What are the SIMPLE IRA contribution limits for 2026?

Employees may contribute up to $17,000 in 2026, with an additional $4,000 catch-up for ages 50-59 and 63 and older, and an additional $5,250 catch-up for ages 60-63 under SECURE 2.0 and OBBBA. Employers choose between a dollar-for-dollar match up to 3% of compensation or a 2% nonelective contribution for all eligible employees. Limits adjust annually with IRS cost-of-living changes.

How much does a SIMPLE IRA save compared to a 401(k)?

A SIMPLE IRA eliminates annual Form 5500 filing, nondiscrimination and top-heavy testing, third-party administrator fees, and audit requirements. In an illustrative example of a 25-employee Central Pennsylvania company, the estimated administrative savings range from $6,000 to $17,000 per year, roughly $9,650 annually in the model. Actual results vary by plan and provider.

Can a business switch from a 401(k) to a SIMPLE IRA?

Yes. The 401(k) is terminated by December 31 and the SIMPLE IRA launches January 1, with a 60-day employee notice window opening November 2, because a SIMPLE IRA must be the employer's only plan for the calendar year. PAC Financial manages the transition: employee meetings, payroll coordination, and rollovers. SECURE 2.0 startup credits generally do not apply to conversions due to a three-year lookback rule.

Who provides SIMPLE IRA plans in Harrisburg and Central Pennsylvania?

PAC Financial, a third-generation independent advisory firm founded in 1972 at 5291 Devonshire Road in Harrisburg, designs and services SIMPLE IRA plans across Central Pennsylvania with a one-advisor service model. Call (717) 564-6400: Private Wealth Advisor Tucker P. Nicholas ext 181, or Stephen A. Marrazzo ext 104.

What are the SIMPLE IRA contribution limits for 2026?

Employees may contribute up to $17,000 in 2026, with an additional $4,000 catch-up for ages 50-59 and 63 and older, and an additional $5,250 catch-up for ages 60-63 under SECURE 2.0 and OBBBA. Employers choose between a dollar-for-dollar match up to 3% of compensation or a 2% nonelective contribution for all eligible employees. Limits adjust annually with IRS cost-of-living changes.

How much does a SIMPLE IRA save compared to a 401(k)?

A SIMPLE IRA eliminates annual Form 5500 filing, nondiscrimination and top-heavy testing, third-party administrator fees, and audit requirements. In an illustrative example of a 25-employee Central Pennsylvania company, the estimated administrative savings range from $6,000 to $17,000 per year, roughly $9,650 annually in the model. Actual results vary by plan and provider. PAC Financial benchmarks existing plan costs using public Department of Labor fee data at no charge.

Do I need an advisor to set up a SIMPLE IRA?

Not strictly. Fund companies open SIMPLE IRAs directly and some payroll providers bundle basic plans. An advisor adds value in choosing the contribution formula, documenting SECURE 2.0 credits with the business's tax professional, benchmarking costs, running employee onboarding meetings, and providing one point of contact year-round. PAC Financial in Harrisburg tells owners honestly when a do-it-yourself option fits their situation.

Can a business switch from a 401(k) to a SIMPLE IRA?

Yes. The 401(k) is terminated by December 31 and the SIMPLE IRA launches January 1, with a 60-day employee notice window opening November 2, because a SIMPLE IRA must be the employer's only plan for the calendar year. PAC Financial manages the transition: employee meetings, payroll coordination, and rollovers. SECURE 2.0 startup credits generally do not apply to conversions due to a three-year lookback rule.

Who provides SIMPLE IRA plans in Harrisburg and Central Pennsylvania?

PAC Financial, a third-generation independent advisory firm founded in 1972 at 5291 Devonshire Road in Harrisburg, designs and services SIMPLE IRA plans across Central Pennsylvania with a one-advisor service model, and can pair plans with Trump Account employer contribution programs. Call (717) 564-6400: Private Wealth Advisor Tucker P. Nicholas ext 181, or Stephen A. Marrazzo ext 104.

SIMPLE IRA Plans for PA Small Businesses | PAC Financial Harrisburg

SIMPLE IRA Plans for Pennsylvania Small Businesses

PAC Financial designs and services SIMPLE IRA retirement plans for businesses with 100 or fewer employees across Central Pennsylvania: contractors, trades companies, auto shops, manufacturers, and family businesses from Harrisburg to Carlisle to Hershey. We are a third-generation independent firm at 5291 Devonshire Road in Harrisburg, and the owner works with one advisor, start to finish. Call (717) 564-6400.

