At The Money: How to Max Out Your Small Business Retirement Plan

Small business owners and solo practitioners face complex choices when optimizing retirement savings, primarily between SEP IRAs and Solo 401k plans. Dan LaRosa, an expert in corporate qualified retirement accounts, highlights that while SEP IRAs offer simplicity, Solo 401k plans—particularly those featuring a Mega Backdoor Roth—provide superior flexibility and higher contribution potential, especially for those with fluctuating income. Each plan carries distinct administrative requirements, such as the Form 5500-EZ filing for Solo 401k plans exceeding $250,000 in assets. Furthermore, incorporating a spouse into a business payroll can significantly supercharge household retirement contributions. Ultimately, selecting the appropriate vehicle depends on income levels, the desire for Roth versus pre-tax deferrals, and long-term goals for business succession or expansion, necessitating professional guidance to navigate these tax-deferred opportunities effectively.