Solo 401(k) features

Opportunity to maximize business deductions
Generous contribution limits
Roth contributions available
IRA rollover flexibility upon termination
Ability to take out a loan or consolidate other retirement accounts
Business owners can contribute to a Solo 401(k) both as the employee and the employer
A spouse can be added to the payroll too

SEP IRA features

Simplified Employee Pension (SEP) Plan
Tax-deferred growth
All contributions 100%, immediately vested
No plan level restrictions on withdrawals (IRA rules apply)
No administrative costs
Available for any business type, including non-profit and government
Easy to set up and maintain

SIMPLE IRA features

Savings Incentive Match Plan for Employees (SIMPLE)
Tax-deferred growth
Available for any business type, including non-profit and government
Mandatory employer match of dollar for dollar up to 3% of compensation or 2% non-elective contribution
Reduced match is available in two out of five years
No employee minimum age requirement
Low-maintenance – minimal employer involvement required
No cost to establish
Helps attract and retain good employees
No government forms to file; no annual reporting

By offering a retirement plan, small businesses offer up a key employee benefit to existing employees, which helps with retention, and also helps in recruiting new talent in a competitive marketplace. Owners benefit from opportunities to maximize their contributions or to reinvest in their businesses.

Instant Insights /

Solo 401(k)s, SIMPLE IRAs and SEP IRAs: Choosing the right plan for a small business

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