SIMPLE IRA Limits 2027: $17,500, or $19,100 at Small Employers

Most 2027 retirement limits in our tracker follow one of two inflation formulas, and the SIMPLE IRA is the plan that uses both: its deferral limits and catch-ups run on a third-quarter price average, while its newest employer contribution runs on the twelve-month index used for the tax brackets. It is a plan built for small employers, and it gives employees two different deferral ceilings depending on the size of the company. The short answer: the 2027 SIMPLE IRA salary-reduction limit projects to $17,500, up from $17,000, and to $19,100, up from $18,100, at employers with 25 or fewer employees. The catch-ups stay where they are, and the optional extra employer contribution rises to $5,400.

The numbers side by side

Here are the limits as the IRS published them for 2024 through 2026, in IRS Notice 2024-80 and Notice 2025-67, with our projection for 2027. The 2024 column comes from the “increased from” amounts in Notice 2024-80.

The 2027 column is ours, not the IRS’s. The official Notice usually appears in November, and the pieces that feed it are nearly all published already.

How the indexing works

Every figure in the table except the extra employer contribution follows the cost-of-living method in § 415(d). That method compares the average CPI-U (the not-seasonally-adjusted consumer price index, Bureau of Labor Statistics series CUUR0000SA0) for the third quarter of the prior year, July through September, with the average for the same quarter of a base year. The increase over the base amount is then rounded down to the next multiple of $500. Rounding down matters: an increase of $499 counts as zero.

For 2027, July 2026 came in at 333.918 and August at 334.980. September is released on October 14, 2026. If September simply equals August, the third-quarter average is 334.626, and that is the figure behind every “unrounded” amount below.

The base year differs by limit, and that difference is where the story is.

In the first row, the increase of $7,649.05 over the $10,000 base is rounded down to $7,500, which gives $17,500. In the second, $1,594.09 rounds down to $1,500, so the base of $17,600 becomes $19,100. The $3,850 and $5,250 catch-ups see increases of $348.71 and $329.24, both below the $500 step, so they stay put.

Why the 110 percent limit jumps $1,000

The $17,600 base for the higher limit is 110 percent of the $16,000 standard limit of 2024. Under § 408(p)(2)(E)(iii)(II), its base period is the third quarter of 2023. Both limits work the same way from there: the full inflation since the base quarter is applied to the base amount, and only whole $500 steps of the increase count. That makes the size of any single year’s change depend on where the unrounded figure sat the year before.

For 2026, the higher limit’s unrounded value was $18,581.20. The increase over $17,600 was $981.20, which counts as $500, so the limit was $18,100, just $18.80 short of the next step. The third-quarter average then rose about 3.3 percent into 2027, enough to lift the unrounded value to $19,194.09 and clear two steps at once. The standard limit had more room: its 2026 unrounded value was $17,085.50, and the same inflation carries it to $17,649.05, one step. So in 2025 the higher limit did not move from $17,600, in 2026 it rose $500, to $18,100, and in 2027 it rises $1,000, to $19,100, while the standard limit rises only $500.

The practical effect is that the gap between the two ceilings widens: $1,600 in 2027, up from $1,100 in 2026. Employees at a company with 25 or fewer workers get a notably better year than employees at a company that sits above that line.

The catch-up quirk: more salary, less catch-up

Here is a result that surprises most people the first time they see it. Since 2026, the catch-up for 110 percent plans, $3,850, has been smaller than the standard SIMPLE catch-up of $4,000, and in 2027 it stays that way. The reason is the base amounts and their base years. The 110 percent catch-up was set at $3,850 when the standard catch-up was $3,500, and it rises only once its own increase since the third quarter of 2023 reaches $500; for 2027 that increase is $348.71. The standard catch-up, indexed from $2,500 in 2005, crossed its next step to $4,000 in 2026 and passed the 110 percent figure.

The consequence for a worker aged 50 to 59 is easy to calculate. In a 110 percent plan in 2027, the maximum is $19,100 plus $3,850, or $22,950. In a standard plan it is $17,500 plus $4,000, or $21,500. The worker at the small employer can put in $1,450 more in total, but gets a smaller catch-up than a colleague at a mid-size employer. It is the salary deferral limit that does the work, not the catch-up.

For people who turn 60, 61, 62 or 63 during the year, the SIMPLE super catch-up is $5,250 in 2027, as it was in 2025 and 2026. It is 150 percent of the 2025 SIMPLE catch-up of $3,500, indexed from a base of the third quarter of 2024. In a standard plan, the 2027 total for that age group is $17,500 plus $5,250, or $22,750.

One caution about the 110 percent plans. The statutory clause for their catch-up, § 414(v)(2)(B)(iii), does not contain the 60-63 rule, and Notice 2025-67 does not publish a separate 60-63 figure for them. We therefore do not state a number for that combination. If you are 60 to 63 and your employer uses the higher limit, ask the plan provider how it handles the larger catch-up before you set your deferral.

