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Freedom for Retirement™ is the podcast designed to help you move beyond the fear of the complexity of finances so you can be financially free to achieve personal significance. Tune in with Josh Duncan each week to turn fear into fuel that drives you into Freedom & Significance.
Welcome to the Freedom for Retirement Podcast.
If you're a high-earning professional, business owner, or someone approaching retirement
and wondering whether you are truly on track, you are in the right place.
This podcast is all about helping you make smart, confident financial decisions without
the fear, confusion, or sales pressure that so often comes with money advice.
Each episode is designed to break down complex topics like retirement planning, investing,
taxes, and cash flow in plain English.
So you can understand what really matters and avoid the most common and costly financial
mistakes.
Everything you hear here is educational, fiduciary focused, and grounded in real-world
planning experience working with clients just like you.
I'm your host, Josh Duncan, partner at F5 Financial Planning.
Let's get started.
If you own a business, there's a good chance your retirement plan sounds something like
this.
Someday you'll sell the company.
And that sale will fund the rest of your life.
And maybe it will, but the reality is that when you tie your entire future to one sale of
one asset at one moment in time, you're taking on a risk most people would never accept
anywhere else in their financial life.
Additionally, you may not be able to find someone to buy your business for what you think
it's worth.
Here's what can help you maximize your business and have a successful retirement.
As a business owner, you actually have access to some of the most powerful retirement
savings tools available to anyone in the country.
Tools that let you set aside far more and shelter far more from taxes than the typical
employee ever could.
And yet most owners either use nothing at all, or they set up the simplest option years
ago and never looked at it again.
I'm Josh Duncan, partner at F5 Financial Planning, where we take a fiduciary approach to
maximize our clients' wealth.
Today I'm going to walk you through the retirement plans built specifically for business
owners.
You'll learn why you have an advantage most employees don't.
what the main options are, roughly how much each one lets you save, and how to think about
which one actually fits your business.
Let's get into it.
Let's start with why you as an owner are in a stronger position than you might realize.
When someone works for a company, they get one way into a tax advantage retirement plan.
They're an employee so they can put part of their paycheck into the company's plan and
that's it.
One door.
You have two doors.
As the owner, you're both the employee and the employer.
So you can contribute as the employee, putting away part of your own compensation
And then you can also contribute as the employer, putting away a percentage of the
business profit on top of that.
Two contributions into the same account in the same year.
That's the whole secret, and it changes everything.
It's the reason an owner can often save two, three, even four times what a regular
employee can save at the same level of income.
The most common mistake I see here isn't a bad decision, it's no decision at all.
Owners tell themselves that the retirement plans are complicated, that they're only for
big companies with a human resources department, or that they'll deal with it once things
slow down.
Meanwhile,
Every year that passes is a year of contributions and a year of tax savings.
They can never get back.
So here's your first takeaway: your business isn't an obstacle to save for retirement,
it's an advantage.
The question is simply which tool you use to take advantage of it.
Now, let's talk about the easy on ramps first, because for a lot of business owners, this
is where the journey begins.
The first is the SEP IRA.
Think of it as the low maintenance option.
This is simple to set up, there's almost no ongoing paperwork, and it's flexible.
In a great year, you can contribute a lot.
In a lean year, you can contribute little or nothing.
For a solo owner with no employees or just a few, it's an easy way to start putting away
meaningful money.
In 2026, employer contributions to these plans can reach as high as $72,000, but they are
capped at 20% of your net adjusted earnings.
These are the earnings from your self-employment minus half your self-employment tax.
The second starter is the simple IRA.
This one's designed for smaller businesses that want to offer employees a plan without
much cost or complexity.
Your team can contribute from their own pay, and you as the employer chip in as well.
In 2026, employees can defer up to $17,000 with an additional $4,000 catch up contribution
for those age 50 and older.
If you're between the ages of 60 and 63, the ketchup contribution is $5,250.
Now, here's the mistake I want you to avoid.
Many owners open a SEP IRA in the early days, and then they simply never revisit it.
Their income grows, their business matures, and they're still using the same plan they
picked when they were just getting started.
The problem is that at the very same income, a different plan could let you save
dramatically more.
Easy is a wonderful place to begin.
It's not always where you want to stay.
The takeaway for this section is that starter plans are genuinely good, and there's no
shame in beginning there.
Just don't confuse the easiest option with the most powerful one.
Now, if you're a business owner with no full-time employees other than yourself and
perhaps your spouse, I want you to pay close attention to this next one, because in my
experience, it's the single most underused plant out there.
It's called the Solo 401k.
Remember those two doors we talked about?
The solo 401k is where they both swing wide open.
You contribute as the employee, deferring up to $24,500 of your own compensation in 2026.
And then you contribute again as the employer, adding a share of your business profit on
top of that.
Between the two, your total contributions can climb as high as $72,000 in 2026 if your
profitability is high enough.
Let's look at an example.
Imagine two owners each earning the same profit from their business.
One uses a SEP IRA and makes only the employer contribution.
The other uses a solo 401k and gets to make both the employee and the employer
contribution.
At the very same income, the owner with the solo 401k can often set aside thousands more
dollars for retirement due to the employee contribution portion and limits based on net
adjusted earnings.
