A SIMPLE IRA (code S in Box 12a) is a type of traditional IRA provided by your employer. If TurboTax asks any general questions about your traditional IRAs, you must include the SIMPLE IRA.
SIMPLE IRAs have much higher contribution limits than traditional IRAs, allowing you to save more in taxes upfront.
The contribution limits are also different:
- For traditional IRAs, the maximum allowable contribution in 2020 is the smaller of $6,000 (or $7,000 for those 50 and older) or total income for the year.
- With a SIMPLE IRA, an employee may contribute up to $13,500 per year in 2020. For those who are 50 years or older, the IRS catch-up provision allows an additional $3,000 for a total of $16,500 maximum contribution for 2020.
- The SIMPLE IRA contributions can be either matched dollar for dollar by the employer, up to 3% of the employee’s compensation—or the employer’s contribution can be a fixed amount of 2% of the employee’s compensation.
**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
