Yes, you can have a SIMPLE IRA and a Roth IRA at the same time. The IRS treats the employer-sponsored SIMPLE IRA and the individual Roth IRA as separate accounts with independent contribution limits, so money you put into one does not reduce what you can put into the other. For 2026, a worker under 50 can defer up to $17,000 into a SIMPLE IRA and contribute another $7,500 to a Roth IRA, a combined $24,500 in personal contributions before any employer match.1Internal Revenue Service. 401(k) Limit Increases to $24,500 for 2026, IRA Limit Increases to $7,500 Whether you can actually use both to the fullest depends on your income and how long you have been in the SIMPLE IRA plan.
How Much You Can Put Into Each in 2026
The two accounts have their own caps. Under age 50, you can defer $17,000 into a SIMPLE IRA. At 50 and older, a $4,000 catch-up brings the SIMPLE IRA limit to $21,000. Between ages 60 and 63, an enhanced catch-up created by SECURE 2.0 raises it further, to $22,250.2Internal Revenue Service. Retirement Topics – SIMPLE IRA Contribution Limits
The Roth IRA limit is $7,500 under 50, or $8,600 with the $1,100 catch-up at 50 and older.1Internal Revenue Service. 401(k) Limit Increases to $24,500 for 2026, IRA Limit Increases to $7,500 A worker between 60 and 63 who maxes out both could put $22,250 into the SIMPLE IRA and $8,600 into the Roth, reaching $30,850 in personal contributions. Employer matching or nonelective contributions to the SIMPLE IRA sit on top of that.
One overlap to watch: the Roth IRA’s $7,500 cap is shared with any traditional IRA contributions you make. If you put $3,000 into a traditional IRA, only $4,500 is left for the Roth that year.3Internal Revenue Service. Retirement Topics – IRA Contribution Limits The SIMPLE IRA has its own separate bucket.
Roth IRA Income Limits Still Apply
Having a SIMPLE IRA at work does not block you from a Roth IRA, but your income might. Roth eligibility is tied to modified adjusted gross income, and the allowance phases out over a set range.4Office of the Law Revision Counsel. 26 USC 408A – Roth IRAs For 2026:
- Single or head of household: the allowance shrinks between $153,000 and $168,000. Above $168,000, no direct contribution is allowed.1Internal Revenue Service. 401(k) Limit Increases to $24,500 for 2026, IRA Limit Increases to $7,500
- Married filing jointly: the phase-out runs from $242,000 to $252,000.1Internal Revenue Service. 401(k) Limit Increases to $24,500 for 2026, IRA Limit Increases to $7,500
- Married filing separately: the range is $0 to $10,000, which effectively rules out direct Roth contributions for most couples using this status.
Contribute anyway and you owe a 6% excise tax on the excess for every year it stays in the account.5Office of the Law Revision Counsel. 26 USC 4973 – Tax on Excess Contributions to Certain Tax-Favored Accounts The remedy is to withdraw the excess and any earnings on it before your tax filing deadline.
Why Own Both: Different Tax Treatment
SIMPLE IRA salary deferrals come out of your paycheck before federal income tax, lowering taxable income now. Withdrawals in retirement are taxed as ordinary income at whatever rate applies then.6Internal Revenue Service. SIMPLE IRA Plan
Roth IRA contributions work in reverse. You use dollars you have already paid income tax on, so there is no upfront deduction. Qualified withdrawals in retirement, including all growth, come out free of federal income tax.7Internal Revenue Service. Retirement Plans FAQs Regarding IRAs – Distributions (Withdrawals)
Owning both means that in retirement you can draw from the pre-tax SIMPLE IRA in lower-income years and lean on the tax-free Roth in higher-income years. That flexibility is the practical case for running the two accounts side by side.
The Two-Year Rule Limits What You Can Do With the SIMPLE IRA
For the first two years after your employer deposits money into your SIMPLE IRA, the account is unusually restricted. The clock starts on the date of that first deposit, not the date you were hired.
