Important Retirement Options for Small Business Owners Integrity Financial Planning

Retirement is different for folks who are running a small business. Your retirement is something that isn’t set up by an employer, and you often must manage it on your own. And in some cases, business owners have to manage options on behalf of their employees too.

If you are running your own business and are interested in setting yourself up for retirement, contacting a financial advisor can be a great idea. A financial advisor can help guide you through all possible options and help you to understand how those options will affect you and your business.

One of those options might be to set up a defined contribution plan such as a 401(k).[1] A 401(k) will allow you to set aside some of your assets into a tax-advantaged account that can have market exposure and the potential to grow over time.[2] An employer’s contributions to these accounts are tax-deductible with certain limitations.[3]

Alternatively, small business owners can set up a SIMPLE IRA, an acronym for Savings Incentive Match Plan for Employees.[4] This is a tax-advantaged account, much like a 401(k).[5] With this account, you will not pay taxes on the money that is contributed to this account until you withdraw it. Also, like a 401(k), an employer’s contributions to these accounts are tax-deductible with certain limitations.[6] One of the main differences between a SIMPLE IRA and a 401(k) is that a SIMPLE IRA does not allow as much saving as a 401(k).[7]

In essence, the decision between a SIMPLE IRA and 401(k) boils down to a preference for simplicity versus flexibility for employers. The appropriately titled SIMPLE IRA offers a more uncomplicated approach among the two options. It boasts quick setup, hassle-free maintenance, and affordability. However, employers with staff members must contribute to the staff’s accounts. While setting up and maintaining a 401(k) plan can be more intricate, it allows for greater contribution limits and provides employers with increased autonomy in determining if and how they wish to contribute to employee accounts.[8]

These are not the only options for small business accounts. There are many other options that are useful for different situations. As you can see, retirement planning for a small business is a complicated issue. If you are looking for someone to help you to design a retirement plan that works best for you, contact our advisors today to set up a complimentary review of your financial situation.


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This article is designed to provide general information on the subjects covered. Pursuant to IRS Circular 230, it is not intended to provide specific legal or tax advice and cannot be used to avoid penalties or to promote, market, or recommend any tax plan or arrangement.