Brittney Castro is CFP® at Perennial Financial Services (http://perennialfinancialservices.com/). In this video she goes over different retirement plans that small businesses can use.
- SEP IRA: simple to setup but requires contribution matching
- Simple IRA: easy to setup but has a contribution cap & matching
- 401k/profit sharing: allows some flexibility but requires elective contributions
- Individual 401k: easy to setup & ideal for owner only businesses
- Defined benefit plans: complex setup & best for max owner savings
As a business owner, there are tons of retirement plans available to you. So you want to do some research just to determine which plan is right for you based on your business structure, but also based on your personal retirement goals.
Most commons one would be a SEP IRA, which is pretty simple to setup. The only problem with this or the disadvantage is, whatever you contribute into the SEP IRA as a business owner, you have to make sure to contribute in equal amount for any employees that you have.
Then you have a Simple IRA, which is again, easy to setup and there is a contribution capital in that, and also you do have to make contributions to that type of account for any employees that you have.
You have your 401k or Profit Sharing, which is probably the most common plan out there. This allows you some flexibility as an employer because you can choose whether you want to make match contributions or not, but at least you give your employees the option to save into their own retirement plan.
You also have the Individual 401k which is really easy to setup and meant for owner only businesses and their spouses basically.
And also, you have the Defined Benefit Plans, which is a little bit more complex, takes some time to setup. But actually, sometimes this work very well for business owners who want to maximize their own retirement savings.
So as you can see, there are a few options here that you have as a business owner. And again, you just want to make sure that you're choosing the right retirement plan based on your business, your business goals, how many employees you have, your own retirement goals, and you probably want to review that on a regular basis because your business is going to go through different stages and you want to continue to make sure that you have the right retirement plan in place for you.