Same business, same profit, very different outcomes simply because of the plan they chose.
And it gets better in two ways.
First, if you're age 50 or older, you can add a catch-up contribution of $8,000 in 2026.
And if you're between ages 60 and 63,
That catch up jumps to $11,250, a special enhanced amount for those closing in on
retirement.
Second, many solo 401k plans offer a Roth option, letting you build a pool of money you
can draw on tax-free later in life.
If your spouse earns income from the business, they can participate too.
That means a married couple can effectively double the household's contributions, saving
as a team inside the same plan.
Now, this is the same for a set plan as well.
One important note as your business grows, the solo version of this plan works only while
it's just you or you and your spouse.
The moment you hire full-time employees, you don't lose the structure.
You graduate it.
You move into a traditional or safe harbor 401k.
The same kind of plan larger companies offer, which lets you include your team, which is
required, while still contributing generously for yourself.
So this isn't a plan you outgrow and abandon, it's a foundation you build on.
The takeaway is straightforward.
If you're an owner without full-time employees, the solo 401k is very often the retirement
tool that allows you to save the most money.
This could also save you the most money on taxes as well.
If you're still sitting in a plain SEP out of habit, this is the conversation to have.
Let's talk about the owners who look at these numbers and think, that's good, but I need
to save even more than that.
Maybe you spent years pouring every dollar back into the business and now you're playing
ketchup.
Maybe you're
High earner, just a handful of years for retirement.
Maybe your business is highly profitable and you want to shelter serious money from taxes.
If that's you, there's another category of plan worth knowing about.
These are defined benefit plans and their close cousin, the cash balance plan.
Everything we've discussed so far has a ceiling in the 70s of thousands of dollars per
year.
These plans blow right past that because they're designed around funding a specific future
pension for you.
The allowable contributions can reach into the hundreds of thousands of dollars in a
single year.
To give you a sense of the scale, the benefits these plans are built to fund can be as
high as $290,000 per year in 2026.
That's an enormous amount of money to move out of the reach of the current taxes and into
your own retirement.
For the right owner, nothing else comes close.
Now, as with everything in life, there are trade-offs with these plans.
These plans are more complex.
They require professional administration, including an actuary, and they expect consistent
funding year after year, not just when you feel like it.
So they fit a business with strong, stable, predictable profits.
They are not a casual decision, and they are not for everyone.
The takeaway here is if you have reliable, sustainable income and a genuine desire to save
aggressively, a defined benefit or cash balance plan can be extraordinarily powerful.
It deserves a serious look alongside a professional who can run the numbers for your
specific situation.
Okay, so how do you actually decide?
Let me give you a simple way to think about it without needing to memorize a single rule.
Start with four questions.
One, do you have employees or is it just you?
Two, how much do you want to save each year?
Three, how stable and predictable is your income?
And four, how much administrative complexity are you willing to take on?
Your answers point you along a natural path.
If you're keeping it simple and just getting started, a SEP IRA or simple IRA does the
job.
When you want to save more, and it's mostly just you or you and your spouse, the solo 401k
usually becomes the clear winner.
Once you hire full-time employees, you step up to a traditional Safe Harbor 401k that
includes your team.
And when your income is strong and stable and you want to save far beyond the usual
limits, a defined benefit or cash balance plan enters the picture.
Think of it as a progression that grows right alongside your business.
The mistake to avoid is the one we keep coming back to: choosing a plan once and then
never revisiting it.
The plan that was perfect when you were bringing in your first real profits, maybe leaving
a fortune on the table now that your business has grown.
Your retirement plan should evolve as your business does.
And one word of caution: these choices interact with your taxes, with your employees, and
the rest of your financial life in ways that aren't always obvious.
This is exactly the kind of decision worth walking through with a financial planner and a
tax professional who can look at your complete picture.
The right plan chosen with the full context of your situation is worth far more than the
right plan chosen in a vacuum.
Key takeaway is the best plan isn't the fanciest one or the one your friend uses.
It's the one that fits where your business is right now, reviewed regularly, so it keeps
growing as you grow.
So let's wrap it up.
As a business owner, you have two doors into retirement savings, not one, and that gives
you a real advantage most people never get.
The simple starters are the SEP and the simple, and they're a fine place to begin.
The solo 401k is the quiet powerhouse for owners without employees.
This plan can graduate into a traditional or safe harbor 401k when your headcount grows.
And when you want to save well beyond the ordinary limits, the defined benefit and cash
balance plans are there for you.
The key isn't picking the perfect plan on the first try.
It's using the advantage you already have and revisiting your choice as your business
grows.
Because at the end of the day, your business shouldn't be your only retirement plan.
It should be the engine that funds a retirement plan built to last, no matter how the sale
of your company turns out.
If you found this episode helpful, please consider subscribing to the podcast and leaving
a review.
It helps more people find the show and continue learning how to make smarter financial
decisions.
I'm Josh Duncan, partnered F5 Financial Planning.
If you would like to learn more about how we help our clients achieve financial freedom
for personal significance,
Please visit our website at www.f5fp.com.
Thanks for listening, and I'll see you in the next episode.