Retirement Plans for Business Owners
Business owners have access to retirement plans that allow far larger contributions than an individual IRA, and the choice among them is one of the more valuable planning decisions available. The right plan depends on three things: whether you have employees, how much you want to save, and how your entity type defines compensation.
If you have no employees, the two most common choices are the solo 401(k) and the SEP IRA. The solo 401(k) has two contribution components and often allows more at moderate income, plus Roth and loan features. The SEP is simpler and can be opened later, but it requires equal-percentage contributions for eligible employees if you hire. The head-to-head comparison turns those differences into decision points, including the effect on backdoor Roth strategies.
Owners with a team have other tools. The SIMPLE IRA offers a low-cost plan with a required employer match or contribution, subject to a firm adoption deadline. High-income owners who want to save far more than a 401(k) allows sometimes explore a cash balance plan, which is powerful but comes with actuarial administration and a real funding commitment.
Entity type changes everything about how contributions are calculated. Sole proprietors and partners use net earnings from self-employment. S-corp owners use W-2 wages, which ties the retirement decision to the salary decision. Retirement plans for S-corp owners explains how to balance payroll tax, salary, and contribution capacity.
Finally, health savings accounts sit alongside retirement plans as a tax-advantaged tool for owners with qualifying health plans. See HSAs for business owners, and pair it with the self-employed health insurance deduction.
All contribution limits adjust each year, so we state figures only by year and encourage you to confirm current amounts. Deadlines matter as much as limits, so calendar them alongside the rest of your tax deadlines. Plan documents and administration should be handled with a qualified plan provider.
All 7 guides in this topic
- Solo 401(k) Guide: Contribution Limits, Eligibility, and Setup for Owners Without EmployeesHow a solo 401(k) works for self-employed owners and S-corp owners, the employee and employer contribution components, 2025 limits, deadlines, Roth options, and plan administration duties.
- SEP IRA Guide: A Simple Owner Retirement Plan and Its Trade-OffsHow a SEP IRA works for self-employed owners and small businesses, the contribution formula, deadlines, employee coverage requirements, and when a SEP is a good or poor fit.
- Solo 401(k) vs SEP IRA: Which Fits Your Income, Entity, and Plans to Hire?A head-to-head comparison of the solo 401(k) and SEP IRA on contribution capacity, deadlines, Roth options, loans, employees, administration, and specific scenarios for owners.
- SIMPLE IRA Guide: A Practical Retirement Plan for Small EmployersHow a SIMPLE IRA works for small businesses with employees, including eligibility, employer match and nonelective contribution options, deadlines, limits, and trade-offs against a 401(k).
- Cash Balance Plans for Business Owners: How They Work, Costs, and Who They FitAn overview of cash balance pension plans for small business owners, including contribution ranges by age, actuarial requirements, funding commitments, combining with a 401(k), and risks.
- Retirement Plans for S-Corp Owners: How W-2 Salary Shapes Your ContributionsHow S-corp owners can use solo 401(k), SEP, SIMPLE, and cash balance plans, why contributions are based on W-2 wages, and how to balance salary, payroll tax, and retirement savings.
- HSAs for Business Owners: Eligibility, Limits, and Entity-Specific RulesHow health savings accounts work for self-employed owners, partners, and S-corp shareholders, including eligibility with a high-deductible plan, contribution rules, the triple tax advantage, and reporting pitfalls.
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