Retirement Planning for Business Owners

Retirement Planning for Business Owners

Core Facts

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Most of the time entrepreneurs have their hands so full with the stresses and details of running a business that they sometimes don’t have the time or resources to plan for their own financial future. 

Understandable though this may be, it’s never too late to start being retirement-savvy. And while the sometimes unpredictable nature of small business can make your monthly financial planning, well, unpredictable, here are some ways you can take to gain control of your retirement plan. 

If you as a business owner are just starting out and have limited income, then the contributory IRA option might be the best option.

If you can afford to put more away than traditional or Roth IRAs permit, then the SEP IRA, Simple IRA, or Solo 401(k) options will all work well. 

Simple IRAs will not allow as much deferral as either a SEP IRA or Solo 401(k), but they are very easy to set up. 

For the solo entrepreneur, the key determinant between a SEP IRA or Solo 401(k) would be whether the business owner would like the possibility of accessing the money in the form of a loan for business purposes. If so, then the Solo 401(k) plan is the way to go.

A Solo 401(k) can allow for a self-employed person to put up to $53,000, or $59,000 for those over the age of 50, into tax-advantaged savings.

Tax-advantaged savings means pre-tax savings like a traditional 401(k), Roth 401(k), or after tax savings that can later be converted to a Roth 401(k).

The employee and employer makes a total contribution of up to the lessor of $53,000, $59,000 for those over the age of 50 or 100% of compensation. Note that not all of the contributions are deductible. 

Generally speaking, most small companies would opt to start with a Simple IRA because of the lower cost and lighter administrative burden, and then transfer those assets into a newly formed 401(k) plan after two or three years once the company has had a chance to grow and take on some new employees, and the plan costs are more easily absorbed.



Material contained in this article is provided for information purposes only and is not intended to be used in connection with the evaluation of any investments offered by David Lerner Associates, Inc. This material does not constitute an offer or recommendation to buy or sell securities and should not be considered in connection with the purchase or sale of securities. 

To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. 

Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances.

These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable-- we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.

David Lerner Associates does not provide tax or legal advice. The information presented here is not specific to any individual's personal circumstances. Member FINRA & SIPC


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Founded in 1976, David Lerner Associates is a privately-held broker/dealer with headquarters in Syosset, New York and branch offices in Westport, CT; Boca Raton, FL; Teaneck and Princeton, NJ; and White Plains, NY. For more information contact David Lerner Associates Call 516-921-4200 Visit our website:

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Jake Mendlinger
Account Manager
516.829.8374 X 232

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