Small Business Retirement Plans for 2025: What You Need to Know
As a small business owner, you spend so much time taking care of your clients, customers, and employees—but are you taking care of your own financial future? One of the best ways to do this is by setting up the right retirement plan. The good news: there are several options designed specifically for small businesses.
Below, we’ll break down the most common retirement plans for small business owners and what type of business they work best for.
1. Traditional IRA or Roth IRA
Contribution limit (2025): $7,000
Catch-up (50+): +$1,000 ($8,000 total)
While not technically a “business retirement plan,” many entrepreneurs start here. An IRA is simple to set up and gives you the option of either a tax deduction now (Traditional) or tax-free growth later (Roth). Best for: solo entrepreneurs just getting started.
2. SEP IRA (Simplified Employee Pension)
Contribution limit (2025): Up to 25% of compensation, capped at $70,000
Catch-up contributions: Not allowed
A SEP IRA is easy to set up and flexible—you don’t have to contribute every year. However, if you do contribute, you must give the same percentage of compensation to all eligible employees. Best for: self-employed professionals or small businesses with just a few employees.
3. SIMPLE IRA
Contribution limit (2025): $16,500
Catch-up (50+): +$3,850 ($20,350 total)
Super catch-up (ages 60–63): +$5,250 ($21,750 total)
A SIMPLE IRA lives up to its name—simple to administer and less expensive than a 401(k). Employers must either match contributions (up to 3%) or give 2% of pay to all employees. Best for: small businesses (100 or fewer employees) that want to offer retirement benefits with minimal paperwork.
4. Solo 401(k) (One-Participant 401(k))
Contribution limit (2025): Up to $70,000 (employee + employer contributions combined)
Catch-up (50+): +$7,500 ($77,500 total)
Super catch-up (ages 60–63): +$11,250 ($81,250 total)
If you’re a business owner with no employees (other than a spouse), this plan lets you put away more than almost any other option. You can contribute both as the “employee” and “employer.” Best for: solopreneurs or family-run businesses with no outside employees.
5. Traditional 401(k), Roth 401(k), or Safe Harbor 401(k)
Contribution limit (2025): $23,500 employee deferral
Catch-up (50+): +$7,500 ($31,000 total)
Super catch-up (ages 60–63): +$11,250 ($34,750 total)
This is the “classic” retirement plan. A 401(k) allows higher contributions and flexibility. A Safe Harbor version requires employer contributions but avoids complex IRS testing. Many plans also allow a Roth option for tax-free growth. Best for: growing small businesses that want to attract and retain employees with strong retirement benefits.
Choosing the Right Plan
Just starting out or self-employed? A Solo 401(k) or SEP IRA might be perfect.
Small team, simple setup? A SIMPLE IRA gets the job done.
Growing business with employees? A Safe Harbor 401(k) balances compliance with strong benefits.
Final Thoughts
Setting up a retirement plan isn’t just about saving for the future—it’s about building a financially healthy business today. The right plan can reduce taxes, attract employees, and give you peace of mind knowing your hard work is also funding your own security.
If you’re not sure which option makes sense for your business, this is exactly where a CPA who specializes in small business finances can guide you. Don’t leave your retirement to chance—plan it with intention.
