Common Retirement Plans For Small Business Owners

As a business owner, you have many options when it comes to establishing a retirement plan for yourself and your employees. However, selecting the right plan or combination of plans can be a daunting task.

To help you make an informed decision, we have created a chart that outlines the most commonly adopted retirement plans. When reviewing this chart, it is important to consider your unique situation, including your retirement savings goals, your desire to incentivize employees, your budget for administrative costs, and your tax planning needs.

Some of the plans highlighted in the chart include:

Simplified Employee Pension (SEP) Plan: A plan that allows employers to contribute to their own and their employees' retirement accounts. It is easy to set up and has low administrative costs.

Simple IRA Plan: A plan that is easy to set up and maintain, and allows employees to contribute to their own retirement accounts. Employers can choose to match employee contributions or make non-elective contributions.

401(k) Plan: A plan that allows employees to contribute a portion of their salary to their retirement accounts on a pre-tax basis. Employers can choose to match employee contributions and can also contribute their own funds. These plans can be complex and expensive to set up and maintain, but offer higher contribution limits.

Defined Benefit Plan: A plan that provides a guaranteed retirement benefit based on an employee's salary and years of service. This plan can be expensive to set up and maintain, and requires actuarial calculations to determine contributions.

Reviewing this chart and discussing your goals with a financial advisor can help you select the right retirement plan or combination of plans for your business.

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Robert J. Pyle, CFP®, CFA, AEP® founded Diversified Asset Management, Inc., in 1996 to provide personalized, comprehensive wealth management services to successful individuals, families, single women, and business owners. His specialty is addressing the complex financial needs of self-employed professionals, corporate executives, and small-business owners. Our disclosure can be found here. The views, opinion, information, and content provided here are solely those of the respective authors, and may not represent the views or opinions of Diversified Asset Management, Inc. Diversified Asset Management, Inc. cannot guarantee the accuracy or currency of any such third party information or content, and does not undertake to verify or update such information or content. Any such information or other content should not be construed as investment, legal, accounting, or tax advice.