Bottom Line Up Front

• You can contribute to both a SIMPLE IRA and a 401(k) in the same year, but your employee salary-deferral limit is shared across both plans — for 2026, that combined cap is $24,500, not two separate maximums. 
• Business owners cannot simply run both plans side by side — to switch from a SIMPLE IRA to a 401(k), the SIMPLE IRA must be terminated, either at year-end or mid-year under SECURE 2.0’s safe harbor 401(k) replacement rules. 
• A mid-year switch comes with a prorated deferral limit, meaning if you’ve already contributed heavily to the SIMPLE IRA, your remaining 401(k) employee deferral room for that year will be reduced — though employer contributions can help close the gap toward the $72,000 annual additions limit. 

Yes, you can contribute to a SIMPLE IRA and a 401(k) in the same year if you are eligible for both plans, such as when you change jobs, work for two unrelated employers, or have a job plus self-employment income. But there’s a catch: your employee salary-deferral limit is shared across both plans. You do not get to contribute to the full SIMPLE IRA employee limit and the full 401(k) employee limit separately. 

For 2026, the general employee deferral limit for a traditional or safe harbor 401(k) is $24,500, and the general SIMPLE IRA salary-reduction limit is $17,000. The IRS states that if you participate in a SIMPLE IRA and another employer plan in the same year, the total salary-reduction contributions you make across all such plans are limited to $24,500 for 2026, before any applicable catch-up contributions. 

Can a Business Owner Switch from a SIMPLE IRA to a 401(k) and Contribute in the Same Year?

For many small business owners, a SIMPLE IRA is a good starter retirement plan. It is relatively easy to set up, inexpensive to operate, and generally does not require the employer to file an annual Form 5500. But once your business is profitable enough that you want to contribute much more for yourself, the SIMPLE IRA can start to feel limiting. The 401(k), especially when paired with employer profit-sharing contributions, can offer a much higher ceiling. 

For 2026, the annual 401(k) employee elective deferral limit is $24,500, while the total annual additions limit for a 401(k) or profit-sharing plan is $72,000, not counting catch-up contributions. By comparison, the general SIMPLE IRA employee salary-reduction limit is $17,000 for 2026, with required employer contribution typically limited to a 3% match or a 2% nonelective contribution formula. 

So, can you contribute to a SIMPLE IRA and a 401(k) in the same year if you own the business  and want to switch plans? The answer is: sometimes, but not by simply running both plans side by side. 

The key point to make the switch from a SIMPLE IRA to a 401(k) is that the 401(k) must replace the SIMPLE IRA, you cannot simply add a 401(k) on top of an existing SIMPLE IRA. 

How Do You Switch from a SIMPLE IRA to a 401(k)? 

There are two practical ways to move from a SIMPLE IRA to a 401(k): 

The first is the clean year-end switch. You discontinue the SIMPLE IRA effective January 1 and start the 401(k) for the new plan year. The IRS says that, for a standard SIMPLE IRA termination, you notify employees before November 2 that the SIMPLE IRA will be discontinued effective the following January 1, notify the financial institution and payroll provider, and keep records of your actions. 

But let’s say you add a few big customers, and you want to start getting the bigger tax deduction this year. The second option is a mid-year replacement. Under SECURE 2.0 for plan years beginning after 2023, an employer can terminate a SIMPLE IRA during the year if it establishes and maintains a safe harbor 401(k) to replace it – it will require a 30 day notice vs the traditional 60 day notice for a January 1st plan change. In that case, the safe harbor 401(k) is treated as an exception to the normal rule that prevents an employer from maintaining both a SIMPLE IRA and another plan in the same calendar year. 

For a business owner whose main goal is to contribute the full $72,000 between employee and employer contributions, the cleanest planning route is usually to terminate the SIMPLE IRA at year-end and start the 401(k) on January 1. For some it may be worth the extra effort to make the switch immediately and take advantage of the added contributions and tax deductions a 401(k) offers. 

Want to Upgrade Your SIMPLE IRA to a 401(k) Plan in 2026?

What Happens if You Switch from a SIMPLE IRA to a 401(k) Mid-Year?

A mid-year switch is possible, but it is not as simple as saying, “I contributed to the SIMPLE IRA for part of the year, now I’ll contribute the full 401(k) maximum.” 

