The Top Three Retirement Plans for Small Business

Are you a small business owner? Here is a brief overview of three main types of tax-deferred retirement plans to consider, which are suitable for self-employed individuals, independent contractors, 1099 earned income recipients, LLCs, incorporations, partnerships, and sole proprietors.

Individual 401k

Also known as a Solo 401k, this plan is one of the most popular choices for those who are self-employed. You are allowed to borrow against it.

Who is it for? Sole Proprietors
Benefits: Allows for the highest contribution amount
Max. contribution:
Salary deferrals: up to $16,500; for those over 50, it is $22,000

Employers contributions: up to 25% of compensation total must not exceed $49,000; or $54,500 if age 50 or more

Annual fees: About $20
Plan setup deadline: December 31

SEP-IRA

Simplified Employee Pension Plans are also a popular choice. These plans have very little administration and a tax filing is not required. You cannot borrow against a SEP-IRA.

Who is it for? Self-employed individuals and small business owners
Benefits: Inexpensive, easy to set up and maintain
Max. contribution: 25% of compensation or $49,000 (whichever is less)
Annual fees: About $20
Plan setup deadline: Company’s tax filing deadline

SIMPLE IRA

A Savings Incentive Match Plan for Employees is not as complex as a 401k, but offers more than a SEP-IRA.

Who is it for? Self-employed individuals; small businesses with up to 100 employees
Benefits: Salary deferral plan with both employer and employee contributions
Max. contribution:
Salary deferrals: up to $11,500 per year

Employer matching: dollar-for-dollar match of salary deferrals, up to 3% of participants compensation – or – employer nonelective: 2% of each eligible employee’s compensation

Annual fees: About $20
Plan setup deadline: Anytime prior to October 1 of each calendar year
For more in information please visit:

Fidelity Retirement Comparison Chart

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