Yes, you can have both a SIMPLE IRA and a Roth IRA in the same year. The two accounts sit in different parts of the tax code and carry independent contribution limits, so money you defer into your employer’s SIMPLE IRA does not reduce what you may put into a personal Roth IRA.1Internal Revenue Service. Retirement Plans FAQs Regarding IRAs – Section: Contributions The only catch is on the Roth side: your income has to fall below the IRS phase-out to contribute directly.
Why the Two Accounts Don’t Interfere
A SIMPLE IRA is an employer-sponsored plan you fund through payroll deferrals. A Roth IRA is a personal account you open and fund yourself. The IRS allows Roth IRA contributions even when you participate in an employer plan, and federal regulations specifically state that SIMPLE IRA contributions made on your behalf do not count against your Roth IRA limit.2eCFR. 26 CFR 1.408A-3 – Contributions to Roth IRAs
Holding both gives you two different tax treatments. The SIMPLE IRA takes pretax dollars now and taxes withdrawals later. The Roth IRA takes after-tax dollars now and produces tax-free withdrawals in retirement. You get to split the bet.
2026 Contribution Limits for Each Account
For the 2026 tax year, the base limits are:3Internal Revenue Service. 401(k) Limit Increases to $24,500 for 2026, IRA Limit Increases to $7,500
- SIMPLE IRA employee deferrals: up to $17,000
- Roth IRA contributions: up to $7,500
A worker under 50 who maxes both accounts puts away $24,500 of their own money in a year, before any employer match. Employer contributions to the SIMPLE IRA sit on top of your $17,000 deferral and do not reduce your Roth room.
One coordination point to watch: the $7,500 Roth IRA cap is a combined ceiling across all of your traditional and Roth IRAs. If you put $3,000 into a traditional IRA, only $4,500 of Roth room remains. The SIMPLE IRA is not part of that combined cap.
Catch-Up Contributions at 50 and Beyond
If you reach age 50 by the end of the calendar year, both accounts allow extra contributions on top of the base limits for 2026:3Internal Revenue Service. 401(k) Limit Increases to $24,500 for 2026, IRA Limit Increases to $7,500
- SIMPLE IRA catch-up (age 50+): additional $4,000
- Roth IRA catch-up (age 50+): additional $1,100
That brings the combined personal contribution ceiling to $29,600 for someone aged 50 through 59 who maxes both accounts.
The SECURE 2.0 Act added a higher SIMPLE IRA catch-up for workers aged 60 through 63. In that window, the SIMPLE catch-up rises to $5,250, pushing the combined personal total to $30,850 for 2026.3Internal Revenue Service. 401(k) Limit Increases to $24,500 for 2026, IRA Limit Increases to $7,500 At 64, the catch-up drops back to $4,000.
Roth IRA Income Limits That Could Disqualify You
The SIMPLE IRA has no income ceiling on employee deferrals. The Roth IRA does. Your ability to contribute phases out based on modified adjusted gross income, and for 2026 the ranges are:3Internal Revenue Service. 401(k) Limit Increases to $24,500 for 2026, IRA Limit Increases to $7,500
- Single or head of household: contributions phase out between $153,000 and $168,000 in MAGI, and stop entirely above $168,000.
- Married filing jointly: the phase-out runs from $242,000 to $252,000, with no direct contributions allowed above $252,000.
Inside the phase-out band, your maximum contribution shrinks proportionally.4Office of the Law Revision Counsel. 26 USC 408A – Roth IRAs A single filer with $160,500 in MAGI sits roughly halfway through the $15,000 phase-out window, so they can contribute roughly half of $7,500. Your SIMPLE IRA deferrals are not added back into MAGI for this calculation, so participating in the SIMPLE plan does not by itself lift you into a phase-out.
When Income Is Too High: The Backdoor Route
Earning above the Roth ceiling doesn’t have to end the strategy. Anyone can contribute to a traditional IRA (the income limit there applies only to the deduction, not the contribution), and anyone can convert a traditional IRA to a Roth IRA regardless of income. Combining those two steps is the standard “backdoor” method.
SIMPLE IRA participants need to pay attention to one wrinkle. When you convert, the IRS applies a pro-rata rule that looks at all your traditional IRAs together, including any SIMPLE IRA money that has been rolled into a traditional IRA. If pretax dollars are sitting in that combined pool, part of the conversion becomes taxable even if the money you just contributed was after-tax. Keeping your traditional IRA balance at zero (by leaving SIMPLE funds in the SIMPLE) sidesteps the problem.
Moving SIMPLE IRA Money Into a Roth IRA
You can convert SIMPLE IRA funds directly into a Roth IRA, but only after a mandatory two-year waiting period. The clock starts on the date your employer first deposited contributions into your SIMPLE IRA, not the date you were hired or became eligible.5Internal Revenue Service. Retirement Plans FAQs Regarding SIMPLE IRA Plans During those first two years, the only permitted transfer is to another SIMPLE IRA.6Internal Revenue Service. SIMPLE IRA Withdrawal and Transfer Rules
Move money to a Roth IRA before the two years are up and the IRS treats the transfer as a distribution. You owe income tax on the full amount plus a 25% additional tax, which is steeper than the usual 10% early-distribution penalty.7Office of the Law Revision Counsel. 26 USC 72 – Annuities; Certain Proceeds of Endowment and Life Insurance Contracts
After the two-year period, you can convert freely. The converted amount is taxed as ordinary income in the year of the conversion, but no penalty applies. A trustee-to-trustee transfer between custodians keeps the money out of your hands and avoids accidentally turning the move into a taxable distribution.6Internal Revenue Service. SIMPLE IRA Withdrawal and Transfer Rules
One more clock starts at conversion. Each converted amount carries its own five-year holding period. If you pull the converted dollars out before five years have passed and you are under 59½, the IRS charges a 10% additional tax on the early portion.8Internal Revenue Service. Distributions From Individual Retirement Arrangements (IRAs)
What Happens If You Overcontribute
Going over the limit in either account, or contributing to a Roth IRA when your income disqualifies you, triggers a 6% excise tax on the excess for every year it stays in the account.9Office of the Law Revision Counsel. 26 USC 4973 – Tax on Excess Contributions to Certain Tax-Favored Accounts The tax repeats annually until you fix it.
The fix is to withdraw the excess, along with any earnings attributable to it, by your tax-filing deadline for the year of the contribution. Filing an extension typically buys you until October 15. Pull the money out in time and the 6% tax goes away, though you will owe income tax on the earnings that come out with it.
The Roth IRA contribution deadline itself extends to your tax-filing deadline the following year, generally April 15. That gives you a window to check your final MAGI before deciding how much you can safely put in, or to walk back a contribution that turned out to exceed the phase-out.