A SEP IRA (Simplified Employee Pension) allows small business owners to make tax-deductible contributions to their employees' retirement accounts, including their own. For 2024, the contribution limit is the lesser of 25% of an employee's compensation or $69,000. This type of plan is attractive due to its ease of setup and low administrative costs, making it ideal for small businesses and self-employed individuals.

A SIMPLE IRA (Savings Incentive Match Plan for Employees) is designed for small businesses with 100 or fewer employees. In 2024, employees can contribute up to $15,500, with an additional $3,500 catch-up contribution for those aged 50 and older. Employers are required to either match employee contributions up to 3% of their compensation or make a fixed contribution of 2% of compensation for all eligible employees.

Traditional and Roth 401(k) plans allow employees to contribute up to $23,000 in 2024, with an additional catch-up contribution of $7,500 for those aged 50 and older. Traditional 401(k) contributions are made pre-tax, reducing taxable income, whereas Roth 401(k) contributions are made after-tax, allowing for tax-free withdrawals in retirement.

A Profit Sharing Plan allows employers to make discretionary contributions to employee retirement accounts based on company profits. Contributions are limited to the lesser of 25% of an employee’s compensation or $69,000 for 2024. This flexibility can help manage cash flow while providing significant retirement benefits.

Combining a 401(k) with a Profit Sharing Plan enables employers to offer a robust retirement benefit package. Employees can contribute up to $23,000 (plus $7,500 catch-up if over 50) to their 401(k), while employers can add profit-sharing contributions, up to the overall defined contribution plan limit of $69,000 or 100% of the employee’s compensation, whichever is lower.

A Cash Balance Plan is a type of defined benefit plan that resembles a defined contribution plan. Employers credit a participant’s account with a set percentage of their yearly compensation plus interest charges. Contribution limits for 2024 vary based on age and salary, often allowing for higher contributions than traditional 401(k) plans, making them suitable for high-earning business owners.

Traditional Defined Benefit Plans promise a specific monthly benefit at retirement, calculated based on factors like salary history and duration of employment. Contribution limits are actuarially determined and can be significantly higher than those for defined contribution plans, offering substantial tax-deferred growth.

Fully Insured Defined Benefit Plans, also known as 412(e)(3) plans, require funding exclusively through insurance products. These plans offer competitive benefits and can be appealing for businesses looking for a more predictable retirement plan with higher contribution limits.

A Restricted Property Trust (RPT) allows business owners to make tax-deductible contributions towards a life insurance policy or annuity. The contributions are taxed when the trust assets are distributed, usually at a lower rate, providing both immediate tax savings and future income.

Captive Insurance Planning involves creating a captive insurance company to insure the risks of the parent company. Premiums paid to the captive are tax-deductible, and the captive can accumulate wealth on a tax-deferred basis. This strategy is beneficial for businesses with significant and predictable risks.