If you’re an entrepreneur, you’re likely thinking about building your wealth now, but have you considered how you’ll set yourself up for retirement? Did you know there are several types of retirement plans that can help business owners build a nest egg, with different parameters to help work with your unique situation or goals?
Along with the more well-known plans, there are a couple of little-known retirement plans that are designed to help entrepreneurs build wealth faster, as referenced in a recent MarketWatch.com article
. The key is figuring out which one will be the best for your unique situation.
There are four options that apply to those who are classified as owning their own business: Savings Incentive Match Plan for Employees (SIMPLE) IRAs, Simplified Employee Plan (SEP) IRAs, Solo or regular 401(k)s or Contributory (Roth or Traditional) IRAs.
The article provides some details of each plan to help you choose the best account for you. For example, if you or your business can afford to save more than the traditional or Roth IRA contribution limits allow each year, then you might want to look into a SIMPLE, SEP IRA, or a solo 401(k) which have higher yearly contribution limits.
Depending on the number of employees your business has, there are other factors to consider when choosing a plan, the author says.
“The lowest cost approach for the business owner would be a payroll-deductible contributory IRA, but that also allows the lowest amount of compensation deferral. Most entrepreneurs cannot afford to be extra generous to employees when starting out, so either a Simple IRA or 401(k) plan generally makes more sense than the SEP IRA option.”
Here are more details
about the different types of small-business retirement accounts.