Why offer a retirement plan at all?

Because your best people have options. Surveys find about 94% of small business employers say a retirement plan matters for attracting and keeping employees, and workers with plan access are roughly a third less likely to leave in their first year. In a labor market where every good tradesman, tech, and manager gets recruited, the plan is not a perk. It is a retention tool that works every payday.

"Many business owners I sit with tell me the same thing: finding good people is the hardest part of the business, and losing one hurts twice, once in the work and once in training the replacement. A retirement plan will not fix a bad culture, but between two good shops, it decides where the good ones stay," says Tucker P. Nicholas, Private Wealth Advisor at PAC Financial in Harrisburg.

How does a SIMPLE IRA work?

Your employees contribute from their paychecks into retirement accounts they own. You, the employer, pick one of two formulas: match employee contributions dollar-for-dollar up to 3% of pay, or contribute 2% of pay for everyone eligible, whether they contribute or not. All employer contributions are fully tax-deductible.

And here is a detail your employees will feel: they own every dollar you contribute on day one. A 401(k) typically uses vesting schedules, "you own this after 3 years." A SIMPLE IRA is immediate. Your match is theirs the moment it hits their account, and that transparency builds loyalty in a way delayed vesting never will.

What are the 2026 SIMPLE IRA contribution limits?

Employee contributions: up to $17,000 per year.

Catch-up, ages 50-59 and 63+: additional $4,000
Catch-up, ages 60-63 (SECURE 2.0 and OBBBA): additional $5,250

Contribution limits are subject to annual IRS cost-of-living adjustments. Consult your tax professional for the most current figures.

Why does 401(k) complexity cost so much?

A 401(k) works well, but the maintenance is expensive and time-consuming. Here is what eats up your budget each year:

Annual Form 5500 filing. The IRS and Department of Labor require a government filing every single year. Miss the deadline and penalties start at $250 per day. Preparing and filing typically costs $1,000 to $2,000 annually.

Nondiscrimination testing. Your plan must prove owners and executives do not contribute disproportionately more than regular employees. When the test fails, and it happens, you refund contributions or add employer money. Testing typically runs $1,500 to $3,000 per year.

Top-heavy testing. If owners or key employees hold more than 60% of plan assets, you are required to contribute for everyone else. Real money out of your pocket.

Third-party administrator fees. A TPA to handle testing, compliance, and filings typically charges $2,000 to $5,000 or more per year, on top of investment fees.

Audit requirements. Plans with 100 or more participants need an independent annual audit, typically $5,000 to $20,000.

The frustrating part: none of this overhead helps your employees save. It does not go into their accounts. A SIMPLE IRA removes nearly all of it: no annual Form 5500, no nondiscrimination testing, no top-heavy testing, no TPA, no audit, whether you have 5 employees or 99.

What does switching actually save?

Working with illustrative numbers for a Central Pennsylvania company with 25 employees averaging $55,000 in pay:

Cost Category	401(k)	SIMPLE IRA
TPA / Administration	$3,000–$5,000/yr	$0
Compliance Testing	$1,500–$3,000/yr	$0
Form 5500 Preparation	$1,000–$2,000/yr	$0
Annual Audit	$0–$5,000/yr	$0
Nondiscrimination Corrections	$500–$2,000/yr	$0
Estimated Annual Savings		$6,000–$17,000/yr

In this illustration, an owner saves roughly $9,650 every year by making the switch. Over ten years, that is $96,500 that stays in the business, funds growth, or becomes more generous matching for your team. If you already have a plan, bring your latest statement and we will benchmark what it actually costs you, using public Department of Labor fee data, at no charge and with no strings attached.

What do the SECURE 2.0 tax credits cover for new plans?

For businesses starting their first plan, federal credits do heavy lifting. Per the IRS, eligible employers with 50 or fewer employees can claim 100% of startup and administration costs, up to $5,000 per year for three years, plus a credit up to $1,000 per eligible employee on contributions you make, at 100% for the first two years before phasing down. Credits are claimed on IRS Form 8881; eligibility rules apply, and your tax professional confirms your numbers. One honest note: these startup credits generally do not apply when converting from an existing 401(k), because of a three-year lookback rule. The conversion case rests on the cost savings above, and it usually stands just fine on its own. Estimate your credits in two minutes with our SECURE 2.0 tax credit estimator.

