Cornerstone Agency Services has merged with Union Bay Risk Advisors. Same exceptional service with a broader range of insurance choices!
Union Bay - Cornerstone Co-Branded Logo-fotor

5 Types of Retirement Plans for Small Businesses

When it comes to saving for retirement, small businesses have a lot of options available to them. This blog outlines the five most popular retirement plans - SEP IRA, Simple IRA, 401(k) plan, Safe Harbor 401(k) plan, and Roth IRA - and discusses their benefits and drawbacks. If you're a small business owner who is thinking about retirement planning, this blog is a great place to start!

1. Simplified employee pension plan (SEP) or SEP IRA

A SEP IRA is an excellent option if you're considering starting your retirement savings. A SEP IRA is a type of retirement plan that allows you to contribute any amount, as long as you have earned income. A SEP IRA plan must be available to all employees who are at least 21 years old, who have performed services for the employer for at least three of the preceding five years, and have received at least $600 in compensation from the employer. One of the benefits of a SEP IRA is that investment earnings from this plan are tax-deferred until they are withdrawn. In addition, as an employer, you can take advantage of flexible funding. 

2. Savings Incentive Match Plan for Employees (SIMPLE)

Investing in stocks can be complex and time-consuming, which is why a Simple IRA is an excellent option for those who want to get started but dont have the time or expertise. The account offers many benefits, including tax-deferred growth and reduced fees. SIMPLE IRA plans are available to businesses with less than 100 employees. Each employee establishes an IRA account, to which both the employer and the employee contribute funds. There is very little paperwork to do, and there are no additional administrative costs. It's a cost-effective approach to offer a retirement plan to many individuals, even by small-business standards.

3. Traditional 401(k) plan

Small businesses should be aware of the many different retirement plans available to them when it comes to retirement. One popular option is the 401(k) plan, which offers many benefits for businesses and their employees. For example, you can contribute pre-tax money, so your savings grow faster. Additionally, a 401(k) is a great way to save for retirement because it has many benefits, such as: 

-Tax-deferred growth: Your contributions are tax-deductible, so your savings grow on a tax-free basis.

-Employer match: If you have contributed money to your 401(k), the company will also contribute an equal amount on your behalf. This is called a matching contribution. 

-Easy withdrawal options: You can make withdrawals from your 401(k) at any time without penalty, subject to the usual rules and regulations.

-Flexibility over the long term: You can choose how your contributions are invested.

4. Safe harbor 401(k) plan

Retirement planning for small businesses can be tricky. However, adding a safe harbor 401(k) to your retirement savings plan can make it much more manageable. A safe harbor 401(k) is a 401(k) plan that is designated as a 'safe harbor' plan by the IRS. This means that it is exempt from some of the more stringent rules that apply to other 401(k) plans. This includes the laws limiting the amount that can be withdrawn during retirement and the regulations restricting the tax-free withdrawal of contributions. In addition, your account will stay with the company that sponsors your plan as long as you are still employed. This is excellent news if you plan on leaving your job in retirement - you won't have to worry about losing your money.

5. Roth Individual Retirement Account

For many businesses with employees, contributing to a Roth IRA is a great way to save for retirement. A Roth IRA allows you to contribute a certain amount per year, which goes a long way in providing financial security in retirement. Additionally, Roth IRA contributions are tax-free, and you can withdraw these funds at any time, with no penalties. Furthermore, Roth IRA contributions are automatically converted into Roth IRA account holders at the end of the year. This means that your contributions are immediately invested and begin growing tax-free. As you can see, there are many benefits to opening and contributing to a Roth IRA. Contact a professional to get started, and be sure to take advantage of all the benefits Roth IRA accounts have to offer!

Small businesses have various retirement plans available to them, depending on their tax status and financial needs. This blog has outlined the five most common retirement plans for small businesses. However, it is advisable to contact a professional if you're unsure which plan is right for you or if you would like to explore further. 

Contact Us To Know More

Name(Required)
"By submitting my phone number, I hereby authorize Cornerstone Agency Services, LLC to communicate with me through text messaging."
Consent - Cornerstone Agency Services, LLC Privacy Statement:
This field is for validation purposes and should be left unchanged.

Can Life Insurance Policies Be Transferred? What You Should Know!

Life insurance is an essential aspect of financial planning, providing assurance that your loved ones will be financially secure after your passing. But what happens if your circumstances change significantly and you're considering transferring your life insurance policy to someone else? Is it even possible? Let's dive into the basics of transferring life insurance policies […]

Read More

How to Extend the Life of Your Motorcycle?

Owning a motorcycle isn’t just about the freedom of the open road and the thrill of the ride—it’s also about taking care of your two-wheeled companion. Here are some easy, practical tips to keep your motorcycle in top shape: 1. Regular Maintenance The best approach to motorcycle care is to stick to a regular maintenance […]

Read More

The Top 5 Claims Business Owners File and How to Avoid Them!

Running a business comes with its set of risks, from unforeseen incidents to legal disputes. As a business owner, it's crucial to understand the most common insurance claims and how to prevent them. Here are the top five insurance claims made by business owners and tips on how to steer clear of them: 1. Property […]

Read More
We extend coverage to individuals and businesses in 
Pennsylvania, New Jersey, and Florida.
Toll Free - (888) 499-2762

Direct to Branch Offices:
Lancaster, PA (717) 898-5982
Moorestown, NJ (856) 499-5191
Elkins Park, PA (215) 298-9398
Philly, PA (267) 678-1705
Tampa, FL (813) 330-5707
Mt Pleasant Mills, PA (570) 539–2758
Garnet Valley, PA (484) 301-3292
Altoona, PA (814) 979-1480
Ebensburg, PA (814) 615-7992
© 2025 Cornerstone Agency Services, LLC Designed by Amplispot
Privacy Policy
Get Quality and Affordable Insurance
Get QuoteContact Us
linkedin facebook pinterest youtube rss twitter instagram facebook-blank rss-blank linkedin-blank pinterest youtube twitter instagram Skip to content