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What is the difference between a SIMPLE IRA and a traditional IRA?

Here’s the difference between a SIMPLE IRA and a Traditional IRA.

SIMPLE IRA:

• Set up by small business owners for both their employees’ future retirement funds and their own.

• Contributions are made by both the employer and the employee.

• The maximum contribution is adjusted annually for cost-of-living increases and is $16,500 for 2025.

• For 2024, the catch-up contribution limit for employees 50 and older is $3,850.

Traditional IRA:

• Set up by an individual.

• Contributions are made by an individual only.

• The maximum contribution is adjusted annually for cost-of-living increases and is $7,000 for 2025.

• For 2024, the catch-up contribution limit for employees 50 and older is $8,000.