When a SIMPLE IRA is replaced mid-year by a safe harbor 401(k), the IRS requires the employee deferral limit for the transition year to be calculated using a weighted formula. The formula prorates the SIMPLE IRA limit for the part of the year the SIMPLE IRA was in effect, prorates the 401(k) limit for the part of the year the safe harbor 401(k) was in effect, and then subtracts any SIMPLE IRA salary-reduction contributions already made that year.

For example, assume the SIMPLE IRA is in place from January 1 through June 30, 2026, and the safe harbor 401(k) starts July 1. Ignoring catch-up contributions, the weighted employee deferral limit would be approximately:

This creates a combined transition-year deferral limit of about $20,781, minus whatever you already deferred into the SIMPLE IRA.

If you had already deferred the full $17,000 into the SIMPLE IRA before the switch, your remaining employee deferral room for the 401(k) would be only about $3,781 in this example.

That does not necessarily mean the $72,000 goal is impossible, but it does mean the employee-deferral portion may be smaller, and more of the contribution would need to come from the employer side if allowed. In addition, a mid-year 401(k) can create short-plan-year or short-limitation-year issues, and the IRS notes that the Section 415 annual additions limit may need to be prorated in a short limitation year depending on how the plan is drafted.

Key Takeaways: Moving a SIMPLE IRA to a 401(k)

Switching from a SIMPLE IRA to a 401(k) can be an effective way for business owners to increase retirement contributions and potentially generate larger tax deductions. However, the transition must be handled carefully. In most cases, you cannot simply add a 401(k) on top of an existing SIMPLE IRA without first terminating or replacing the SIMPLE IRA according to IRS rules. 

While a 401(k) generally involves more administration and recordkeeping than a SIMPLE IRA, the increased contribution flexibility may make the additional complexity worthwhile. If you’re considering making the switch, it’s important to coordinate with your retirement plan advisor, TPA, payroll provider, and tax professional to ensure the transition is completed correctly and to maximize available contribution opportunities. 

Frequently Asked Questions

Can I max out both a SIMPLE IRA and a 401(k) in the same year?
No. The employee salary-deferral limit is generally shared across both plans, so you cannot contribute the full employee maximum to each separately.

Can I have a SIMPLE IRA and a 401(k) at the same time?
Generally, an employer cannot maintain both plans simultaneously unless a specific exception applies, such as the SECURE 2.0 mid-year replacement rules.

Is it worth switching from a SIMPLE IRA to a 401(k)?
For many growing businesses, a 401(k) provides significantly higher contribution opportunities and greater plan design flexibility, though it comes with additional administrative responsibilities.

The post Can I Contribute to a SIMPLE IRA and 401(k) in the Same Year? appeared first on Odyssey Advisors, Inc.

Bottom Line Up Front

• Medicare costs are climbing – Part B premiums are projected to rise over 11%, and Medigap plans could see an 8-12% increase.
• Social Security COLA will be modest – Expect a 2.6% to 2.8% adjustment, adding around $50/month on average, which will be largely offset by increased Medicare premiums.
• High-income retirees may pay more – IRMAA surcharges are expected to rise slightly, so income planning now could help avoid higher costs later.

It’s almost August, which means fall, the holidays, and the new year are just around the corner. Time really does fly. As 2025 winds down, many retirees and soon-to-be retirees are already looking ahead to 2026, especially when it comes to Medicare costs and Social Security benefits.

While official numbers won’t be finalized until later this year, current projections and historical trends give us a pretty good idea of what’s coming.

Here’s a breakdown of what to expect in 2026, and a few planning tips to keep in mind.

Medicare Part B Premiums – 2026 Outlook

The standard Medicare Part B premium is projected to increase from $185.00 in 2025 to approximately $206.00 – a jump of $21.50 or about 11.6%.

For beneficiaries with higher incomes, IRMAA (Income-Related Monthly Adjustment Amount) surcharges are also expected to rise slightly, by an estimated 1.04% on average, according to the latest Medicare Trustees’ Report.

What this means:

• Standard Part B enrollees could pay significantly more in 2026.
• Higher-income individuals may face even greater increases due to rising IRMAA backets.

