Small Businesses

Unlike a big company 401(k) plan that requires an employer to hire multiple service providers to administer a complex plan, a small business retirement plan is designed to require little from the business owner. Plan documents can be completed in minutes, and employees, if any, generally receive just one notice per year.

Quick and easy to establish

Few administrative requirements

No government reporting/nondiscrimination testing

No fiduciary liability for investments

No ERISA bonding requirements

Benefits for business owners

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With a small business retirement plan, you could save a significant amount of money each year for your retirement and offer a competitive benefit to attract and retain employees. To offset the cost of contributing to your employees’ retirement accounts, you receive a:

Tax-deduction for plan contributions
Tax credit for plan start-up costs or employee education

If you don’t have employees, you can save even more each year in your own account and can still deduct your plan contributions. You also have the freedom to choose whether to contribute each year your business is profitable.

Benefits for employees

Employees typically have a greater chance of financial security in retirement if they have a retirement savings plan at work. Employees more likely to save through an employer-sponsored plan and workplace retirement plan contributions and investment earnings are not taxable until taken out of the plan.

Employees participating in an IRA-based employer plan will have greater flexibility and control over their savings and investments than they would with a big business 401(k) plan. Once contributions are deposited into an employee’s self-directed IRA, the employee may choose to invest in anything permitted by the custodian.

Sep IRA at a Glance

Who Can Establish One?

Any type of employer of any size, including a self-employed individual.

Who Contributes?

The employer makes contributions for eligible employees. Contributions are discretionary from year to year but must generally be uniform for eligible employees.