How to get started: two paths and the deadlines

Path A: You already have a 401(k). The transition is straightforward. You terminate the 401(k) by December 31 and the SIMPLE IRA launches January 1, with the 60-day employee notice window opening November 2. You cannot run both in the same year, but that keeps things clean. The biggest challenge is making sure your employees understand the change and trust that their money moves correctly. PAC Financial handles all of that: we talk to your team, coordinate with payroll, process the rollovers, and launch the plan. You do not manage the transition. We do.

Path B: You have never offered a plan. A SIMPLE IRA is the easiest path there is. Minimal paperwork, launch any time from January 1 through October 1, and the startup credits above apply. If October 1 is close, that is exactly when one phone call saves a year of waiting.

"The owners who feel best about this a year later are the ones who remember that it took one conversation and about two weeks of paperwork. After that the plan runs itself, and their people watch their balances grow every payday. That is the whole mountain," says Tucker P. Nicholas.

Do you need an advisor to set up a SIMPLE IRA?

Not strictly, and we would rather tell you that than have you wonder. Fund companies open SIMPLE IRAs directly, and some payroll providers bundle basic plans. Where we earn a place: choosing the right contribution formula for your cash flow, documenting the credits with your tax professional, benchmarking costs against public data, running the employee meetings in plain English, and being the one phone number your people call. And if the simplest do-it-yourself option genuinely fits your situation, we will tell you that in the first meeting. It has happened, and those owners send us their friends.

The benefit almost nobody offers yet: Trump Account contributions

Employers can now contribute up to $2,500 per year toward an employee's child's Trump Account through a formal workplace program, excluded from the employee's federal taxable income. Almost no Central PA employer offers it yet. Paired with a SIMPLE IRA, it gives a small company a benefits story that competes far above its weight, especially with working parents. Details, including a Pennsylvania tax wrinkle worth knowing, in our Trump Accounts guide.

Why work with PAC Financial

We are a Central Pennsylvania firm, third-generation, founded in 1972. When you call, you get the same person, not a national call center. We design the plan around your business, your budget, and your people; and when questions come up mid-year, new hires, limit changes, a rollover, we are here, not just at enrollment. We know the Harrisburg business landscape because we have been part of it for fifty years.

Frequently asked questions

Does my business qualify? Generally yes if you have 100 or fewer employees who earned $5,000 or more last year, and no other retirement plan in the same calendar year.

Do I have to contribute every year? You choose the 3% match or the 2% formula, and the structure has some year-to-year flexibility. We walk through it before you commit to anything.

How long does setup take? Typically a few weeks from decision to running payroll deductions, which is why the October 1 and January 1 dates reward acting early.

What if we grow past 100 employees? There is a grace period, and graduating to a 401(k) at the right time is part of the service, not a crisis.

Ready to Take The Next Step?

If you are tired of expensive 401(k) overhead, or you want to offer your team a real benefit without the red tape, we handle the work. You focus on running your business. First conversation is about your company and your people, not a pitch. In person at your shop or ours, or by video. Or see what a transition looks like on our Rollover to PAC Financial page.

Stephen A. Marrazzo
Private Wealth Advisor
T: (717) 564-6400 ext 104
E: smarrazzo@osaicwealth.com

Tucker P. Nicholas
Private Wealth Advisor
T: (717) 564-6400 ext 181
E: tnicholas@osaicwealth.com

Model estimates are based on hypothetical assumptions: 25 employees, average salary $55,000, 3% employer match, 21% corporate tax rate. Actual results will vary based on individual circumstances, plan design, and market performance. This illustration is provided for educational purposes only and does not constitute a guarantee of future results. Administrative cost ranges reflect typical industry figures and vary by provider. This content is for informational purposes only and is not intended as tax or legal advice; tax credits are subject to eligibility requirements under applicable law and are subject to change; please consult legal or tax professionals regarding your individual situation. Survey statistics are drawn from published third-party research. Trump Accounts are governed by Public Law 119-21 and 26 USC Section 530A; rules are subject to change, and Pennsylvania tax treatment is based on preliminary guidance. Contribution limits follow current IRS rules and adjust annually. Investing involves risk, including the possible loss of principal. Securities and Investment Advisory Services offered through Osaic Wealth, Inc., Member FINRA/SIPC and Registered Investment Advisor. Insurance services offered through PAC Financial, which is not affiliated with Osaic Wealth, Inc. This communication is strictly intended for individuals residing in the states of CO, DE, FL, GA, MD, MI, NC, NJ, NY, PA, SC, VA. No offers may be made or accepted from any resident outside the specific state(s) referenced. Check the background of your financial professional on FINRA's BrokerCheck.