If you own a small business, you’ve probably had a moment where you realized you should be doing more for your own retirement — and then immediately got pulled back into running the business. You’re not alone. Most owners I talk to either don’t have a plan set up yet, or they have one their accountant picked years ago that may not be the best fit anymore.
The good news: choosing the right plan isn’t complicated once you know which question to ask first. And that question is simple — do you have employees or is it just you (and possibly your spouse)?
Here’s a simple guide to the four most common options.
If it’s just you: the Solo 401(k) or SEP-IRA
When you’re self-employed with no employees, you have two strong choices.
A Solo 401(k) usually lets you put away the most money, because you contribute both as the employee and as the business. It also offers a Roth option, which can be valuable if you’d rather pay taxes now and take the money out tax-free later. The tradeoff is a little more paperwork once the account grows. In 2026, you can contribute up to $72,000 if you’re under 50, or $80,000 if you’re 50 or older.
A SEP-IRA is the simpler cousin. It’s easy to open, easy to maintain, and contributions are flexible year to year — helpful if your income swings. The catch is there’s no Roth option, and contributions are tied to a percentage of your income, so lower-earning years mean lower contributions.
In 2026, you can contribute up to $72,000 or 25% of compensation, whichever is less.
Rule of thumb: if you want to maximize savings or want a Roth option, the Solo 401(k) usually wins. If you want the simplest possible setup, the SEP-IRA is hard to beat.
If you have a few employees: the SIMPLE IRA
Once you have employees, the math changes — most plans require you to contribute on their behalf too.
A SIMPLE IRA is built for exactly this situation. It’s designed for businesses with 100 or fewer employees, it’s inexpensive to run, and it keeps your obligations predictable. You contribute for yourself and make a modest matching or fixed contribution for your team.
In 2026, employees can contribute up to $17,000, or $21,000 if age 50 or older. It won’t let you save as aggressively as a 401(k), but for many small teams it’s the right balance of cost, simplicity, and benefit.
If you’re growing and want to offer a great benefit: the 401(k)
A 401(k) is the most robust option. It allows the highest employee contributions, gives you flexibility in how you match, and is often what employees expect when comparing job offers. Like a Solo 401(k), you can also choose to set up Roth contributions for tax flexibility. In 2026, employees can defer up to $24,500, or $32,500 if age 50 or older. Combined employer and employee contributions can reach up to $72,000. It comes with more administration and cost than the other plans, so it tends to make sense once you have a stable team and want retirement benefits to be part of how you attract and keep good people.
If you’re already maxing out your plan: the Cash Balance Plan
A Cash Balance Plan is a more advanced plan that can run alongside your 401(k) and can allow business owners to often fund well over six figures into the plan — resulting in very large tax savings opportunities. These plans have higher startup costs and require ongoing yearly contributions, so the business should have some predictable cash flow. They tend to make the most sense once the business owner is already maxing out their 401(k) or business plan and is looking for additional tax-advantaged savings.
The honest answer: it depends on your specifics
Your income, your business structure, whether you have employees, and how much you want to save all change the answer. The plan your accountant set up three years ago may still be perfect — or you may be leaving money on the table. That’s a quick thing to check. If you’d like, I’m happy to take a look at your situation and tell you whether you’re in the most suitable plan — no pressure, no obligation. Most of these conversations take about 20 minutes.