Small Business Retirement Plans
HathawayFinancial offers a number of retirement plans for small businesses.
Individual 401(k) -
Traditional and Roth
Who it's for:
Owner-only businesses with no employees
Key features:
- Traditional and Roth contributions
- High contribution limits
- Flexible annual contributions up to $70,000
- No IRS filing or reporting
Who can contribute:
Employer and employee as owner
A Self-Employed 401(k) to maximize your retirement savings and reduce taxes
For self-employed individuals, owner-only businesses, and partnerships, a 401(k) plan is designed to help you save more for retirement while lowering your taxable income.
Benefits of a Self-Employed 401(k)
- Higher contribution limits: Contribute up to $70,000 in 2025 (employer + employee), plus catch-up contributions if age 50+.
- Tax advantages: Reduce taxable income now with Traditional contributions or enjoy tax-free growth with Roth.
How it works
Who is eligible
- Self-employed individuals, owner-only businesses, or partnerships.
Contributions
- Employee deferrals + employer contributions allowed.
- Contribution maximum: $70,000 in 2025 (plus catch-up if 50+).
Withdrawals
- Early withdrawals before 59½ may face penalties.
- Required minimum distributions begin at age 73.
- Roth withdrawals may be tax-free if conditions are met.
Deadlines
Must establish your plan by year-end and fund by tax deadline.
What are the tax implications of an Individual 401(k) plan?
- Contributions to a traditional Individual 401(k) plan are generally tax deductible.
- Contributions to a Roth Individual 401(k) plan are made with after-tax dollars.
- For a traditional Individual 401(k), earnings grow tax-deferred and assets are not taxed until they are withdrawn in retirement.
- Qualified Roth distributions are tax-free if you are over age 59½ and have held the account for over 5 years.
SEP IRA: Maximize your self-employed retirement savings with tax advantages
A SEP IRA gives self-employed individuals and small-business owners an easy way to save for retirement with flexible contributions and tax-deferred growth.
Benefits of a SEP IRA
- Tax savings: Contributions are tax-deductible, reducing taxable income.
- Flexible funding: Contribute between 0% and 25% of compensation each year (up to $70,000 in 2025).
- Employer-only contributions: You control how much to contribute annually.
- Broad investment options: Choose from mutual funds, ETFs, stocks, and bonds.
How it works
Who is eligible
- Sole proprietors, partners, or small-business owners (typically with few employees).
- Must earn self-employment income from a trade, service, or business.
Contributions
- Employer-funded only.
- Each eligible employee must receive the same percentage.
- Contribution cap: 25% of compensation, max $70,000 in 2025.
Withdrawals
- Early withdrawals before 59½: 10% penalty (exceptions: first-time home purchase, certain college expenses).
- Required minimum distributions start at age 73.
Deadlines
- Must be established and funded by the business tax filing deadline (plus extensions).
What are the tax implications of a SEP IRA?
- Employer contributions are tax deductible.
- Contributions and earnings grow tax-deferred and are not taxed until they are withdrawn.
SIMPLE IRA: A low-cost retirement plan for small businesses with 100 or fewer employees
A SIMPLE IRA helps employers and employees save for retirement through shared contributions, with easy setup and minimal administrative burden.
Benefits of a SIMPLE IRA
For Employers
- Contribute to your own retirement and help employees save.
- Low-cost, funded primarily by employee contributions.
- Contributions are tax-deductible for your business.
- Simple administration, with no IRS tax filings required.
For Employees
- Pre-tax contributions reduce taxable income (Traditional).
- Employer contributions through match (up to 3%) or 2% fixed.
- Tax-deferred growth on all contributions.
- Starting in 2026, Roth contributions available for potential tax-free withdrawals.
How it works
Who is eligible
- Businesses with 100 or fewer employees, each earning at least $5,000 in the prior year.
- Employees who earned at least $5,000 in any two previous years are eligible to participate.
- Not available if the employer already sponsors another retirement plan.
Contributions (2025)
- Employee deferral: up to $16,000 (+$3,500 catch-up if 50+).
- Employer: must contribute either a 3% match or 2% fixed for all employees.
Withdrawals
- Tax-deferred until retirement.
- Roth contributions (available in 2026) allow for potential tax-free withdrawals if requirements are met.
Deadlines
- SIMPLE IRA must be established by October 1 of the year you want the plan to start.
What are the tax implications of a SIMPLE IRA?
- For the business/employer, all contributions made to the SIMPLE IRA are tax-deductible for the company.
- Employee Contributions to a Traditional SIMPLE IRA are made pre-tax. I.e. they are not included in the employees income. Contributions and earnings are taxed when the employee withdraws in retirement.
- Employee Contributions to a Roth SIMPLE IRA are made after-tax. I.e. they are taxed. However, the earnings are not taxed when the employee withdraws funds in retirement.
Contact us today
to learn more about
our services and how
we can help you.
We help small businesses establish retirement plans for their owners and employees; providing them competitive job benefits and avenues for tax advantaged retirement savings.
sean@hathawayfinancial.com - 1-971-409-4180 - Almaden, San Jose, California