SIMPLE IRA RMD Rules: Aggregation, the QCD Restriction, and What Small Business Owners Need to Know

A SIMPLE IRA — Savings Incentive Match Plan for Employees — is an IRA-based retirement plan available to businesses with 100 or fewer employees. Because it is structured as an individual retirement arrangement, it follows IRA distribution rules rather than 401(k) rules: RMDs begin at age 73 (or 75 for those born in 1960 or later), there is no still-working exception, and the SIMPLE IRA aggregates with all your traditional IRAs for RMD purposes. Its two distinctive planning complications at RMD age are the QCD restriction (employer contributions in the current tax year block qualified charitable distributions from the account) and the 2-year rollover restriction that can affect recent plan entrants who are approaching RMD age. Here is a complete breakdown.

Who holds SIMPLE IRAs

SIMPLE IRAs are available exclusively to businesses with 100 or fewer employees who earned at least $5,000 in the prior year. Common SIMPLE IRA holders approaching RMD age include:

• Employees at small companies — manufacturers, retail businesses, medical practices, law firms, and other small employers that want a simple, lower-cost alternative to a 401(k)
• Sole proprietors and self-employed individuals — a sole proprietor with no employees can establish a SIMPLE IRA, though the SEP-IRA and Solo 401(k) typically offer higher contribution ceilings for this group
• Small business owners with a handful of employees — the SIMPLE requires the employer to contribute: either a 3% matching contribution (dollar-for-dollar up to 3% of compensation) or a 2% non-elective contribution for all eligible employees regardless of whether they contribute
• Long-tenured employees at small firms — some workers have been contributing to the same SIMPLE IRA for 20–30 years and arrive at RMD age with $500K–$1.5M+ in the account

The defining characteristic at RMD age is the mandatory employer contribution. Unlike a SEP-IRA where a self-employed retiree can simply stop making contributions, employees at an active SIMPLE plan may continue receiving employer contributions even after they stop contributing themselves — which has direct implications for QCD access, as explained below.

RMD starting age: same as traditional IRA

Because a SIMPLE IRA is a type of IRA, the SECURE 2.0 Act § 107 RMD age rules apply directly:¹

The April 1 first-year deadline creates a double-distribution year if you defer. Taking two full SIMPLE IRA RMDs in one tax year — your deferred year-1 distribution plus your year-2 distribution — can push you into a higher bracket and trigger IRMAA Medicare surcharges. The better path for most retirees is taking the first RMD before December 31 of the year you reach RMD age. See our RMD starting age guide for the full birth-year analysis and the April 1 trap.

How to calculate your SIMPLE IRA RMD

The calculation is identical to a traditional IRA:

1. Find your SIMPLE IRA balance as of December 31 of the prior year (use the custodian's December 31 statement — employer contributions deposited early in the new year do not count).
2. Find your IRS Uniform Lifetime Table divisor for your age in the current year.
3. Divide the balance by the divisor. The result is your RMD from this account.

If your spouse is the sole beneficiary of your SIMPLE IRA and is more than 10 years younger, you may use IRS Table II (Joint Life and Last Survivor Expectancy) instead, which produces a lower divisor and therefore a smaller RMD. See our spousal RMD strategy guide for a divisor comparison.

Example: A long-tenured employee at a small manufacturing firm, born in 1953, turns 73 in 2026. Their SIMPLE IRA had a December 31, 2025 balance of $620,000. The Uniform Lifetime Table divisor at age 73 is 26.5. Required distribution: $620,000 ÷ 26.5 = $23,396 for 2026. Use our RMD Calculator to calculate your amount and project distributions over the next 10 years.

Aggregation: SIMPLE IRA pools with all your traditional IRAs

This is the most practically important rule for SIMPLE IRA holders with multiple retirement accounts. A SIMPLE IRA is an IRA — which means it enters the IRA aggregation pool along with every other traditional IRA, rollover IRA, and SEP-IRA you own.²

This flexibility is valuable: if your SIMPLE IRA is invested in a limited-menu annuity or your employer's plan custodian has inconvenient distribution procedures, you can satisfy the entire combined RMD from a more accessible IRA held at a major brokerage.

