What is the best type of Retirement Plan for my Business & Goals?

SPC is here to help - useful information without the product sales pitch.

There are many types of plans and endless plan design options. How do you know where to start? We've put together a quick guide to the different types of plans with some plain-English explanations. Simply scroll down to see major plan types, click the link to jump to the explanation of each plan.

If you'd like more information on any type of plan or have questions, please contact us. We'd love to speak with you.

What type of Plan is best for my Business?

Click below on the type of plan to skip to the detailed description of each type...

Owner-Only business or companies with thousands of employees. Great option for employees & employer.

A good option for Non-Profit & Municipalities, Hospitals, or Educational entities.

Only for businesses with fewer than 100 employees. More of a rigid starter plan.

Best Option for companies with Employees to add extra flexibility for benefits.

A better option for Non-Profits who wish to add extra benefits for executives.

Allows very large contributions annually for owners over 40 yrs old.

Businesses with fewer than 10 employees. Employer-only contributions.

Employer-Only Contributions, but can include 6 yr vesting.

Old-Style employer pension plan with added benefits for additional years of service.

Is a 401(k) Plan right for my company?

401k Plans are the gold standard in current employee benefit plans. They offer great flexibility in design & administration. They also provide a great foundation for revisions over time or additional plan/benefit pairings as your needs change.

Employees can save for themselves through 401k deferrals (from their own paychecks to save for their own retirement). In 2025, employees under 50 years old can save up to $23,500 annually for themselves (including executives & owners).

Employees can choose whether their own contributions are Pre-Tax or as ROTH and typically they can select their own investments inside the plan.

Employers can choose to also offer benefits to employees . This could be an employer match (with immediate vesting or prolonged vesting). Or, an employer might offer a flat 3% - 6% guaranteed benefit to staff annually. Some plans provide no employer contributions at all.

401k plans are suited from single-person companies or companies with thousands of employees. They require annual administration & compliance testing, but the benefits, flexibility, & employee retention makes 401(k) Plans the most popular form of retirement plan in the USA. Contact us today to learn more...

Employee Choice.

- Employees can save for their own retirement
- Employees can generally select their own investments
- Employees can choose Pre-Tax or ROTH deferrals

Employer Choice.

- Employers can choose to offer a company match
- Employers can choose eligibility (Day 1 or up to 1 year)
- Easy to manage & for employees to understand

Company Benefit.

Flexible options for design, company tax deductions, and most employees understand how 401k plans operate.

Is a 401(k) Profit Sharing Plan right for my company?

All of the benefits and design flexibility of a 401(k) plan, but with the extra capability to add additional benefit for the ownership, executives, or individual productivity bonuses for employees.

401(k) Profit Sharing Plans allow the company to provide additional benefits annually to select groups of employees or as a flat benefit to all participants in the plan.

Imagine being able to tell your staff that if the company performs well, they might be able to get an additional bonus in the retirement plan - a great employee incentive plan.

All Profit Sharing contributions made to the plan from the company are 100% tax deductible for the business AND incur no payroll taxes. Contributions are typically made annually before the tax filing date of the company (in order to list the tax deduction on the corporate tax filing).

Profit Sharing contributions are 100% discretionary, meaning that the contribution does NOT need to be made every year AND the amount can vary from year to year. Benefits can be weighted towards ownership or executives increasing employee retention of key employees.

Employee Choice.

- Employees can save for their own retirement
- Employees can generally select their own investments
- Employees can choose Pre-Tax or ROTH deferrals

Employer Choice.

- Employers can offer a company match paired with PS
- Vesting Provisions up to 6 years
- Profit Sharing does not need to be made every year

Company Benefit.

Increased tax deductions for the company and increased employee retention with the contribution incentive

Is a SEP IRA right for my company?

SEP IRAs (Simplified Employee Pension) are primarily suited for small businesses who wish to only provide a company contribution to staff. SEPs do not allow employees to make contributions or deferrals for themselves. SEPs allow a Pro-Rata annual contribution up to 20% of pay for self-employed or up to 25% for W2 Employees. This percentage contribution would be made to all eligible staff members. (Up to $70k in 2025)

SPC is generally not an advocate for SEP IRAs, except for special circumstances where an owner wishes to make a Pro-Rata contribution to all staff annually - and - does not wish their plan to require any annual testing or compliance.