Medigap (Medicare Supplement) Premium Trends

While 2026 Medigap premiums haven’t been set yet, they typically increase annually in response to changes in Part B premiums, medical inflation, and other cost drivers.

With a projected 11-12% increase in Part B, expect Medigap plans (like Plan G or Plan N) to rise by 8-12% on average. Factors like age, gender, state, and insurer all influence final rates.

Pro tip: If you’ve had the same Medigap policy for several years, it’s worth comparing current rates with other providers or considering a different plan letter. For a look at your local Medigap plan rates, visit Medicare.gov.

Social Security Benefits & COLA – 2026 Projections

In 2025, Social Security recipients received a 2.5% cost-of-living adjustment (COLA), increasing the average monthly benefit to $1,976 for retired workers.

For 2026, most projections place the COLA between 2.6% and 2.8%, depending on inflation trends:

• 2.6% COLA: Benefit increases to ~ $2,027/month
• 2.8% COLA (optimistic): Benefit increases to ~ $2,031/month

That’s roughly a $50/month increase, on average. You can also follow updates from the Senior Citizens League as they track expected COLA changes.

But here’s the catch:

With Part B premiums also rising, many retirees may see little or no net increase in their Social Security check after deductions. In some cases, the higher premiums could completely offset the COLA increase.

A Decade of Medigap Rate Increases (2015 – 2025)

Looking back can help us see where we’re headed. Here’s how monthly Medigap premiums for Plan G (for a 65-year-old male) have trended:

• 2015: $120 – $175
• 2020: $160 – $220
• 2025: $200 – $260

Plans F and G, the most popular options, have historically increased 5-10% per year, and the graphic (shown above) confirms a steady upward trend, particularly after 2020.

2026 at a Glance: Key Numbers

Key Takeaways for 2026

In 2026, Medicare Part B premiums are expected to rise sharply (over 11%), marking one of the most significant annual increases in recent years. Medigap plan premiums are likely to follow, with projected increases in the 8-12% range depending on plan type and location. Meanwhile, the Social Security cost-of-living adjustment (COLA) is estimated to come in around 2.6% – 2.8%, offering retirees a modest monthly benefit increase of about $50.

Unfortunately, that boost may be entirely offset by the higher Medicare premiums, leaving many beneficiaries with little to no net gain. For higher-income retirees, income-related surcharges (IRMAA) will also tick upward, making careful income planning all the more important.

What You Can Do Now

• Review your Medigap coverage. Shop around if your insurer raises rates significantly.
• Understand IRMAA thresholds. Remember, IRMAA surcharges are based on your modified adjusted gross income (MAGI) from two years prior, meaning 2024 tax returns will impact your 2026 Medicare premiums.
• Track COLA updates. The official 2026 COLA announcement comes in October 2025; stay tuned.

If you’d like approximate state-specific costs or comparisons between Medigap plans (e.g., Plan G vs. Plan N), you can reach out to us. We’re happy to help you break it all down.

The post What to Expect for Medicare and Social Security in 2026 appeared first on Odyssey Advisors, Inc.

Business owners have enough day-to-day stress. The last thing you want to worry about is managing a retirement portfolio.

Your future well-being depends on this kind of long-term planning, and it is important to have your needs catered to in a customized way. At Odyssey Advisors, we pride ourselves on this level of customer attention. We want you to feel secure. Instead of offering “one size fits all” retirement planning advice, we listen to your concerns and desires so we can best handle all of your retirement needs, ranging from compliance testing to plan documentation. We provide a complimentary plan design, review, and discussion to all prospective clients.

Our expertise in the retirement plan arena can save you many thousands of dollars compared to your current plan design.  Additionally, the review continues on an ongoing basis to ensure that the plan design continues to meet your needs. This also enables us to suggest alternatives where appropriate.

Odyssey can handle everything from discussing the design with the plan sponsor to completing the required documentation, including the Summary Plan Description. The plan includes a description of the benefits, rights, and responsibilities defined by the coverage.

Let Odyssey customize your retirement planning, freeing you up to concentrate on making your business thrive today. Let us pave the way for your tomorrow.

The post Expert 401(k) Customization for Your Retirement appeared first on Odyssey Advisors, Inc.