What does NOT aggregate with your SIMPLE IRA: 401(k) plans, 403(b) plans, and 457(b) plans each have their own separate distribution requirement. If you also have an old 401(k) from a prior employer, or a 403(b) from an earlier career, those accounts must satisfy their own RMD independently — your SIMPLE IRA distribution cannot cover a 401(k) shortfall. See our RMD aggregation rules guide for the full account-type breakdown.

No still-working exception for SIMPLE IRAs

Many SIMPLE IRA holders are familiar with the 401(k) still-working exception and assume the same rule applies to their SIMPLE. It does not.

• 401(k) and 403(b) plans: Participants still employed at the plan sponsor who own less than 5% of the business can delay RMDs from that specific plan until the year they actually separate from service.
• IRAs (including SIMPLE and SEP-IRAs): No such exception exists. RMDs begin at age 73 or 75 regardless of whether you are still working, still receiving a salary, and still receiving employer contributions to your SIMPLE IRA.

This creates a scenario that surprises many small business employees: you can be actively employed, still deferring $17,000 per year into your SIMPLE IRA (and receiving the employer 3% match), and simultaneously be required to take an RMD from that same account — because the IRA rules do not permit deferral regardless of employment status.

The 2-year rollover restriction

SIMPLE IRAs have a rollover restriction that applies for the first two years after the date of the first contribution to the SIMPLE IRA under an employer's plan. During this 2-year period, the SIMPLE IRA can only be rolled to another SIMPLE IRA — not to a traditional IRA, SEP-IRA, 401(k), or other plan.³

For most SIMPLE IRA holders at RMD age, this restriction is historical — they have been in the plan for years or decades. However, it can matter in two edge cases:

• Late career job change. If you changed employers and joined a SIMPLE IRA plan within the last two years before your RMD starting age, you may not yet be able to roll the SIMPLE to a traditional IRA for QCD access or consolidation.
• Recently established SIMPLE. A small business owner who converted from a SEP-IRA to a SIMPLE plan in 2024 or 2025 may be within the 2-year window at RMD age in 2026 or 2027.

After the 2-year period, a SIMPLE IRA can be rolled over to a traditional IRA, SEP-IRA, 401(k), 403(b), governmental 457(b), or another SIMPLE IRA — the same broad rollover eligibility as a traditional IRA. Note that RMD amounts are never eligible for rollover; the current year's RMD must be distributed first before the remaining balance can be rolled over.

QCDs from SIMPLE IRAs: the ongoing-contribution restriction

This is the most consequential rule for charitably inclined SIMPLE IRA holders who are still employed at an active SIMPLE plan.

Under IRC § 408(d)(8)(B), a qualified charitable distribution cannot be made from a SIMPLE IRA if employer contributions are made to the SIMPLE IRA agreement for the plan year ending with or within your taxable year in which the QCD is made.⁴

The planning implication: If you are 70½ or older and want to use QCDs to reduce your AGI — excluding up to $111,000 in 2026 from income and simultaneously satisfying part or all of your RMD — you generally need to separate from service at the SIMPLE employer to stop employer contributions. Once separated and after the employer's contribution cycle concludes for the plan year, the following year's SIMPLE IRA becomes QCD-eligible. If the 2-year restriction has passed, you can also roll the SIMPLE to a traditional IRA for immediate QCD access (satisfying the current year's SIMPLE RMD before rolling).

See our QCD strategy guide for how the income exclusion, IRMAA cliff avoidance, and Social Security taxation interaction work together — and our QCD calculator to model the tax savings.

