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Small Business Retirement Plans

September 6, 2017 By John Dapper

Many small business owners are unaware that there are qualified retirement plans tailor-made for one-person enterprises, professional practices, and entrepreneurs with new start-ups. Here are a few of the best tax-deferred retirement savings plans for sole proprietors and professional practice groups.

Cash Balance Pension Plans

Cash balance pension plans are a tax-deferred savings vehicle for business owners who want to heavily fund their retirement plans during peak earning years.

Pros include:

  • The annual contribution limit isn’t fixed.
  • Contribution limits are generous and increase with age.
    • People 60+ can contribute $250,000 annually, whereas 401(k)s limit contributions for those 50+ to $57,500.
  • Participants choose their payout method – they can elect to receive the money as a lump sum or as a monthly payment after retirement.

The beauty of a cash balance pension plan is its capacity to fund retirement over a short period of time. For example, if a solo business owner establishes a cash balance pension plan at 57 and contributes the maximum allowable contribution until they’re 67, they’ve made at least $1.5 million in tax-deferred contributions in just 10 years.

Solo 401k Plans

Solo 401(k) plans – sometimes known as one-participant 401(k) plans – are traditional 401(k) plans with a twist: they only cover a business owner with no employees or that business owner and their spouse.

The business owner isn’t required to incorporate the business to establish a plan; IRS regulations permit the owner-employee to make a tax-deductible salary contribution as an employee and a deductible profit-sharing contribution as owner.

In addition to providing an enormous tax-break (due to the “double dipping”), solo 401(k) plans are easy to set up and manage.

So if you don’t work for a big company or you run your own business, don’t despair – there are options out there that will allow you to retire someday.

Please contact us for more information about retirement savings or other money-related matters.

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Holdfast Wealth Management works as your fee-only personal advisor, offering a wide range of consulting services such as retirement planning, investment and wealth management, and holistic financial plans. We proudly serve clients in Austin, Texas and the surrounding communities.


3711 Greystone Drive, Austin, Texas 78731
512.693.8384 | info@holdfastwealth.com

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