SEP IRAs do allow for longer eligibility periods - up to 2-3 years before an employee could become eligible, but generally, once employees become eligible, it is more advantageous to design a 401k Profit Sharing plan for maximum tax savings and benefit.

SEP IRAs generally allow each participant to direct their own investments (just like a pool of Employee IRA accounts), so they do offer a lot of investment flexibility for employees who wish to manage their own investments. If you have a current SEP or are considering one for your business, contact SPC today to estimate your annual contribution amounts.

Employee Choice.

- Employees can generally select their own investments
- Contributions are made as Pre-Tax Only

Employer Choice.

- Employers can choose the annual contribution %
- Employers can choose eligibility (Day 1 or up to 3 years)
- Easy to manage & for employees to understand

Company Benefit.

Tax Savings for the company annually without any compliance filings or compliance testing needed.

Is a 403(b) / 457 Plan right for my company?

403(b) Plans are another gold standard for non-profit entities for employee benefit plans. They offer great flexibility in design & administration, similar to a 401(k) plan. In fact, non-profits have a choice - they can sponsor a 403(b) or 401(k). They also provide a great foundation for revisions over time or additional plan/benefit pairings as your needs change.

Employees can save for themselves through 403(b) deferrals (from their own paychecks to save for their own retirement). In 2025, employees under 50 years old can save up to $23,500 annually for themselves (including executives & board members).

Employees can choose whether their own contributions are Pre-Tax or as ROTH and typically they can select their own investments inside the plan.

Employers can choose to also offer benefits to employees, including adding a 457 plan option. This could be an employer match (with immediate vesting or prolonged vesting). Or, an employer might offer a flat 3% - 6% guaranteed benefit to staff annually. Some plans provide no employer contributions at all. 457 Plans are generally designed to provide higher benefits for executives or board members who wish to contribute more than the standard limits. Contact us today for details.

Employee Choice.

- Employees can save for their own retirement
- Employees can generally select their own investments
- Employees can choose Pre-Tax or ROTH deferrals

Employer Choice.

- Employers can offer a company match paired 457 Plan
- Vesting Provisions up to 6 years
- Does not require any Employer Contributions

Company Benefit.

Specialized for Non-Profit Entities, so there are no "Tax Benefits" to list, however these plans still provide a great employee retention benefit and allow for employee choice.

Is a Profit Sharing Plan right for my company?

Profit Sharing Only Plans can be added to 401k plans, Cash Balance/Defined Benefit Plans, or as a stand-alone plan. Why would a company decide to start a stand-alone Profit Sharing Plan? Annual Flexibility and maximum efficiency.

When designed correctly, Profit Sharing Plans can provide an owner-weighted benefit and provide a minimum benefit to staff. In short, a best-case scenario would be that an owner could receive a company contribution up to 25% of their pay and the staff would receive a company contribution of only 5% of the employee's pay. This is a 5:1 ratio, making it very efficient for ownership to receive benefits from the company.

Contributions are discretionary each year. This means that the company can decide year-to-year whether they will provide a profit sharing benefit to staff. This is a great incentive for employees.

Profit Sharing can also include conditions to receive a contribution - Last Day Rule and 1,000 hours, for example. So the design can be tailored to provide benefits only to employees who stay with the company. Contact SPC today to see if adding Profit Sharing is a good option for your company.

Employee Choice.

- Employees can generally select their own investments
- Employees receive Pre-Tax Contributions

Employer Choice.

- Employers can choose the annual contribution % / $
- Employers can choose eligibility (Day 1 or up to 1 year)
- Easy to manage & for employees to understand
- Great add-on for Cash Balance or Defined Benefit Plans

Company Benefit.

Flexible options for design, company tax deductions, and most employees understand how PS plans operate.

Is a SIMPLE IRA right for my company?

A SIMPLE IRA Plan is sometimes thought of as a 401k-light. With lower deferral amounts, lower employer contribution amounts, and no annual compliance testing, companies with fewer than 100 employees can offer a SIMPLE IRA Plan. But should you?