Who qualifies for the 110 percent limit

The higher limit is automatic for employers with 25 or fewer employees who earned at least $5,000 in the prior year. Employers with 26 to 100 employees may elect it, but then they take on a higher employer contribution: a 4 percent match instead of 3 percent, or a 3 percent nonelective contribution instead of 2 percent (§ 408(p)(2)(C)(ii)(IV) and (B)(iii)). There is also a condition that the employer must not have maintained another qualified plan for substantially the same employees at any time in the previous three years (§ 408(p)(2)(E)(iv)).

The mandatory employer contribution in any SIMPLE IRA is either a dollar-for-dollar match of up to 3 percent of compensation, or a 2 percent nonelective contribution for every eligible employee. The 2 percent compensation is limited by § 401(a)(17), which we project at $375,000 for 2027. That caps the 2 percent contribution at $7,500 per employee.

The extra employer contribution, already closed

SECURE 2.0 added a new option in § 408(p)(2)(A)(iv). An employer may make an additional nonelective contribution, uniform for all eligible employees, of up to 10 percent of compensation, with a per-employee cap that is indexed. Employees must have at least $5,000 of compensation to be eligible for it.

This cap does not use the quarterly method. It follows § 1(f)(3), the same chained CPI-U (series SUUR0000SA0) average over the twelve months from September to August that we use for the income tax brackets, with a 2023 base, and rounds to the nearest $100 rather than down. The window for 2027 runs from September 2025 through August 2026 and is now complete, so the number is closed at $5,400.

One wrinkle is the missing October 2025 reading: the Bureau of Labor Statistics did not publish a CPI for that month because of the government shutdown. If the month is omitted, the unrounded figure is $5,431.90. If the month is imputed, it is $5,425.16. Both round to $5,400. As a control, the same method gives $5,139.58 for 2025 and $5,264.05 for 2026, which round to $5,100 and $5,300, exactly the amounts in the Notices.

Three examples

A 45-year-old at a ten-person company, salary $80,000, 3 percent match. The employer is under the 25-employee line, so the 110 percent limit applies. She defers $19,100. The employer matches 3 percent of $80,000, which is $2,400. The total going into the account is $21,500.

A 61-year-old at a 40-person company that did not elect the 110 percent limit. The standard plan applies, and he is in the 60-63 age range. He defers $17,500 plus the $5,250 super catch-up, for $22,750. His employer matches 3 percent of his $120,000 salary, which is $3,600. The total is $26,350.

An owner who pays an employee $60,000 and wants to add the extra 10 percent. Ten percent of $60,000 would be $6,000, but the 2027 cap limits the extra contribution to $5,400.

How the pieces fit with your other plans

SIMPLE IRA salary deferrals count toward the overall elective deferral limit under § 402(g) if you also participate in another plan, such as a 401(k) at a second job. We do not repeat that limit here; it is covered in the 2027 401(k) and IRA contribution limits projection. If you are an owner still deciding which plan to open, our comparison of a SEP IRA and a SIMPLE IRA walks through who contributes, how much, and which one suits a business with employees.

The mandatory Roth catch-up rule for higher earners does not apply to SIMPLE IRAs or SEPs, because § 414(v)(7)(C) carves them out. Our guide on the Roth catch-up wage threshold for 2027 explains who is caught by that rule in a 401(k), where the super catch-up is $11,750, a very different number from the SIMPLE’s $5,250. If you are comparing a SIMPLE with other retirement vehicles for lower-income savers, the Saver’s Match 2027 explainer covers the federal match that replaces the Saver’s Credit.

What could still change

The risk to these numbers is narrow. The standard $17,500 would fall to $17,000 only if the September CPI-U came in at or below 326.50 and would rise to $18,000 only at 354.95 or above. The 110 percent limit is the one with a real, if small, sensitivity: it would fall to $18,600 if September came in at or below 330.06, about 1.5 percent under August, and would rise only if September reached 356.22. The three catch-ups do not move for any September reading between about 276 and about 365.

For perspective, the September CPI-U has not fallen more than 0.5 percent from August in any year since 2000. The worst case was 2006, at a decline of 0.49 percent. That is well short of the 1.5 percent drop it would take to move $19,100. So every figure except $19,100 is effectively decided, and $19,100 is decided with a wide margin. The extra employer contribution of $5,400 does not depend on September at all.

The official numbers arrive in the IRS Notice each November. We will confirm the final unrounded values after the Bureau of Labor Statistics publishes September on October 14, 2026. The full list of 2027 figures is in the IRS 2027 inflation adjustments tracker.

Sources

• IRS Notice 2025-67 (2026 retirement plan limits) — irs.gov/pub/irs-drop/n-25-67.pdf
• IRS Notice 2024-80 (2025 retirement plan limits) — irs.gov/pub/irs-drop/n-24-80.pdf
• 26 U.S.C. § 408 (SIMPLE retirement accounts, § 408(p)) — law.cornell.edu/uscode/text/26/408
• 26 U.S.C. § 414 (catch-up contributions, § 414(v)) — law.cornell.edu/uscode/text/26/414
• Bureau of Labor Statistics, CPI-U (series CUUR0000SA0) — api.bls.gov/publicAPI/v2/timeseries/data/CUUR0000SA0
• Bureau of Labor Statistics, C-CPI-U (series SUUR0000SA0) — api.bls.gov/publicAPI/v2/timeseries/data/SUUR0000SA0