Your Business Is Growing — Is Your Retirement?
This week’s insight sheds light on the retirement savings boom among small business owners.
It’s no secret that America boasts an enduring entrepreneurial spirit. Six years removed from perhaps the biggest financial risk-taking spark in modern history, the number of new business applications continues running hot. There are intended and unintended consequences. One such positive byproduct is the outright financial explosion in corporate retirement plans.
SEP-IRAs, SIMPLE IRAs, and solo 401(k)s were once small segments of the retirement savings landscape. It used to be that establishing such a plan was a burdensome process, involving ink signatures, notaries, and weeks of processing time. Then, once up and running, the paperwork and regulatory reporting were one headache after another.
Today, that’s all changed. An entrepreneur can open a solo 401(k) with a few clicks. SEP-IRAs are similarly simple to create (though ensuring proper plan administration and protection can still be complicated). While there are still tax-filing requirements (particularly if a plan’s value exceeds $250,000), being able to turbocharge your retirement savings to the tune of $72,000 per year in total contributions (2026) is appealing for many small business owners. The Roth feature is often available, too!
Gusto, a payroll administration platform popular with many small and remote firms, notes that the number of small-business employees has increased by nearly 6 million since 2019. A low-cost, easy-to-use, and owner-friendly 401(k)-type account is not just a benefit for the owner—the perk can also attract key talent.
While the labor market is nothing like it was five years ago, many industries still struggle to find and retain quality workers. Something like a solo 401(k) (also known as an individual 401(k)) can draw in potential employees who feel compelled to invest in their future—and chances are, those are the kinds of people you want on your team.
To help small businesses, Congress approved various tax credit programs in recent years, some of which are still active. Keeping costs low is critical to supporting retirement savings among the tens of millions of people employed at small- to medium-sized businesses.
For you as a business owner, it’s key to analyze which plan may be best for you, your family, your company, and your employees. It is also critical to understand all the options, plan for years or even decades, and make the best decision. That’s where a financial planner specializing in working with entrepreneurs comes into the picture.
They can take a holistic view, spot the risks and opportunities, and recommend the best approach. Not only is the decision made from the optimal dollar-and-cents perspective, but the peace of mind that comes from knowing you are doing the most good for yourself and those depending on you is invaluable.
