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

Last updated on Sep 17, 2024

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 employee.

  • The maximum contribution is adjusted annually for cost-of-living increases and is $16,000 for 2024.

  • For 2024, the catch-up contribution limit for employees 50 and older is $3,500.

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 2024.

  • For 2024, the catch-up contribution limit for employees 50 and older is $1,000.