← All account types
RMD required
SIMPLE IRA
A SIMPLE IRA (Savings Incentive Match Plan for Employees) is a small-business retirement plan allowing both employee and employer contributions, with simpler rules than a 401(k).
Who might have one?
- Employees at small businesses with 100 or fewer employees
- Small business owners who want a simpler alternative to a 401(k)
- Workers whose employer offers SIMPLE instead of a full retirement plan
Why would you have one?
- Employer must contribute (match or nonelective) — built-in savings boost
- Lower administrative burden for small employers than a 401(k)
- Employee salary deferrals reduce current taxable income
- Straightforward IRA-style account you can understand and track
How RMDs work for this account
SIMPLE IRAs are subject to Traditional IRA RMD rules. Each SIMPLE IRA balance requires an RMD calculation, and withdrawals can be aggregated with other Traditional IRAs.
Common mistakes
- Early withdrawals within the first two years of participation face a higher 25% penalty
- Not including SIMPLE IRA in total IRA RMD calculations
- Confusing SIMPLE IRA with a 401(k) for aggregation purposes
Frequently asked questions
- Are SIMPLE IRAs subject to RMDs?
- Yes. SIMPLE IRAs follow Traditional IRA distribution rules, including required minimum distributions starting at your RBD age.
Related account types
Need help with your RMD?
Get a free review of your required minimum distribution strategy with a qualified advisor.