Retirement Plans for Your Business: Making Sense of the Wine List

You know the feeling. You sit down at a nice restaurant, open the wine list, and immediately realize you recognize roughly three words: red, white, and rosé.

There may be bottles you recognize. There are likely bottles you've never heard of. There are descriptions that somehow make less sense the more carefully you read them, or seem to be written in an entirely different language. And then there are the prices.

But price isn't the only consideration. You're also thinking about what you're eating, who you're eating with, and what kind of evening you're trying to have. A crisp white might make perfect sense with one meal and seem completely out of place with another. A $150 bottle might be a little much with fish and chips, but could make perfect sense alongside a multi-course dinner. It's less about finding the most expensive bottle and more about finding the right pairing for the occasion.

Retirement plans can feel much the same way. Go with me on this for a moment.

Some retirement plans offer a lot more options than others. That can be a good thing, but more options usually mean more moving parts, and more moving parts can mean more administrative work, more compliance requirements, and more expense. A 401(k), for example, can involve a third-party administrator, annual compliance testing, Form 5500 filing requirements, recordkeeping, participant communications, and potentially an annual audit as the plan grows.

For a business with a hundred or so employees, that additional infrastructure may make perfect sense. For a business with three employees, it may be more than the occasion calls for.

That's where the pairing becomes important.

The question isn't only, "What can this retirement plan do?" but also, "What does my business need, and what is my budget?"

With that in mind, let's take a brief look at some of the main retirement plans available to small businesses. Keep in mind this is a high-level overview, and I'd encourage you to connect with your sommelier, I mean advisor, to nail down which may be best suited for your business.

The 401(k): The Napa Cabernet Sauvignon

A 401(k) can be robust and layered with options. Employees can contribute through payroll, while employers can add matching contributions and build in additional features like profit sharing, vesting schedules, loan provisions, and more.

For 2026, employees can generally contribute up to $24,500, with additional catch-up contributions for older employees. The plan also allows for potentially substantial employer contributions.

But optionality and complexity come with a price. A 401(k) can involve a third-party administrator (TPA) to help with recordkeeping, compliance testing, plan administration, and Form 5500 filings, along with a recordkeeping platform to house the plan and participant accounts.

For a growing company, that complexity may be exactly what you're looking for to attract and retain employees. For a very small business, it may be more headache and infrastructure than it's worth.

And like a good Napa Cabernet, it usually isn't the cheapest bottle on the list.

The SIMPLE IRA: The Monday through Thursday Red Blend

If the 401(k) is Napa Cabernet, the SIMPLE IRA is the familiar bottle that doesn't require much explanation. It's straightforward, affordable, and reliable.

Employees contribute through payroll, and the employer generally makes either a matching contribution or a nonelective contribution. For 2026, the standard employee contribution limit is $17,000, with additional catch-up opportunities for eligible employees.

The big attraction with the SIMPLE IRA is simplicity, pun intended. The administrative burden is considerably lighter than with many 401(k) plans, and the overall cost can be lower.

The tradeoff is flexibility. You get a simpler plan, but you also have fewer options for customization and larger employer contributions.

For a small business that wants to offer a straightforward retirement benefit without building a lot of infrastructure around it, that simplicity can be valuable.

The SEP IRA: The Wine Subscription

You're not asking everyone at the table to order their own bottle. The business is essentially deciding, "This year, we're sending wine."

That's the basic idea behind a SEP IRA. Employees generally don't make salary-deferral contributions. Instead, the employer makes the contributions, and the business can generally decide whether to contribute from year to year.

For 2026, contributions can generally be as much as the lesser of 25% of compensation or $72,000.

There's an important catch, though. When an employer contributes to a SEP, eligible employees generally receive contributions based on the same percentage of compensation.

For a business with few employees, that may work well. For a business with a larger employee population, the cost can add up quickly.

Like the SIMPLE IRA, the SEP is relatively straightforward to establish and maintain, with generally no annual Form 5500 filing.

A Taste, Not the Whole Bottle

Each of these plans comes with its own rules, costs, contribution limits, administrative requirements, investment options, and design considerations. There are also other retirement plan options we haven't covered.

Think of this as a tasting, not the entire wine list. The goal isn't to answer every question in one sitting. It's to give you a sense of what's out there and help you start asking the right questions about what might fit your business.

Because just like choosing a bottle of wine, there's rarely one answer that works for everyone. Sometimes you want the Napa Cab. Sometimes the weekday red is exactly what you need. And sometimes, you just want someone who knows the wine list to point you in the right direction. If you're not sure which retirement plan is the right fit for your business, we'd be happy to help you sort through the options. Reach out to us through our contact page and let's find the right pairing.

Disclosures & Disclaimer: This material is for general educational purposes only and does not constitute personalized tax, legal, or investment advice, nor a solicitation to buy or sell securities. Our firm does not provide tax or legal advice. Information and regulatory limits are subject to change. Always consult a qualified CPA, attorney, or investment advisor regarding your specific situation before acting on any information presented.