Roth SIMPLE IRA: no lifetime RMDs

SECURE 2.0 Act § 601 authorized employers to permit Roth contributions in SIMPLE IRA plans beginning in 2023. A Roth SIMPLE IRA, like a Roth IRA, carries no lifetime required minimum distribution requirement.¹

If your employer's SIMPLE plan was updated to allow Roth elective deferrals and you have been directing some or all of your contributions to a Roth SIMPLE IRA account, those balances are exempt from RMDs during your lifetime. Your beneficiaries will face the 10-year depletion rule after your death (same as an inherited Roth IRA), but there are no annual distribution requirements for them during the 10-year window.

Practical note: Not all SIMPLE plan custodians implemented the Roth option immediately after SECURE 2.0 passed. If your SIMPLE IRA is a traditional (pre-tax) account, contributions remain on a pre-tax basis unless your plan was updated by the custodian.

Roth conversion from SIMPLE IRA: After the 2-year restriction period, you can convert a traditional SIMPLE IRA to a Roth IRA using the same rules as converting a traditional IRA. The conversion is taxable in the year of conversion but permanently eliminates future RMDs on the converted balance. For individuals still earning income in their late 60s and early 70s, the pre-RMD window is the optimal conversion window. See our Roth conversion guide and Roth conversion sizing calculator.

SIMPLE IRA vs. SEP-IRA at RMD age: key differences

Key difference: The SEP-IRA gives the individual complete control over when contributions stop (since the employer and employee are the same person for a sole proprietor). With a SIMPLE IRA, even a retired employee may receive employer contributions if the employer continues to make the required non-elective contribution on their behalf — which can block QCD access unexpectedly. Understanding whether your former employer is still depositing contributions is essential for QCD planning.

Inherited SIMPLE IRA: the 10-year rule applies

Non-spouse beneficiaries who inherit a SIMPLE IRA after December 31, 2019 are subject to the SECURE Act 10-year rule: the account must be fully distributed by December 31 of the 10th year after the year of death.

Under T.D. 10001 (finalized July 2024), if the original SIMPLE IRA owner had already reached their Required Beginning Date and was taking RMDs, the beneficiary must also take annual RMDs in years 1–9 of the 10-year period, with the full balance distributed by year 10. The Single Life Expectancy Table is used for annual calculations.⁵

An inherited SIMPLE IRA cannot be aggregated with the beneficiary's own IRAs for distribution purposes. It forms its own separate pool — though inherited IRAs from the same decedent can be aggregated with each other.

Eligible Designated Beneficiaries (surviving spouses, minor children of the decedent, disabled or chronically ill individuals, and beneficiaries not more than 10 years younger than the decedent) retain the lifetime stretch option. See our beneficiary designation guide for the full EDB categories and strategies.

Should you roll your SIMPLE IRA to a traditional IRA?

Once the 2-year restriction period has passed and you have separated from service (or your employer's SIMPLE plan terminates), rolling your SIMPLE IRA to a traditional IRA can make sense for several reasons:

• QCD access. If you left the employer years ago and no contributions have been made since, your SIMPLE is likely already QCD-eligible without a rollover. But if there is any ambiguity about recent employer contributions, rolling to a fresh traditional IRA at a new custodian eliminates the question entirely.
• Investment options. Many SIMPLE IRA custodians — particularly insurance-company platforms — have limited investment menus and higher expense ratios. Rolling to a brokerage IRA unlocks lower-cost index fund options.
• Consolidation. If you have both a SIMPLE IRA and one or more traditional or rollover IRAs, consolidating into a single account simplifies aggregation math and reduces the administrative burden of tracking multiple December 31 balances.
• Roth conversion strategy. Rolling to a traditional IRA positions you to execute a systematic bracket-filling Roth conversion program through your IRA custodian's tools, particularly in the pre-RMD window.

Timing: The current year's SIMPLE IRA RMD must be distributed before rolling the remaining balance — RMD amounts are not eligible for rollover. If you are rolling during an active RMD year, calculate and distribute the RMD first, then initiate the rollover for the remainder.

