In conjunction with the upcoming 401(k) Day on September 5, it is a good time to review the type of retirement plan your company offers. If you are self-employed or help your company manage its retirement plan offering, reviewing the options below can help ensure your plan is maximizing the tax benefits for the company while attracting, retaining, and rewarding your employees. We want to help you and your employees feel confident about how retirement savings fit into your long-term financial plan.
If you are not self-employed and participate in your employer’s retirement plan, click here to review how to help maximize your employer-sponsored retirement plan to celebrate 401(k) Day.
Popular small business retirement plans include SEP IRAs, SIMPLE IRAs, Solo 401(k)s, traditional 401(k)s, and defined benefit plans. The optimal plan will depend on a number of factors, including: the amount and stability of extra cash flow that can be used to contribute to and maintain the plan (both now and in the future), your age, the average age of your employees, employee turnover, and your generosity towards employees (certain plans require you to contribute on behalf of your employees, while others do not.)
In 2025, the maximum contribution limit for SEP IRAs, Solo 401(k)s, and traditional 401(k)s is $70,000, which might be reduced based on income and includes contributions made by the employer and the employee, where applicable. Defined benefit plan contributions might be much higher. Unlike SEP IRAs and 401(k)s, defined benefit plans do not have a contribution limit . Instead, they have a maximum benefit amount. Contributions can be made up to an amount that is expected to provide the maximum allowable benefit of $280,000 in retirement (2025). Professional actuaries determine required annual funding amounts for defined benefit plans.
Establishing certain retirement plans may be as simple as filling out an adoption agreement and completing an application through your brokerage firm. Although it’s easy, you might find that your brokerage company is not fully equipped to help with plan-related questions or requests that could arise. Instead, we recommend hiring a third-party administrator (TPA) to help with choosing a plan, drafting the plan document, preparing necessary tax filings, and managing plan requests, such as loans, rollovers, and distributions.
Key Planning Considerations
If your income was higher than in previous years, and you are looking for a last-minute tax savings idea, consider establishing a SEP IRA, as you have until the tax filing deadline, including extensions, to contribute and still take the deduction for the year before. If you have a 401(k) plan, it may be a good idea to review the new provisions created by the Secure Act 2.0 and the OBBB Act to add or enhance provisions like emergency savings accounts, Roth employer contributions, and/or expanded catch-up options.
How can your Beacon Pointe advisor help?
No matter your role — whether you own a business, help guide your company’s retirement plan, or simply want to make smarter use of your workplace savings — your Beacon Pointe advisor can help you make the most of your retirement benefits. We understand that every client’s situation is unique, and we bring the tools, experience, and personal attention needed to align your retirement plan decisions with your broader financial goals.
Here’s how Beacon Pointe can support you:
- Plan Selection and Strategy Alignment: We help you select the right retirement plan and contribution strategy based on your cash flow, tax planning, and long-term financial plan.
- Administrative Relief and Plan Optimization: We can reduce your workload by streamlining plan oversight, coordinating with providers, and identifying cost-saving opportunities.
- One-on-One Investment Guidance and Education: We offer personalized advice and education for you — and your employees — to make confident, goal-aligned decisions.
We can help you choose the right type of retirement plan, reduce administrative burden, and identify ways to improve cost efficiency, investment options, and overall plan performance.
Ready to explore your retirement plan options — or just want to make the most of what you already have? Connect with us to schedule a complimentary consultation. We’re here to help you take the next step with clarity and confidence.
