Business Planning

Business Retirement Plans: Save More, Pay Less in Taxes

401(k), SEP IRA, SIMPLE IRA, and defined benefit plans — structured to maximize your retirement savings as a business owner.

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Business owners have access to retirement savings vehicles that can be significantly more powerful than what's available to W-2 employees. A solo 401(k), for example, can allow contributions of up to $69,000 in 2024 — far more than the employee-only limit.

The right plan depends on how many employees you have, how much profit the business generates, and what your goals are. Some structures are simple and self-administered. Others require third-party administrators but offer greater flexibility and higher contribution limits.

The Blueprint walks through the main plan types, when each makes sense, and how to think about the tradeoffs — including whether a defined benefit plan might be appropriate for a highly profitable business with a small team.

What you need to know

Solo 401(k)

Available to self-employed individuals with no full-time employees. Allows contributions as both employee ($23,000 in 2024) and employer (up to 25% of compensation), for a potential total of $69,000. Roth option available.

SEP IRA

Simplified Employee Pension — easy to set up and administer. Allows employer contributions of up to 25% of compensation per employee, max $69,000. Straightforward but less flexible than a 401(k), and no Roth option.

SIMPLE IRA

Designed for businesses with up to 100 employees. Employees contribute via payroll, and the employer must either match (up to 3%) or make a fixed 2% contribution. Lower administrative burden than a 401(k).

Defined benefit plans

For high earners looking to shelter large amounts, a cash balance or traditional defined benefit plan can allow much higher contributions — sometimes $200,000+ per year. More complex, but powerful for the right situation.

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