What an advisor models that you can't easily do alone

SIMPLE IRA holders approaching RMD age face an interplay of rules that is straightforward on paper but complex to optimize in practice:

• Whether to separate from service before the current tax year ends to unlock QCD eligibility for next year — and whether the IRMAA and tax savings from QCDs exceed the value of additional contributions and employer match if you continue working
• Whether the 2-year restriction affects your rollover timeline, and whether consolidating with a rollover IRA before RMD age makes sense given your investment lineup
• How the SIMPLE IRA's growing balance (still receiving employer contributions) interacts with Social Security taxation, IRMAA surcharges, and the pre-RMD Roth conversion window — specifically whether converting some of the SIMPLE to Roth (after the 2-year window) reduces lifetime tax cost
• Whether a partial Roth conversion strategy in your early 70s, before RMDs begin, reduces the 20-year tax burden more than taking the full accumulation as taxable RMDs
• Coordinating SIMPLE IRA distributions with other income (Social Security, pensions, taxable investment accounts, rental income) to stay below IRMAA thresholds

For small business employees and owners with large SIMPLE IRA balances, the pre-RMD window is the most valuable planning period. See our Roth conversion sizing calculator, IRMAA planning guide, and strategies to reduce RMDs for how these pieces fit together.

Sources

1. IRS — Retirement Topics: Required Minimum Distributions (RMDs). SECURE 2.0 Act § 107: RMD age 73 for those born 1951–1959; age 75 for those born 1960+. SECURE 2.0 § 601: Roth contributions now permitted in SIMPLE IRA plans starting 2023; Roth SIMPLE IRA balances have no lifetime RMD requirement. // Source: IRS.gov RMD rules, 2026
2. IRS — RMD Comparison Chart: IRAs vs. Defined Contribution Plans. SIMPLE IRAs are IRAs for RMD aggregation purposes: SIMPLE IRA balances pool with all traditional IRAs and SEP-IRAs; combined RMD total can be satisfied from any IRA, SEP-IRA, or SIMPLE IRA in the pool. 401(k), 403(b), and 457(b) plans do not aggregate with IRAs.
3. IRS — SIMPLE IRA Plan. IRC § 408(d)(3)(G): During the 2-year period beginning on the date of the first contribution to a SIMPLE IRA, the SIMPLE IRA may only be rolled over to another SIMPLE IRA, not to a traditional IRA, SEP-IRA, or employer plan. After the 2-year period, a SIMPLE IRA may be rolled to any eligible retirement plan. // Source: IRS SIMPLE IRA Plan rules, 2026
4. IRS Publication 590-B — Distributions from Individual Retirement Arrangements. IRC § 408(d)(8)(B): QCD exclusion does not apply to a distribution from a SIMPLE IRA if employer contributions are made to the SIMPLE IRA agreement for the plan year ending with or within the owner's taxable year in which the distribution is made. 2026 QCD annual limit: $111,000 per individual (indexed for inflation). // Source: IRS Pub 590-B 2025 (applying to 2026)
5. IRS — IRA Required Minimum Distributions. T.D. 10001 (July 2024): finalized inherited IRA annual RMD rules for non-EDB beneficiaries under the 10-year rule when the decedent had passed the Required Beginning Date; beneficiaries must take annual distributions in years 1–9 with full balance by year 10. Single Life Expectancy Table used for annual calculation. Inherited SIMPLE IRAs follow the same inherited IRA rules as traditional IRAs.

SIMPLE IRA RMD rules verified against IRS Publication 590-B, IRS SIMPLE IRA plan guidance, and SECURE 2.0 provisions, May 2026. 2026 SIMPLE IRA employee contribution limit $17,000; catch-up (age 50–59 and 64+) $3,500; super catch-up (ages 60–63) $5,250 per IRS Rev. Proc. 2025-43 and SECURE 2.0 § 109. QCD limit $111,000 per IRS 2026 inflation adjustment. Individual situations vary — confirm plan-specific rules with your custodian or tax advisor.