What is the Best Retirement Plan for Small Business Owners?

Q. What is the best retirement plan for small business owners?

A. The answer is it depends because there are multiple retirement plan options for a small business owner to choose from, below is a general guideline -

• For employers with a long-term horizon to fund a plan for their employees, defined contribution plans work well.
  
• For sole proprietors or small business owners wishing to minimize administrative costs, a SEP or SIMPLE plan may be the best choice.
  
• For small business owners without employees wishing to maximize contributions, a Solo-401K may be the right plan.
  
• Profit sharing is appropriate if discretionary contributions or a vesting schedule are important.
  
• For employers with older key employees, defined-benefit plans may be more appropriate.
  
• For employers that wish to have their employees fund a portion of the retirement cost, a SIMPLE or 401K plan may be the most suitable.