By John Arthur 
When you run your own business, you don’t get a company 401(k), but you do get powerful, flexible ways to save. The key is choosing the right account mix, funding it consistently, and understanding the latest IRS limits.
Start with the workhorse plans.
A Solo 401(k) lets you contribute both as employee and employer. For 2025, you can defer up to $23,500 as an employee, and then add an employer profit-sharing contribution up to the overall defined-contribution cap of $70,000. Ages 60–63 also have a higher catch-up limit of $11,250 for 2025.
A SEP-IRA is simpler to administer and great for variable income. You contribute as the employer only, generally up to 25% of compensation to a 2025 maximum of $70,000. Keep in mind: if you have employees, the same percentage you give yourself must be given to eligible staff.
A SIMPLE IRA can fit solos or small teams that want easy payroll deferrals with low admin. For 2025, employee contributions max at $16,500, plus a $3,500 catch-up. Employers must make either a match (up to 3%) or a 2% nonelective contribution for eligible employees.
Don’t overlook IRAs and HSAs.
You can still fund a Traditional or Roth IRA alongside your business plan. The 2025 IRA limit is $7,000, with a $1,000 catch-up if you’re 50+. Roth eligibility and Traditional IRA deduction phase-outs depend on your income and coverage in a workplace plan.
A Health Savings Account (HSA) can double as a stealth retirement vehicle if you’re on a high-deductible health plan. For 2025, you can contribute $4,300 (self-only) or $8,550 (family), with all the usual HSA tax advantages. Many entrepreneurs use HSAs to pay current costs or invest for future healthcare needs.
Choosing between Solo 401(k) and SEP-IRA.
- Max savings on lower income: Solo 401(k) often allows bigger contributions at modest profits because you get an employee deferral plus employer profit-sharing.
- Ease and deadlines: SEPs are simple and can be opened and funded by your tax-filing deadline (including extensions). Solo 401(k)s generally must be set up by year-end to make employee deferrals, though employer contributions can be made by the filing deadline.
- Roth option: Many Solo 401(k)s offer a Roth bucket for the employee deferral.
Cash-flow tactics for uneven income.
Automate monthly transfers to smooth volatility, then “top up” after strong quarters. Use quarterly tax projections to set safe contribution targets without starving operations. If hiring staff, revisit plan choice, adding employees can change cost and compliance.
Exit and risk planning.
As your business grows, coordinate retirement savings with liability protection, insurance, and an eventual business-sale plan. Keep beneficiary designations current and know your RMD age under current law.
Conclusion
Entrepreneurs have excellent tools, Solo 401(k), SEP-IRA, SIMPLE IRA, IRA, and HSA, to build retirement on their own terms. Know the 2025 limits, pick the plan that matches your income pattern and hiring plans, and automate contributions so saving happens even when your workload spikes. A tax pro can help dial in the right mix and ensure you maximize deductions while staying compliant.
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