With eligibility up to 2 years before entry, it can be attractive to make employees wait before entry. All employer contributions are 100% vested immediately and it can be difficult to manage a large pool of personal IRAs for your financial advisor or payroll person (contributions are made separately for each participant). There are also very few guardrails to prevent employees from withdrawing the funds, since the employer does not technically control their account(s).

Employees can make deferrals from their pay (just like a 401k) and the employer will make either a 2% Annual Contribution or a 3% Match. There are only 2 options.

With recent legislation, now employees can defer as ROTH in SIMPLEs and the employer can offer up to a 5% Profit Sharing contribution annually above the 2% Non-Elective or 3% Match.

SIMPLEs have their place, but we find that most employers transition into a 401k fairly quickly due to the inflexibility.

Employee Choice.

- Employees can save for their own retirement
- Employees can generally select their own investments
- Employees can choose Pre-Tax or ROTH deferrals

Employer Choice.

- Employers can offer a 3% company match
- Profit Sharing does not need to be made every year
- Eligibility up to 2 years before entry

Company Benefit.

Increased tax deductions for the company and increased employee retention with the contribution incentive

Is a Cash Balance Plan right for my company?

Cash Balance plan adoption has exploded in the last 10+ years - for a very good reason. These plans are exceptional options for smaller companies whose owners want to maximize their retirement savings. Cash Balance Plans are hybrid Defined Benefit Plans, so there are some similarities to older style pension plans, but offer a lot of newer style benefits & flexibility.

With annual contributions for an owner easily averaging between $200k - $300k, you can see why this would be appealing to owners and small companies who want to maximize their own retirement benefit and provide a maximum tax deduction for the company. These plans also provide creditor and liability protection, since they are qualified plans - they are great options for professional service corporations where liability protection is a major focus.

Based on Age & Income, custom plan designs can be created to maximize the potential contribution of each owner and still provide a minimum benefit annually to the eligible staff. These plans can require PBGC coverage and require annual compliance testing with additional filings. If you are looking for annual contributions in excess of $75k and are an owner over 40 yrs old, a Cash Balance Plan might be a good option for you.

Owner Choice.

- Individual Owners can have their own benefit %
- Individual Staff can be classified for special benefit
- All Investments are in a single managed account

Employer Choice.

- Employers can offer a Profit Sharing plan for flexibility
- Employers can choose eligibility (Day 1 or up to 1 year)
- Easy to adjust over time with custom design

Company Benefit.

Flexible options for design, company tax deductions, and the highest contributions possible for a qualified plan.

Is a Defined Benefit Plan right for my company?

Traditional Defined Benefit Plans are the types of plans you might think of when you hear "Pension Plan". These are the original style of company retirement plan where the company makes an annual contribution based on your income & years of service with the company. Cash Balance plans are replacing these types of plans due to the flexibility that CB plans can offer versus traditional Defined Benefit plans. But still, there are more Defined Benefit plans active than Cash Balance plans.

Usually based on a 3 year average compensation, Defined Benefit plans are designed to "replace" a percentage of your current working income in retirement through an annuitized payment. This benefit increases each year of service with the company. This can create large annual costs if your staff is highly paid and works for your company for a long time.

Defined Benefit plans can offer the same maximum benefit to owners as a Cash Balance plan - easily averaging $200k - $300k annually, with a reduced benefit to staff. The investments are pooled and managed together, so each participant receives an annual statement of their benefit. These can be very difficult to understand for employees and do not allow individual investment options. Defined Benefit plans require annual testing & additional filings, just like a Cash Balance plan, but can still provide a huge potential benefit for the company & for the ownership.

Owner Choice.

- Individual Owners can have their own benefit %
- Individual Staff can be classified for special benefit
- All Investments are in a single managed account

Employer Choice.

- Employers can offer a Profit Sharing plan for flexibility
- Employers can choose eligibility (Day 1 or up to 1 year)
- Longer vesting than a Cash Balance Plan

Company Benefit.

Increased tax deductions for the company and increased employee retention with the contribution incentive