Choosing a Retirement Plan
The best retirement plan is the one that fits your business.
What This Means
What’s the best retirement plan for a business owner?
The answer is: It depends.
There isn’t one retirement plan that’s best for every business owner. The right choice depends on your income, business structure, number of employees, retirement goals, and how much complexity you’re willing to manage.
In this video, I walk through a real client example. He was a 42-year-old landscape contractor operating as an S-corporation with six employees. He wanted to save more for retirement, offer a benefit to his employees, and keep things simple.
For his situation, a SIMPLE IRA was the right fit. It allowed him to contribute more toward retirement, provide an employee benefit, and avoid much of the administrative complexity and ongoing costs associated with a traditional 401(k).
That doesn’t mean a SIMPLE IRA is always the best choice. Retirement plans should be tailored to your business and can change as your company grows. The goal isn’t finding the “best” retirement plan—it’s finding the one that best fits your situation.
Common Questions
Can I change retirement plans later?
Yes. As your business grows, your retirement plan can evolve. Many business owners start with one plan and transition to another as their income, workforce, or goals change.
Is there a limit on how many employees can participate in a SIMPLE IRA?
Yes. A SIMPLE IRA is generally available only to businesses with 100 or fewer employees who earned at least $5,000 in the prior year. If your business grows beyond that limit, you may eventually need to transition to another retirement plan.
Why would I choose a SIMPLE IRA over a 401(k)?
Do I have to make employer contributions for every employee?
Remember This:
The “best” retirement plan depends on your situation.