Aside from planning for the future of the business, entrepreneurs need to prepare for their future as well. For small business owners with no or few employees, it may be tough to keep that top of mind when there are so many things to manage. What are the retirement options available for you?

Here are some options that will help you prepare for retirement.

Independent 401(k)

An independent or solo 401(k) is ideal for business owners who don’t have employees. The primary beneficiaries of this plan are the owners and their respective spouses. The key to understanding the mechanics of this plan lies in visualizing two entities:

• The business owner and/or spouse as “the employee”
• The business owner as “the employer”

Acting as the employee, the business owner, or employed spouse in this scenario would set aside their contributions. Salary deferrals are reaching up to 100 percent of salary or $19,500 (whichever is less).

Acting as the employer, the same business owner can further add to the contribution. The amount limit is 25 percent of the salary.

For couples that manage a business together, this is an excellent option to increase savings significantly.

Just remember that contribution limits apply on a per-person basis. If you have a 401(k) plan from another job, then the restrictions apply to both plans — the independent 401(k) and outside employment 401(1)k plan.

Individual Retirement Account (IRA) and Roth IRA

In deciding which IRA plan to get, it’s crucial for business owners to figure out if their tax rate will be higher or lower in the future. Consult a reliable broker who sells annuities retirement plans and see which options are ideal.

An IRA is a wise move for entrepreneurs who just recently set-up their business, which is less than a year old. Contributions limits are currently at $6,000, and there’s a catch-up amount of $1,000 for owners who are 50 years old and above. With an IRA, individuals get a tax break upfront and can offset contributions with income tax returns.

Roth IRA contributions, on the other hand, are made with after-tax money. So withdrawals during retirement are no longer taxed. You can get both IRA and Roth IRA; however, the individual contribution limit of $6,000 will cover both plans.

Simplified Employee Pension (SEP) IRA

A SEP IRA is easy to maintain. Annual reporting to the IRS is not required, and there’s some paperwork involved. That makes it an ideal option for business owners with no or few employees.

Contribution limits are either $57,000 in 2020 or 25 percent of salary or net self-employment earnings. Business owners can offset contributions made with tax returns.

However, withdrawals made during retirement will be taxed as income. Also, contributions for each employee must be equal to the percentage attributed to yourself, the business owner.

If your goal is to increase your retirement savings as much as possible, this may not be the ideal plan for you.

Defined benefit plan

For solo business owners who have a lot of extra cash to save (over $60,000 annually) and a steady stream of high income, this is a good move. There are different defined benefit plans available in the market.

Contribution limits are determined based on the available benefit upon retiring. Age and expected returns will also be factored in. High-earning business owners can significantly benefit from this plan during retirement.

However, since you’re essentially creating a pension plan for yourself, this path entails a lot of administrative work and high annual fees. Changing the contribution amount is not as flexible since you will be charged with corresponding costs.

With these suggestions in mind, you can make a decision on which one to get. This way, you can prepare ahead and know that you will have a good retirement.