Can I Have More Than One SIMPLE IRA Account?

Can I Have More Than One SIMPLE IRA Account?
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Contributing to a company-sponsored retirement plan is one of the best ways to prepare for retirement. A common type of retirement plan is a Savings Incentive Match Plan for Employees (SIMPLE). Both employers and employees can make contributions to the plan. You might be wondering if you can have two SIMPLE IRA plans to boost your savings even more.

SIMPLE IRA Accounts

If you are thinking of starting a SIMPLE IRA, you need to be aware that some recent changes have been made to the program. In December 2019, the Setting Every Community Up for Retirement Enhancement (SECURE) Act eliminated the maximum age for making contributions. Previously, the maximum age at which you could contribute was ​70 ½​ years old. Now, you can contribute for the rest of your life.

You can establish a Roth IRA at any age, as long as you have income from some form of employment and meet the income requirements. A Roth IRA is a popular choice as your withdrawals are tax-free as long as you are ​over 59 ½​ and you have had the account for more than ​five years​. If you choose a traditional IRA, you can deduct the taxes when you are making contributions, but your payments will be taxed when you begin collecting payments.

Two SIMPLE IRA Plans?

SIMPLE IRAs are meant for employers with ​less than 100​ employees. There are a few differences between a 401(k) and a SIMPLE IRA. With a 401(k), you have to work for the company for a certain number of years before you become vested. If you were to leave before that time, your employer could take any matching investments. With a SIMPLE IRA, you are vested the minute you make a contribution.

Depending on the state where you live, your employer may do some form of matching. This means that for every 3 percent you contribute, the employer may also contribute 3 percent, meaning that your contribution totals 6 percent. Under some circumstances, the employer can reduce the matching amount to 1 percent for between two to five years.

Can a company have two retirement plans? Your employer cannot have two retirement plans. Under employer aggregation rules, they are still only allowed to operate one plan even if they have multiple businesses. Only one plan is allowed for all of the employees in all of the businesses combined.

Participate in Multiple Retirement Plans

There is no limit to the number of IRA plans that an employee can establish, but you will be subject to annual contribution limits. You cannot max all of them out, as the limits are set for the sum total of all of your IRA accounts. For 2020 and 2021, the maximum you can contribute is ​$6,000​ split over all of your accounts. For instance, if you have two SIMPLE IRA accounts, you could contribute $3,000 to each of them.

Another requirement that the IRS places on SIMPLE IRA accounts is that you must have eligible income. Eligible income includes wages, a salary or self-employment income. You cannot contribute if your only income is unemployment, disability or other forms of support.

If you have a spouse who has little or no income, you can contribute a portion for them. This can double the amount you are allowed to save for retirement. One thing to consider if you have multiple accounts is that you will have to pay separate fees for each of them. If you are over the age of 50, you can contribute an ​extra $1,000​ per year, raising the limit to ​$7,000​.