There are plenty of people who own small businesses or are self-employed. Most of their life is spent putting in efforts for their business, no matter how small it is.
Just like any other senior citizen, they should also take steps to secure a good future. A happy, tension and anxiety-free retired life where you can live life to the fullest without worrying about finances – that’s the dream.
This is possible by getting a good small business retirement plan.
There are four types of small business retirement plans:
- Self-employed 401(k) plan
- Savings incentive match plan for employees, often called SIMPLE IRA
- Simplified employee pension plan, often called SEP IRA
- 401(k) plan which is best suited for larger companies with many employees
Normally if we ask a small business owner or a self-employed individual which is a preferable small business retirement plan, they’d probably say it’s the 401(k) plan.
Not that there aren’t any other good small business retirement plans to choose from, but because most of the people are not familiar with the other plans, they assume the 401(k) plan to be the best one.
The self-employed 401(k) plan, the savings incentive match plan for employees (SIMPLE IRA) and the simplified employee pension plan (SEP IRA) are the most suitable plans for people who run small businesses with around 10 or fewer employees.
All these plans have different characteristics of their own. Some have the ability to cover the number of employees, some have a certain contribution limit, some have administrative responsibilities, some have profit sharing plans, and so on.
So, before getting a small business retirement plan, one should do proper research and directly get in touch with the company to know every important and relevant detail.