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SIMPLE stands for Savings Incentive Match Plan for Employees. It is a retirement plan built for businesses with 100 or fewer employees, and it works just as well for a self-employed person with no employees at all. The employee sets aside part of their pay, and the employer adds money on top. That employer contribution is not optional. It is part of what makes a SIMPLE a SIMPLE.
Compared to a full 401(k), setup is light and there is usually no annual government filing to manage. Compared to a plain IRA, the ceiling is much higher and someone else is contributing alongside you. That combination is why it fits so many small businesses in the Treasure Valley and across the Mountain West.
A SIMPLE IRA at a large brokerage usually limits your menu to that firm's funds. A self-directed SIMPLE IRA, held with an Administrator like Mountain West IRA, widens that menu. The account can hold options many people never realize are allowed, such as real estate, private notes, precious metals, and private placements.
Here is the important framing. Self-direction is about control and choices, not about any promised outcome. Mountain West IRA does not select assets for you and does not sell anything. As the Administrator, we handle the record-keeping and paperwork so the account stays inside the rules. You make the decisions in the areas you know best.
Here is what an employee can set aside in 2026:
Then the employer contributes. They choose one of two methods: a dollar-for-dollar match up to 3% of the employee's pay, or a flat 2% of pay for every eligible employee whether or not that person contributes. If you are self-employed, you play both roles, so you can make the employee contribution and the employer contribution into the same account.
1. The two-year rule
The clock starts the first time money lands in your SIMPLE IRA. If you move that money into a different kind of retirement account before two years are up, the early-distribution penalty can climb to 25% instead of the usual 10%. After two years, the normal options open up. This is the single most common surprise, so mark the date your account was first funded.
2. Arm's length
Your IRA and your personal life are supposed to keep a polite distance. The account cannot do deals with you or with close family such as your spouse, parents, or children. So no selling a rental to your own IRA and moving in, and no paying yourself to do repairs on a property the account owns. These are called prohibited transactions, and they are the fastest way to damage an otherwise healthy account. When something feels close to the line, ask before you act.
It tends to fit small businesses with 100 or fewer employees, and self-employed people who want a higher ceiling than a plain IRA without the cost and complexity of a full 401(k). One timing note: a SIMPLE IRA for a given year generally has to be established by October first of that year, so it pays to plan ahead rather than scramble in December.
Can I hold real estate in a self-directed SIMPLE IRA?
Yes. Real estate is one of the more common options people hold in a self-directed account, as long as you follow the arm's-length rules and never do a deal with yourself or close family. Mountain West IRA administers the account; it does not choose the property for you.
What are the 2026 SIMPLE IRA contribution limits?
The standard employee limit is $17,000, rising to $18,100 for businesses with 25 or fewer employees. Catch-ups add $4,000 (or $3,850 in higher-limit plans) for ages 50 to 59 and 64 and older, and $5,250 for ages 60 to 63. The employer then contributes on top.
Is a SIMPLE IRA better than a 401(k)?
They serve different needs. A SIMPLE IRA is lighter to set up and run, with usually no annual government filing, which many small businesses prefer. A 401(k) allows higher contributions but costs more to administer. The right fit depends on your situation, so talk with your own advisor.
What is the two-year rule?
It is a clock that starts when your SIMPLE IRA is first funded. Moving money to a different type of retirement account within those two years can trigger a 25% penalty instead of the usual 10%. After two years, the standard options apply.
Does the employer really have to contribute?
Yes. The employer chooses either a dollar-for-dollar match up to 3% of pay, or a flat 2% for every eligible employee. If you are self-employed, you make both the employee and employer contributions yourself.
What does it mean that Mountain West IRA is an Administrator?
As an Administrator, Mountain West IRA handles the record-keeping and paperwork that keep your account compliant. It does not act as an advisor, does not recommend assets, and does not sell products. You direct the account.
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To keep learning, visit our educational videos library on YouTube: https://www.youtube.com/@MountainWestIRA/videos
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https://www.youtube.com/@MountainWestIRA & https://www.mountainwestira.com/blog
If this topic sparked questions, reach out to our team. We are here to help you understand the rules, the process, and how self-directed retirement accounts work.
Not investment, tax, or legal advice. Check with your own financial advisor about your specific situation.
This post is for informational purposes only and should not be considered financial advice. Please consult with a financial advisor for personalized advice.
Mountain West IRA, Inc. does not render tax, legal, accounting, investment, or other professional advice. If accounting, tax, legal, investment, or other similar expert assistance is required, the services of a competent professional should be sought.
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