Small Business Retirement Plans
Find the plan that best fits your business
As a small business owner, you have a lot on your plate. Considering a retirement plan is one more thing to do. However, with benefits for you and any employees—plus tax advantages for your business—it’s worth the time to explore.
Just because your business is smaller doesn’t mean your retirement plan needs are less important. We’ll help with plan selection and choosing investments.
Are you a current small business retirement plan sponsor? Find more information here.
employees highly value the retirement savings plan offered by their employer.
Source: 9th Annual National Survey of Retirement Plan Participants. American Century Investments. 2021.
Retirement Plans Can Be a Win-Win-Win
Small business retirement plans are good for you, your employees and your business. Choose one that is suitable for your business size and needs.
Easy and automatic way to save
Tax-deferred retirement savings
Tax deductions (and potential tax credits) for your business
Attract and keep quality employees
Choose the Right Retirement Plan
John is a dentist with six employees
“I want my employees to be able to save for their retirement, and I like the idea of offering a company match. But isn’t that complicated? Seems like a lot to figure out with my busy schedule."
Solution: SIMPLE IRA
A SIMPLE IRA plan lets participants set aside a portion of their pay before income taxes are withheld, like a 401(k). It requires less paperwork and offers a company match for employees.
Mary opened an interior design business
“Just starting out, I’m not sure how profitable I’ll be from year to year. I need a flexible plan so I can contribute during the up years but not have to when profits are lower.”
Solution: Individual 401(k)
An Individual 401(k) offers the flexibility to change contribution amounts from year to year. The plans have larger contribution limits compared to others and you can choose to make Roth contributions too.
Maya is a professional photographer
“I’m sole proprietor and owner of my business, so I only need to worry about myself. I have some retirement money from my old corporate job, but am now looking for tax deductions for my business. Plus, it can’t hurt to stock up more for my retirement, right?"
Solution: SEP IRA
A SEP IRA allows a self-employed or small business owner with employees the chance to save for retirement and get tax benefits. Contributions are tax-deductible expenses for the business. In addition, contributions are flexible—you don’t have to make them every year.
Steve runs a construction company
“In the construction field, you can have great years and some less than great. I need flexibility in how much to contribute to the plan each year. Also, employee turnover can be high, so I’m looking for a way to reward my best long-term employees. Finally, I need a plan with enough investment options to meet the different needs of all of my 80 employees.”
Solution: Profit Sharing
A profit sharing plan allows employers to vary their contributions to participants each year. Vesting schedules give employees gradual ownership based on years of service. With an American Century profit sharing plan, Steve’s employees can choose from a range of no-load mutual funds for retirement.
Taxes are deferred until withdrawal if the requirements are met. A 10% penalty may be imposed for withdrawal prior to reaching age 59½.
If withdrawals are made within the first two years of participation in the SIMPLE IRA, the penalty increases to 25%.
A Retirement Plan for Every Business
Investing in a retirement plan for your small business puts you and your employees in control of your retirement goals. Getting a solid start on saving may lead to a better chance of success for the future.
As you review choices for your business, consider:
Company Size. Are you self-employed and have a few or many employees? Even a self-employed business owner can make tax-deferred contributions to their own retirement plan.
Employer Contributions. Will you make company contributions or match employee contributions?
Salary Deferrals. Do you want contributions deducted from employees’ salaries or only employer contributions for your plan?
Features. Are you looking for minimal paperwork or more flexible plan features that may require more effort?
Company Size | Company Industry | Employer Contribution | Salary Deferrals | |
|---|---|---|---|---|
SEP IRA | ||||
SIMPLE IRA | ◼ | ◼ | ◼ | |
403(b)/457(b) | ◼ | ◼ | ||
Individual 401(k) | ◼ | ◼ | ||
Traditional 401(k) | ◼ | |||
Safe Harbor 401(k) | ◼ | ◼ | ◼ | |
Profit Sharing |
Establish Your Small Business Retirement Plan
Choose the plan that best fits the needs of your business, then set up your plan.
SEP IRA
With generous contribution limits, this plan offers a self-employed individual or any size employer a flexible and convenient way to save.
SIMPLE IRA
Easy setup and maintenance, plus business tax benefits and matching contributions, make this a popular plan for employers with fewer than 100 employees.
403(b) & 457(b)
These plans offer schools, churches, nonprofits and local governments a convenient way to provide tax-deferred retirement savings for employees.
Individual 401(k)
This plan helps maximize retirement savings for self-employed individuals or business owners with a spouse employee. Tax-deductible contributions are good for business too.
Other 401(k) Plans & Profit Sharing
These plans feature automatic retirement savings, along with tax-deductible business expenses and the ability to attract quality employees.
• Traditional 401(k)
• Safe Harbor 401(k)
• Profit Sharing
Managing Your Retirement Plan—We’ll Help
Meeting Employee Disclosure Rules
Certain plans require employers to communicate more specifically about investments and fees. Let us help you meet these requirements outlined by the Department of Labor for an annual fee of $75. This service is available for qualified retirement plans.
You can review an overview of the requirements, then enroll. Call 1-800-345-3533 or complete the forms below and return them with your first fee payment.
Disclosure Forms
Spend Less Time on Distribution Reporting
Managing a qualified retirement plan can mean you spend more time processing paperwork, tax filing and tax reporting. Let us make your job easier with Distributions Services. We’ll handle income tax withholding and IRS reporting, so you can spend time running your business. Call 1-800-345-3533 to get started. This service is available for qualified retirement plans.
Small Business Retirement Plans
With American Century Investments
Get Support and Guidance
Education and tools—plus guidance upon request—can help you and any employees plan for retirement. It starts with helping you choose the right plan.
Find Investment Opportunities
You and your employees can build a diversified portfolio that aligns with your risk comfort level, time horizon and retirement goals.
Make an Impact
When you invest with us, you can also invest in the future of others. Together we can become a powerful force for good.
This material has been prepared for educational purposes only. It is not intended to provide, and should not be relied upon for, investment, accounting, legal or tax advice.
IRS Circular 230 Disclosure: American Century Companies, Inc. and its affiliates do not provide tax advice. Accordingly, any discussion of U.S. tax matters contained herein (including any attachments) is not intended or written to be used, and cannot be used, in connection with the promotion, marketing or recommendation by anyone unaffiliated with American Century Companies, Inc. of any of the matters addressed herein or for the purpose of avoiding U.S. tax-related penalties.
This information is for educational purposes only and is not intended as tax advice. Please consult your tax advisor for more detailed information or for advice regarding your individual situation.
IRA investment earnings are not taxed. Depending on the type of IRA and certain other factors, these earnings, as well as the original contributions, may be taxed at your ordinary income tax rate upon withdrawal. A 10% penalty may be imposed for early withdrawal before age 59½.
You could lose money by investing in a mutual fund, even if through your employer's plan or an IRA. An investment in a mutual fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.
Diversification does not assure a profit nor does it protect against loss of principal.