Retirement Plans that the IRS will pay you to start!

July 19, 2023 - 6 minutes read

Don’t Miss these Tax Advantaged Retirement Plans that the IRS will pay you to start! When you’re working hard to establish and grow your small business, planning for retirement may not be your top priority. It’s crucial to invest in your future. One way to do this is to invest in a retirement plan and not only save for your future but attract and retain your business’s employees by helping them save for theirs too! With so many options, it can be overwhelming to choose which plan is best suited for you and your business. Let’s discuss two tax credits and different retirement vehicles that your business can set up. Keep an eye out in the coming weeks, where we’ll dive deeper into each one.

Don’t forget! A bonus for setting up a new small business retirement plan this year! You can qualify for TWO tax credits that can reduce your taxes!

Credit Requirements:
Set up a SEP IRA, Solo or Company 401(k) or Simple IRA (Less than 50 employees)

Pension Start up Credit
100% credit up to $5,000 for qualified start up and administration costs of the plan.

Employer Contributions Credit Brand new this year for 2023:

Want to give your employees an incentive to open their own plan or a bonus for excellent work!!
Brand new this year for 2023:
1st and 2nd year of the new plan: Employer contributes up to a $1000 for each employee and get a credit of 100%
3rd year: up to $1000 each employee and get a credit of 75%
4th year: up to $1000 each employee and get a credit of 50%
5th year: up to $1000 each employee and get a credit of 25%

Don’t wait! The deadline to get the new plan up and started for your 2023 taxes is October 1st 2023!!!

Here are some plans options to get started.

1. Simplified Employee Pension IRA (SEP-IRA)

The Simplified Employee Pension IRA (SEP-IRA) is a tax-deferred plan that allows small business owners to contribute to their own or their employees’ retirement accounts. It’s an easy plan to set up, and the owner can contribute up to 25% of eligible employees’ salaries or $66,000, whichever is less. Another advantage of SEP-IRAs is that they are straightforward and inexpensive to administer.

2. Solo 401(k) Plan

The Solo 401(k) plan is designed for self-employed individuals and small business owners with no full-time employees. It allows the owner to contribute as both an employee and an employer. The maximum contribution is $66,000, with an additional $7,500 for individuals over 50 years old. This plan offers higher contribution limits than other retirement vehicles, making it an excellent option for those looking to save more.

3. Company 401(k) Plan

A Company 401k is a retirement plan designed for businesses with employees. It allows both employees and employers to contribute to the retirement account. The contribution limits for the company 401k are $66,000 for employees with $7,500 more allowed as a catch-up for individuals over 50. These contributions are also tax-deductible, reducing the taxable income for both employees and employers.


The SIMPLE (Savings Incentive Match Plan for Employees) IRA is ideal for employers with fewer than 100 employees. Employees are allowed to contribute up to $15,500, and the employer can either match the employees’ contribution dollar-for-dollar up to 3% or make a non-elective contribution of 2% for all eligible employees.

5. Profit-Sharing Plans

A Profit-sharing plan is another option for small business owners. It allows the employer to award a portion of the company’s profits to employees annually. It can vary year-to-year, and the employer has complete discretion to choose the amount or not contribute at all. The employer can contribute up to 25% of an employee’s eligible compensation or $66,000; whichever is less. Profit-sharing plans can help motivate, appreciate, and retain employees.

6. Defined Benefit Plan

A defined benefit plan is a pension plan that guarantees employees a fixed amount of benefits upon retirement. While this plan is not as popular as others, it can be a great option for owners who want to contribute more significant amounts toward their retirement savings and also offer higher benefits to their employees.

We can help you get started

Retirement planning is essential for small business owners to ensure that they can retire comfortably while also retaining the best employees. Choosing the right retirement vehicle depends on the owner’s goals, employee demographics, and business’s financial health. Start planning for your retirement today and create a secure financial future.

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