Do you have a business and are worried about your retirement? There are currently several types of retirement planning for small business owners that you can use to retire.
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We have searched for the best retirement planning for small business owners, which can be used both for you (the business owner) and can also be used in your company as benefits for your employees.
We will cover details about each of the retirement planning for small business owners, highlighting the fees, main rules and requirements, as well as the monthly costs that you will have to bear.
1. SEP-IRA
For those who are self-employed, have a small business or earn income as a freelancer, the SEP-IRA (Simplified Employee Pension) is the best alternative available on the market.
This type of account allows entrepreneurs to pay month by month, in a flexible way, while still having tax benefits and total control over their investments.
Main rules and contribution limits
The rules vary depending on the option you fall into, let’s see:
- Contributions for self-employed workers and companies: allows contributions of up to 25% of total compensation or a maximum of US$69,000 in 2024 and US$70,000 in 2025. On the other hand, for self-employed workers, the limit is 20% of net income, already considering tax deductions.
- Individual contributions and tax deductions: Individuals can contribute to a traditional SEP-IRA up to US$7,000 (general rule) or US$8,000 for those who are 50 or older (data from 2025). The contribution is made directly on income tax and is not mandatory.
Addition, it is now possible for employers to offer Roth contributions to SEP-IRAs. However, there are brokerages, such as Vanguard, that do not yet have this option.
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In summary, SEP-IRA is a great viable option, especially if you want to guarantee your assets in the long term. In addition to having tax benefits and ease of control over your retirement plan.
2. IRA (Fidelity Investments) – Retirement planning for small business owners
The SIMPLE IRA (Employee Savings Incentive Plan) is another alternative for self-employed individuals and entrepreneurs. We will discuss the option provided by Fidelity Investments that simplifies this process for many Americans.
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We must understand who is eligible for the SIMPLE IRA:
- Business owners: in this case, the employer must have a maximum of 100 employees and cannot have another retirement plan.
- Qualified employees: employees of the company that purchases the SIMPLE IRA can also take advantage of the plan. However, they must receive compensation of more than US$5,000.00.
In addition, the employer can make an additional non-elective contribution, which limited to 10% of the US$5,000.00 (the base is the employee’s salary).
The SIMPLE IRA is an excellent solution for small companies that want to offer long-term benefits to employees, guaranteeing tax incentives and facilitating preparation for retirement.
3. 401(k) Self-Employed (Fidelity Investments)
In principle, self-employed individuals and businesses with a single owner can use the 401(k) plan for retirement planning. As a rule, this plan allows for generous contributions and tax benefits, ensuring a more secure financial future.
Who can participate?
- Self-employed individuals with no employees;
- Businesses with only one owner;
- Partnerships with no other employees;
- Spouses of the owner (must be an employee of the company).
How much will you need to contribute? To do this, check the table below, the amount considered for the estimate annual and was taken directly from the Fidelity brokerage website. Let’s see:
| Type of Contribution | 2024 | 2025 |
| Employee salary deferral | $23.000 | $23.500 |
| Additional for age 50-59 and 64+ | $7.500 | $7.500 |
| Additional for age 60-63 | $7.500 | $11.250 |
| Employer profit sharing | $69.000 | $70.000 |
The deadline for opening the plan is the same as the deadline for filing your taxes. Therefore, it is worth checking with an expert in the field to be sure of the deadline, according to your case.
In short, the 401(k) is an excellent alternative for flexibility and a simplified retirement plan.
4. Personal Defined Benefit Plan (Schwab)
Schwab’s Personal Defined Benefit Plan designed for self-employed individuals and small business owners who thinking about saving for retirement. It’s worth noting that this plan is expensive, which can be detrimental to your daily savings. Its main features are:
- Personalized financing proposal: The plan varies according to each case, taking into account your retirement income goal.
- High contributions and tax benefits: the contribution is 100% of the tax burden you pay. The IRS limit repeated.
- Guaranteed income in the future: the plan made in a predetermined manner. This means greater financial security in the long term.
- Rates: from US$ 2,250, in addition to service fees.
It is important to note that it is exempt from brokerage commissions. Because of this, many investors have taken advantage of this plan. It is also a great alternative for those thinking about financial success. Therefore, this plan is ideal for those seeking efficiency in the construction of the renovation, with high contributions and planning. If you are self-employed or the owner of a small business, it is undoubtedly an alternative to be considered, thinking about financial success in retirement.
Conclusion (Retirement planning for small business owners)
There is no doubt that one of the options mentioned will help you with retirement planning for small business owners. There are options for self-employed individuals, owners of established companies, or those looking to make individual contributions.
The important thing is to consider the options, checking exactly which option best suits your current situation. We recommend that you use one of the options mentioned in conjunction with savings and investment practices with the aim of maximizing your results in the long term.