As a small business owner, you are completely responsible for your retirement planning. If you have employees, you may feel responsible for helping them plan for a successful retirement. The considerations and 澳洲幸运5官方开奖结果体彩网:retirement savings accounts that work for you should be paramount when plaꦑnning for both your retirement and that of your employees.💟

There are some traditional options other than using your small business to fund your retirement, such as IRAs and 401(k)s, that function as additional sources of retirement income other than 澳洲幸运5官方开奖结果体彩网:liquidating your small business. In this article, we explore some of the retirement plans available to small business oꦿwners.

Establish a SIMPLE IRA

The savings incentive match plan for employees is one retirement plan available to small businesses. This plan is commonly known as the 澳洲幸运5官方开奖结果体彩网:SIMPLE IRA, Employees can defer up to $16,000 of their salary using pretax dollars in 2024. That's an increase from the $15,500 limit in 2023. Individuals who are 50 or older can defer up to $19,500 in 2024 ($19,000 in 2023) by taking advantage of a $3,500 澳洲幸运5官方开奖结果体彩网:catch-up contribution.

The catch-up contribution remains at $3,500 in 2024, so the total that those who are 50 or older can defer is $19,500. However, employees who participate in other 澳洲幸运5官方ꦯ开奖结果体彩网:employer-sponsored retirement plans can contribute no more than $23,000 in all employer-sponsored plans combined (up from $22,500 in 2023). This includes 401(k), 403(b), and 澳洲幸运5官方开奖结果体彩网:profit-sharing plans.

Employers can match employee contributions to a SIMPLE IRA up to 3% of the employee’s compensation. Conversely, employers can contribute 2% of each eligible employee’s compensation up to $345,000 in 2024 ($330,000 in 2023). Employer contributions are tax-deductible. 

Set Up a SEP IRA

A simplified employee pension (SEP) is another type of 澳洲幸运5官方开奖结果体彩网:individual 💞retirement account (IRA) to which small business owners can contribute. In 2024, it lets employers make pretax contributions of up to 25% of the employee's income or $69,000 ($66,000 in 2023), whichever is less.

Like a SIMPLE plan, a SEP lets small business owners 澳洲幸运5官方开奖结果体彩网:make tax-deductible contributions on behalf of eligible employees, and employees won’t pay taxes on the amounts an employer contributes on their behalf until they take distributions from the plan when they retire.

Almost any small business can establish a SEP. It doesn't matter how few employees you have or whether your business is structured as a 澳洲幸运5官方开奖结果体彩网:sole proprietorship, partnership, corporation, or nonprofit. Each year, you can decide how much to contribute on behalf of your employees, so you aren’t locked into contributing if your business has a bad year. Business owners are also considered employees and can make employee contributions to their accounts.

The SEP plan is a better option🌃 for many small businesses because it allows for larger contribuꦺtions and greater flexibility.

Individual Ret✨irement Accounts (IRAs) and Solo 401(k)s

If you’re in a competitive field and want to attract the best talent, you might need to offer a retirement plan, such as the two described above. However, employers are not required to offer retirement benefits to their employees. If you don't, one way you can save for your retirement without involving your employees is through a Roth or traditional IRA. These options are available ꦦto anyone with emplo🌼yment income.

Roth IRAs let you contribute 澳洲幸运5官方开奖结果体彩网:after-tax dollars and take tax-free distributions in retirement while traditional IRAs let you contribute pretax dollars. Keep in mind, though, that you’ll pay tax on the distributions. The most you can contribute to an IRA in 2024 is $7,000, or $8,000 if you’re 50 or older. These limits are up from $6,500 and $7,500 respectively for the 2023 tax year. Another benefit is that you can also contribute to an IRA on your spouse’s behalf.

If your small business has no eligible employees other than your spouse, you can contribute to a 澳洲幸运5官方开奖结果体彩网:Solo 401(k). This type of plan can be opened at most online brokerage firms and requires an 澳洲幸运5官方开奖结果体彩网:employer♏ identification number (EIN) to enroll.

Develop an Exit Strategy for Your Business

It may seem strange that developing a 澳洲幸运5官方开奖结果体彩网:business exit strategy should be one of your first considerations when planning for retirement. But consider thi🐓s: the small business you spend your life building might become your largest asset.

If you want it to fund your retirement—and stop working—you’ll need to liquidate your investment. To prepare for the future (and eventual) sale of your business, it needs to be able to operate without you. It’s never too early to start thinking about how to accomplish that goal and about how to find the 澳洲幸运5官方开奖结果体彩网:best buyer for your small business. 

M💟arket conditions will affect your ability to sell your business. You might want to build flexibility into your retirement plan so you can sell your stake du🐲ring a strong market or work longer if a recession hits.

You definitely want to avoid a distress sale: One problem you’ll encounter if you waಌit until the last minute to exit your business is that your impending retirement will create the impression of a distress sale among potential buyers and you won’t be able to sell your company at a premiꦏum. 

The Bottom Line

Many small business owners say that they don't want to retire, or at least not retire fully. But even if you’re among the many small business owners who plan to keep working, establishing a retirement plan for your small business is a good idea because it gives you options—and having options means you’ll feel more satisfied with whatever path you choose.