Having Both a Simple IRA and a Roth IRA at the Same Time

Yes, you can have both a Simple IRA and a Roth IRA, but contribution limits apply across both accounts combined

You are allowed to own a Simple IRA and a Roth IRA at the same time. The IRS does not prohibit holding both. However, the money you contribute to each account counts toward the same annual limit, so you cannot max out both accounts in a single year. If you contribute $16,000 to a Simple IRA, you cannot also contribute $7,000 to a Roth IRA in that same year — the total across both accounts cannot exceed the Simple IRA limit for your age.

The practical reason most people consider this combination is that a Simple IRA is tied to your employer, while a Roth IRA is independent. If you leave your job or your employer stops offering the Simple IRA, you keep the Roth. But the contribution limits mean you have to choose how to split your savings between the two accounts each year.

Key Takeaways

Your total contributions to a Simple IRA and a Roth IRA combined cannot exceed the Simple IRA annual limit for your age group.
A Simple IRA is employer-based and requires your employer to set one up; a Roth IRA is individual and you open it on your own.
Employer contributions to your Simple IRA do not count toward your personal contribution limit to either account.
If you leave your job, you can roll your Simple IRA into a traditional IRA or another retirement account, but a Roth IRA stays separate.

How the contribution limit works when you have both accounts

The IRS sets an annual contribution limit for Simple IRAs. For 2024, that limit is $16,000 if you are under 50, and $19,500 if you are 50 or older (the higher amount includes a catch-up contribution). This limit applies to the total amount you put into your Simple IRA across the entire year.

A Roth IRA has its own separate limit: $7,000 per year if you are under 50, and $8,000 if you are 50 or older. However, if you also have a Simple IRA, the IRS combines the limits. Your total contributions to both accounts cannot exceed the Simple IRA limit. So if you contribute $10,000 to your Simple IRA, you can contribute only $6,000 to your Roth IRA that year, not the full $7,000.

Employer contributions to your Simple IRA do not count toward this limit. Your employer can add money to your account, and that does not reduce how much you can personally contribute to either your Simple IRA or your Roth IRA.

Why someone might want both accounts

The main reason to hold both is tax treatment. A Simple IRA is funded with pre-tax money — you deduct your contributions from your taxable income in the year you make them, and you pay taxes on withdrawals in retirement. A Roth IRA is funded with after-tax money — you do not deduct contributions, but withdrawals in retirement are tax-free.

If you expect to be in a higher tax bracket in retirement, a Roth IRA can save you money because you lock in today's tax rate. If you expect to be in a lower bracket, a Simple IRA saves you money now. Some people split contributions between both to hedge against uncertainty about future tax rates.

Another reason is flexibility. If you leave your job, your Simple IRA is no longer tied to your employer. You can roll it into a traditional IRA or another retirement account. A Roth IRA, by contrast, stays yours regardless of employment changes. Having a Roth gives you a pool of money that is always under your control.

Income limits for a Roth IRA when you have a Simple IRA

Roth IRAs have income limits that determine whether you can contribute. These limits are based on your modified adjusted gross income (MAGI) and your filing status. The limits change each year. For 2024, single filers can contribute the full amount if their MAGI is below $146,000; the contribution phases out between $146,000 and $161,000. Married filers filing jointly can contribute fully if MAGI is below $230,000; it phases out between $230,000 and $240,000.

Having a Simple IRA does not change these income limits. Your Simple IRA contributions do not reduce your MAGI for the purpose of Roth IRA limits. However, your total income from all sources — including employer contributions to your Simple IRA — counts toward your MAGI. If your income is too high, you cannot contribute to a Roth IRA at all, regardless of whether you have a Simple IRA.

What happens to a Simple IRA if you leave your job

When you leave your job, your Simple IRA remains yours. You do not lose the money. However, you can no longer make contributions to it through payroll deduction. Your employer also stops making contributions.

You have several options. You can roll the Simple IRA into a traditional IRA at a bank or brokerage of your choice. You can roll it into a new employer's retirement plan if your new job offers one and accepts rollovers. You can also leave it where it is if your former employer's plan allows it, though this is uncommon. A rollover is usually the simplest path because it keeps your retirement savings in one place and gives you more investment choices.

Your Roth IRA is unaffected by a job change. It continues to exist and you can continue to contribute to it (subject to income limits) regardless of whether you are employed or which employer you work for.

Tax filing when you have both accounts

You will receive separate tax documents for each account. Your employer sends you a Form 5498-SA for your Simple IRA, which reports contributions and earnings. You report Roth IRA contributions on your tax return using Form 8606 if you also have a traditional IRA or Simple IRA. This form helps the IRS track whether you are mixing pre-tax and after-tax retirement savings.

The key point is that contributions to a Simple IRA reduce your taxable income for the year, while Roth contributions do not. When you file your taxes, you deduct Simple IRA contributions on your return. Roth contributions are not deductible. Your tax software or preparer will ask about both accounts and handle the reporting correctly if you provide the right documents.

Frequently Asked Questions

Can I contribute the maximum to both a Simple IRA and a Roth IRA in the same year?

No. Your total contributions to both accounts combined cannot exceed the Simple IRA limit for your age. If you are under 50, that limit is $16,000 for 2024. You must split that $16,000 between the two accounts however you choose.

Do employer contributions to my Simple IRA count toward my Roth IRA limit?

No. Employer contributions to your Simple IRA are separate from your personal contribution limit. You can contribute up to the full Simple IRA limit yourself, and your employer can add money on top of that without affecting how much you can contribute to a Roth IRA.

What if my income is too high for a Roth IRA but I have a Simple IRA?

You cannot contribute to a Roth IRA if your income exceeds the IRS limit for your filing status, regardless of whether you have a Simple IRA. The Simple IRA does not change the income limits for Roth contributions. If you are over the limit, you can only contribute to the Simple IRA.

Can I roll my Simple IRA into my Roth IRA?

You can roll a Simple IRA into a Roth IRA, but you will owe taxes on the amount you roll over because you are converting pre-tax money into after-tax money. This is called a Roth conversion. Consult a tax professional before doing this, as it can significantly increase your tax bill in the year of conversion.

If I leave my job, do I have to do anything with my Simple IRA?

You do not have to do anything immediately, but you should plan a rollover within a reasonable time. Most people roll their Simple IRA into a traditional IRA at a bank or brokerage to keep their retirement savings organized and maintain investment flexibility. Your former employer may eventually close the plan, so rolling over protects your account.

This guide is for general information only and is not medical, financial, legal, or other professional advice. For decisions specific to your situation, consult a qualified professional. See our Editorial Policy.