Traditional IRAs are set up by individuals, while SIMPLE IRAs are set up by small business owners for employees. The key requirement for a traditional IRA is that you have earned income during the year, while SIMPLE IRAs may have other restrictions put in place by the small business owner.

Anyone can convert their eligible IRA assets to a Roth IRA regardless of income or marital status. Prior to 2010, only those account owners who had a modified adjusted gross income below $100,000 were eligible to convert. Despite its advantages, Roth may not be the preferred option for all investors.

Simple IRA Rollover Rules You cannot roll over money from a SIMPLE IRA to a traditional IRA within the first two years after you open the SIMPLE IRA. The only way to move money from a SIMPLE IRA within the first two years is to roll it into another SIMPLE IRA.

You can contribute up to $13,500 into a SIMPLE IRA in 2020 if you’re under age 50. Folks who are 50 and older can throw in an additional $3,000. Whatever you contribute, your employer is typically required to match what you put in, dollar for dollar, up to 3 percent of your earnings.

The amount an employee contributes from their salary to a SIMPLE IRA cannot exceed $13,500 in 2020 and 2021 ($13,000 in 2019 and $12,500 in 2015 – 2018).

Employer Contributions to SIMPLE IRAs An employer can choose to either make a dollar-for-dollar match of up to 3% of a worker’s pay or contribute a flat 2% of compensation, whether the employee contributes or not. Once that five-year period is over, the employer can again lower its matching contribution.

Yes, your employer can make matching contributions on your designated Roth contributions. Your employer must allocate any contributions to match designated Roth contributions into a pre-tax account, just like matching contributions on traditional, pre-tax elective contributions.