential to communicate to plan participants at enrollment:

Years 1–2 of participation: Early withdrawals before age 59½ incur a 25% penalty plus ordinary income tax
After 2 years: The standard 10% early withdrawal penalty applies
Rollover restriction: During the first 2 years, SIMPLE IRA assets can only be transferred to another SIMPLE IRA. After 2 years, funds can roll to a traditional IRA, Roth IRA (taxable conversion), or eligible employer plan

The 2-year clock starts from the first date of participation — not the first day a contribution is deposited.

Preferred Rewards: The Bank of America Connection

For business owners who bank with Bank of America, Merrill SIMPLE IRA balances count toward Preferred Rewards tier qualification:

Tier	Combined Balance	Key Benefit
Gold	$20,000	25% credit card rewards bonus
Platinum	$50,000	50% rewards bonus; mortgage discount
Platinum Honors	$100,000	75% rewards bonus; full suite

A business owner with a growing SIMPLE IRA balance — plus their own personal Merrill accounts — may find that Preferred Rewards delivers meaningful cash-back value on top of the tax savings.

How to Establish a Merrill SIMPLE IRA

Verify eligibility — 100 or fewer qualifying employees; no other active plan for this employee group
Establish by October 1, 2026 — Firm IRS deadline; new businesses may establish as soon as feasible after formation
Choose your employer formula — 3% match or 2% non-elective; decision must be made before the annual employee notice window
Issue employee notices — Notify all eligible employees at least 60 days before the plan year begins with plan details and election forms
Contact Merrill — Visit merrilledge.com or speak with a Merrill representative to complete plan adoption documents and open participant accounts
Process contributions — Payroll deferrals and employer contributions are deposited to each employee’s SIMPLE IRA at Merrill

Merrill SIMPLE IRA vs. Competitors

Feature	Merrill	Fidelity	Schwab
Employee limit (2026)	$16,500	$16,500	$16,500
Employer required	Yes	Yes	Yes
Account fees	None	None	None
Preferred Rewards credit	Yes	No	No
Investment scope	Broad	Very broad	Very broad

Merrill’s distinct advantage is the Preferred Rewards integration for existing Bank of America customers. On investment breadth and fees, it is broadly comparable to Fidelity and Schwab.

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