What is the 2026 Schwab SIMPLE IRA contribution limit?

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 qualify for a $5,250 SECURE 2.0 super catch-up, bringing the total to $21,750. Employers must also contribute via a 3% match or 2% non-elective formula.

Does Schwab charge fees for a SIMPLE IRA plan?

Schwab charges no setup fees and no annual maintenance fees for SIMPLE IRA plans. Individual employee accounts are standard Schwab IRA accounts with $0 commission stock and ETF trades and access to Schwab's full fund lineup.

What is the SIMPLE IRA 2-year rule?

During the first two years of SIMPLE IRA participation, early withdrawals carry a 25% penalty instead of the normal 10%. After two years, the 10% early withdrawal penalty applies to distributions before age 59½. Rollovers to a traditional IRA are also blocked during the first two years.

By when must a Schwab SIMPLE IRA be established?

A SIMPLE IRA plan must be set up by October 1 of the plan year it covers. This is a firm IRS deadline. For businesses established after October 1, the plan can be created as soon as administratively feasible in that first year.

Can I have a SIMPLE IRA and a solo 401(k) at the same time?

Generally no — SIMPLE IRA plans require the employer not to maintain any other qualified retirement plan for the same employees during the same year. However, if you have self-employment income from a separate business with no employees, rules around maintaining multiple plans become complex and should be reviewed with a tax advisor.

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

The Charles Schwab SIMPLE IRA gives small businesses with up to 100 employees a straightforward, low-cost retirement plan with mandatory employer contributions. Employees can defer up to $16,500 in 2026 from their paychecks, and Schwab charges no plan setup or annual administration fees.

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

SIMPLE IRA limits are lower than 401(k) limits but the plan is significantly easier and cheaper to administer — making it the go-to option for small business owners who want to offer employee retirement benefits without the cost of a full 401(k).

Who Qualifies to Offer a Schwab SIMPLE IRA

Employer size: 100 or fewer employees who earned at least $5,000 from the business in the prior year
No other active plan: The business generally cannot maintain another qualified retirement plan for the same employees
Self-employed: Sole proprietors and partners qualify; however, self-employed workers without employees typically get more from a Schwab Solo 401(k) or Schwab SEP-IRA

Employer Contribution Choices

Employers select one of two formulas annually before the 60-day employee notice window:

3% Matching Contribution: Match each participating employee’s deferral dollar-for-dollar up to 3% of compensation. Only contributing employees receive the match. The rate can drop to 1% for up to 2 of every 5 years.

2% Non-Elective Contribution: Contribute 2% of compensation for every eligible employee, regardless of whether they contribute. Compensation is capped at $350,000 in 2026, so the maximum per-employee non-elective contribution is $7,000.

Worked Example: Two Employees at $70,000 Salary

Assume Employee A defers the full $16,500; Employee B defers $0.

	3% Match	2% Non-Elective
Employee A employer contribution	$2,100 (3% × $70,000)	$1,400 (2% × $70,000)
Employee B employer contribution	$0	$1,400
Total employer cost	$2,100	$2,800

The 3% match costs less when employees don’t contribute; the 2% non-elective costs the same regardless of employee participation.

The 2-Year Rule

The SIMPLE IRA’s 2-year rule is its most important restriction:

Years 1–2: Withdrawals before age 59½ incur a 25% penalty plus ordinary income tax
After year 2: The standard 10% early withdrawal penalty applies
Rollovers: During the first 2 years, SIMPLE IRA funds can only be rolled to another SIMPLE IRA. After 2 years, you can roll to a traditional IRA, Schwab Rollover IRA, or eligible employer plan

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

How to Set Up a Schwab SIMPLE IRA

Confirm eligibility — 100 or fewer qualifying employees; no other active retirement plan for these employees
Establish by October 1, 2026 — Plan must be effective by this date; for new businesses, establish as soon as feasible
Choose contribution formula — 3% match or 2% non-elective
Issue employee notice — Notify all eligible employees at least 60 days before the plan year begins, providing an election form and plan description
Open accounts at Schwab — Schwab provides prototype plan documents and opens individual SIMPLE IRA accounts for each participating employee
Transmit contributions — Employee deferrals from payroll and employer contributions are deposited to each employee’s account

Schwab charges $0 in plan setup and administration fees.

Investment Options

Each Schwab SIMPLE IRA account has access to:

Schwab Market Cap Index funds — Among the lowest expense ratios in the industry
ETFs — Full marketplace at $0 commission
Individual stocks and bonds — $0 commissions
Schwab OneSource mutual funds — No-transaction-fee options
Target date funds — For employees who want simple, hands-off investing

SIMPLE IRA vs. SEP-IRA vs. Solo 401(k) at Schwab

Feature	SIMPLE IRA	SEP-IRA	Solo 401(k)
Employer required contribution	Yes	Flexible	Optional
Employee can contribute	Yes ($16,500)	No	Yes ($23,500)
Max employees	100	Unlimited	0 (self-employed only)
Roth option	No	No	Yes
Loans	No	No	Yes
Establishment deadline	October 1	Tax filing + extension	December 31

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