What Retirement Options Are Available For Business Owners?

Posted on January 18, 2022

  • When it comes to retirement planning for small business owners there are a lot of options available which can be confusing.

    There is no one strategy that is perfect for everyone. Over the course of the next few weeks, we are going to go through the various retirement options that are available to business owners. We are going to break them down and hopefully help you get a better idea of what may be right for your business.

    If you would like to get started on setting up a retirement plan and need connection you can email us, submit the form below, or visit our partners site here.

    What Is Your Goal With a Retirement Plan?

    Before you think about putting a retirement plan in place you need to think about what your goal is by starting one. 

    • Employer looking for their own retirement or tax savings.
    • Help recruit and retain high quality employees. 
    • Can be both!

    What Retirement Plan Options Are Best For Businesses With No Outside Employees?

    If you have no employees you will likely want to focus on one of the two options below.

    • SEP IRA
      • Allows the owner to contribute up to 25% of your income.
      • All contributions are pre-tax.
      • Employee contributions are NOT allowed. (employer must do same amount of contribution as their own)
    • Solo 401k (AKA Individual 401k)
      • Will allow the owner to contribute 100% of your income up to a certain point.
      • Allows the company to match your contribution.
      • Choice of Pre-tax or Roth Contributions.

    What Retirement Plan Options Are Best For Businesses With Employees?

    When you have employees outside of the owners you will want to look into the following options.

    • Payroll Deducted IRA
      • Gives your company the feel of a retirement plan for your employees, even if you’re not quite ready for a 401k.
      • Allows your employees to contribute towards retirement straight out of their paycheck.
      • Choice of Pre-tax or Roth contributions.
      • Matching contributions from the employer are not required.
    • Traditional 401k
      • Allows the owner to mold the plan around the goals of the company.
      • Can create your own matching and vesting schedule.
      • Multiple Investment Options.
      • Both Pre-tax and Roth options inside the plan.
      • “Turn-key” matching and vesting options.
      • Pre-tax contributions only.
      • Your choice of employment qualification into the plan.
      • No administration costs.
    • Safe Harbor 401k
      • Allows the owner to maximize contributions without relying on high employee participation.
      • “Turn-key” matching and vesting options for easy compliance testing.
      • Both Pre-tax and Roth Options inside the plan.

    This is just the first blog in a series that we are doing on retirement options. In future posts we will be digging deeper into all of the strategies above and discussing them so you can have a better idea of what you want to implement in your business.

    As mentioned, if you are looking for professional advice and help in this area we work directly with Life Inc Retirement Services. Email us or submit the form below and we can get an introduction out to you. You can also go directly to their site here and setup a call and go through a retirement plan evaluator. 

    If you don’t have an accounting or tax advisor (or you need assistance with anything discussed), click here to book your complimentary strategy session with IncSight.

Related Posts:

Kiddie Tax Explained: A Comprehensive Guide for Parents

Kiddie Tax Explained: A Comprehensive Guide for Parents

Parents need to be aware of the Kiddie Tax, a provision that was instituted in the United States to prevent parents from taking advantage of their children's tax-free status. The tax affects minors’ unearned income and can have significant financial consequences for...

You may also like:

The result?
You’ll love how easy managing your business finances becomes!

Download your FREE copy of this eBook to see if you’re overpaying uncle Sam by 5 or 6 figures annually