Small business retirement

Simple-IRA

What is a SIMPLE-IRA?

A SIMPLE (Savings Incentive Match Plan for Employees) IRA is a retirement plan that allows employers and employees of small businesses to make tax-deferred contributions to the plan.

Who can participate?

Self-employed individuals, small-business owners, and any business with 100 or fewer employees that don't have another existing retirement plan.

Employer contribution limits

  • Option 1. Dollar-for-dollar match of employee contributions up to 3% of each employee’s compensation (which can be reduced to as low as 1% in any 2 of 5 years).
  • Option 2. A contribution of 2% of each employee's compensation. The maximum compensation used to determine this contribution is $285,000 for the 2020 tax year and $290,000 for the 2021 tax year. Contributions are tax-deductible and are required every year.

Employee contribution limits

  • Employees can contribute up to $13,500 for the 2020 and 2021 tax years ($16,500 for employees age 50 or older).

Investment choices

Participants can select from more than 100 Vanguard mutual funds, including many from our low-cost Admiral™ shares class. And there's no minimum initial investment.

Browse Vanguard's fund choices

What are Admiral Shares?

Who can use the plan?

  • There are no age restrictions. Employees are eligible if they received at least $5,000 from you in any 2 preceding years and are reasonably expected to earn at least $5,000 in the current year.
  • You can expand the group of eligible employees by reducing or eliminating the minimum compensation requirement and set the eligibility to be less restrictive if you choose.

  • There’s no fee to establish an account.
  • We charge $25 a year for each Vanguard fund in a SIMPLE IRA. We’ll waive the fee if you have at least $50,000 in qualifying Vanguard assets.

See what Vanguard assets qualify

  • Certain employee notifications are required annually, but there are no IRS reporting rules.

  • All contributions to your SIMPLE IRA belong to you immediately, and you can withdraw them at any time.
  • If you withdraw before age 59½, you're subject to a federal penalty tax of 25% if you take the distribution within the first 2 years of participating in the plan and 10% if taken after that time. Certain exceptions may apply.
  • You can’t take a loan from your SIMPLE IRA.
  • You’ll pay ordinary income tax on any taxable distributions.


Ready to get started?

If you're new to Vanguard, give us a call.

800-992-7188


Are you a Vanguard client looking for a small-business plan? Set up your new plan today.


Ready to get started?

If you're new to Vanguard, give us a call.

800-992-7188


Are you a Vanguard client looking for a small-business plan? Set up your new plan today.

Learn more about small-business retirement

Enhance your retirement plan

Looking to enrich your existing retirement plan with quality mutual funds? Our investment-only service opens the door for you to offer Vanguard funds. 

Learn about our investment-only option

Move your plan to Vanguard

Consider moving the small-business plan you hold elsewhere to Vanguard. You can enjoy high-quality, low-cost funds and reliable service for your portfolio.

Learn how to transfer your plan

All investing is subject to risk, including the possible loss of the money you invest.