Ordinarily, an early withdrawal from a retirement account before age 59½ triggers a 10% additional tax. For SIMPLE IRA withdrawals inside the two-year window, that penalty jumps to 25%. During those two years, the only tax-free transfer you can make out of a SIMPLE IRA is to another SIMPLE IRA. Moving the balance to a traditional IRA, a 401(k), or a Roth IRA during this period is treated as a taxable withdrawal and hit with the 25% penalty unless you are at least 59½ or qualify for another exception.8Internal Revenue Service. SIMPLE IRA Withdrawal and Transfer Rules
After the two years pass, the standard 10% early withdrawal penalty applies if you are still under 59½, and you can roll the balance into other retirement accounts, including a Roth IRA.
Converting a SIMPLE IRA to a Roth IRA
Once the two-year period ends, you can roll SIMPLE IRA money into a Roth IRA. The untaxed amount you convert is added to your gross income for the year, so you owe ordinary income tax on it.8Internal Revenue Service. SIMPLE IRA Withdrawal and Transfer Rules No additional penalty applies, and there is no income cap on conversions.
The Pro-Rata Rule if You Use a Backdoor Roth
A SIMPLE IRA balance complicates the backdoor Roth strategy (making a nondeductible traditional IRA contribution and converting it to a Roth to work around the income limits). The IRS treats all of your traditional, SEP, and SIMPLE IRA balances as a single pool and calculates what percentage of the total is pre-tax. That same percentage of any conversion becomes taxable.
Say you have $45,000 in a SIMPLE IRA, all pre-tax, and you make a $7,500 nondeductible traditional IRA contribution. Your total IRA pool is $52,500, of which about 86% is pre-tax. Converting the $7,500 to a Roth would not be tax-free; roughly $6,430 of it would be taxable. The calculation uses your December 31 balances for the year, and the larger your SIMPLE IRA, the worse the math gets.
The standard workaround, available only after the two-year period, is to roll your SIMPLE IRA into your employer’s 401(k) if that plan accepts incoming rollovers. Doing so removes the balance from the pro-rata calculation.
Roth Contributions Inside the SIMPLE IRA Itself
Starting in 2023, the SECURE 2.0 Act gave employers the option to let employees designate their SIMPLE IRA salary deferrals as Roth contributions. If your employer offers it, your deferrals go into a Roth SIMPLE IRA instead of a traditional one.9Internal Revenue Service. SECURE 2.0 Act Impacts How Businesses Complete Forms W-2
The tax treatment flips: Roth SIMPLE IRA contributions are included in your taxable wages now, but qualified withdrawals in retirement come out tax-free. Employer matching or nonelective contributions can also be designated as Roth, and those are treated as taxable income to you when allocated to your account.9Internal Revenue Service. SECURE 2.0 Act Impacts How Businesses Complete Forms W-2 The contribution limits are the same whether the SIMPLE IRA uses traditional or Roth treatment. Not every employer has adopted this option, so check with your plan administrator.
For high earners locked out of direct Roth IRA contributions, a Roth SIMPLE IRA can be a simpler path to Roth savings than a backdoor conversion, because SIMPLE IRA deferrals have no income limit.
Required Minimum Distributions Only Hit the SIMPLE Side
While you are alive, a Roth IRA has no required minimum distributions. You can leave the balance invested indefinitely.10Internal Revenue Service. Retirement Plan and IRA Required Minimum Distributions FAQs
A SIMPLE IRA follows the same RMD rules as a traditional IRA. Distributions must begin at age 73 whether you need the money or not, and each withdrawal is taxed as ordinary income.10Internal Revenue Service. Retirement Plan and IRA Required Minimum Distributions FAQs If you do not expect to need the money at 73, weighting more of your contributions toward the Roth side, or converting SIMPLE IRA funds gradually after the two-year window, can reduce the taxable income you are forced to recognize later.