Choosing the Right Retirement Plan for Your Business |
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| SEP IRA | Simple IRA | Solo 401(k) | Profit Sharing with Traditional 401(k) | Defined Benefit | |
| Contribution Options | Contributions are solely employer paid, but not required; maximum contribution 25% of net income (20% for Sole Proprietor) or $70,000 (2025) | Employer and employee salary reduction and employer must make matching contributions up to 3% of compensation or contribute 2% of each employee’s compensation; maximum contribution $16,500; $3,500 catch-up over 50 and an additional $1,750 catch-up for age 60-63 (2025) | Owner salary reduction and employer contributions are flexible; maximum contribution 25% of compensation or net income (20% for Sole Proprietor) or $70,000 (2025) | Employer profit-sharing contributions are flexible, but must be substantial and recurring. Employee salary deferrals up to $23,500 (2025) are optional; maximum contribution 25% of compensation or net income (20% for Sole Proprietor) or $70,000; $7,500 catch-up over 50 and an additional $11,250 catch-up for age 60-63 (2025) | Contributions are solely employer paid and are generally required annually as set by plan terms and determined by an actuary; up to a benefit of 280,000 (2025) |
| Who is Covered | Must be offered to employees at least age 21 and worked 3 of the last 5 years, and had compensation of $750 or more per year | Must be offered to all employees who received at least $5,000 compensation in any prior 2 years, and reasonably expected to earn $5,000 in current year | Owner and spouse
(Only) |
Must be offered to employees at least age 21 and worked at least 1,000 hours in previous year. SECURE 2.0 long-term part-time updated rule – 500 hours in 2 consecutive years (plan years beginning 2025) for elective deferrals | Must be offered to employees at least age 21 and worked at least 1,000 hours in previous year |
| Vesting Schedule | 100% immediately vested | 100% immediately vested | 100% immediately vested | Vesting schedule can be either 3 year cliff or 2-6 year graded | Vesting schedule can be either 5 year cliff or 3-7 year graded (if not top heavy) |
| Other Factors | Easy to set up and maintain; low complexity and administration costs, contributions due before employer’s tax deadline, including extensions. Good fit for self-employed such same contribution percentage must be offered to each employee. Establish and fund by employer’s tax filing deadline (Apr 15), plus extensions. | Easy to set up and maintain; low complexity and administration costs. Best for owners with or without employees who don’t have a huge excess of free cash flow not available to employer with over 100 employees. Establish by Oct. 1; employer contributions due by employer’s tax-filing deadline, plus extensions; salary deferrals deposited no later than 30 days following last day of month for which deferrals are withheld. | Easy to set up and maintain; low to medium administration cost. Best for owners with no employees and higher free cash flow. Establish by Dec. 31; employer contributions due by employer’s tax-filing deadline, plus extensions; salary deferrals for owner-only plans generally due by employer’s tax filing deadline, plus extensions. | Low to high administration cost depending on design complexity and other factors, provide high level of total pre-tax savings for owners. Best fit for business owners looking to maximize contributions, without mandating contributions. | High complexity and administration cost; employer must contribute any amount needed to satisfy minimum funding requirement. Best fit for employers who desire to contribute more than amounts allowed by other plans and have stable cash flow. Minimum funding requirements for a plan year generally made in quarterly installments and no later than 8 ½ months after the end of that year. |
Source: https://www.irs.gov/retirement-plans/cola-increases-for-dollar-limitations-on-benefits-and-contributions
Important Disclosure: This material is intended for general informational purposes only and does not constitute a recommendation or offer to adopt any specific retirement plan or strategy. Beacon Pointe Advisors does not offer legal or tax advice. Please consult with the appropriate tax or legal professional regarding your circumstances. This information is not intended and should not be relied upon as individualized tax, legal, fiduciary, or investment advice. Only a tax or legal professional may recommend the application of this general information to any particular situation or prepare an instrument chosen to implement any design discussed herein. Nothing herein should be relied upon as personalized investment advice, nor should it be considered an individualized recommendation, offer or solicitation for the purchase or sale of any security or to adopt a specific investment strategy. An investor should consult with their financial professional before making any investment decisions. Beacon Pointe provides links for your convenience to other providers’ websites. Beacon Pointe is not responsible for errors or omissions in the material on third-party websites and does not necessarily approve or endorse the information provided.
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