Learn how to cut taxes, build wealth, and keep great employees

Retirement plans aren’t just about retirement.

If you’re a business owner, they’re one of the most overlooked tools for cutting your tax bill, building long-term wealth, and making your business more attractive to employees. But most people don’t hear about the real benefits, or the best timing, until it’s too late.

Why retirement plans matter

A well-structured retirement plan can reduce your taxable income, help you build personal wealth outside your business, and increase liquidity. They can also support employee retention, especially in industries where recruiting and turnover are constant headaches.

If you haven’t looked at retirement plan options lately, you might also be missing out on thousands in tax credits. For example, if you’re setting up a new plan, you could qualify for:

• A startup plan credit of up to $5,000 per year for three years
  
• An additional $500 per year for three years if your plan includes auto-enrollment

These are tax credits, not deductions. They directly reduce your tax bill.

Which type of plan is best for me?

There’s no one-size-fits-all plan. The right choice depends on your profitability, how many employees you have, and your goals as an owner.

Some of the most common plans include:

Simple IRA – Easy to set up and low-cost, but requires you to contribute a match for employees. Great for small businesses with predictable cash flow.

Simple 401(k) – Similar to a Simple IRA, but with a little more flexibility and the ability to take loans from the account.

Traditional 401(k) – Offers the highest contribution limits and the most customization. If you want to max out your own contributions, adding a safe harbor provision can help you avoid IRS testing issues. This is often the best fit for growing teams or high-income owners.

Other options, like a SEP IRA or solo 401(k), can work well for owner-only businesses. And if you’re over 50 with significant profits, a defined benefit or cash balance plan may allow much larger contributions than any 401(k).

When should I set up the plan?

Most business owners don’t realize that to get the deduction for the current year, many retirement plans must be set up by December 31, even if the actual contributions don’t happen until next year.

That’s why it’s smart to start planning now. Waiting until the end of the year often limits your options or forces you into a plan that doesn’t fit.

We’ve worked with owners who missed $10,000–$50,000 in tax savings simply because no one brought it up early enough. Others were stuck with the wrong plan for years because their accountant never asked about their goals.

What makes sense for you?

If you’re profitable and don’t yet have a retirement plan, this is one of the first places to look for tax savings and long-term planning. But your choice should depend on:

• How much you want to contribute for yourself
  
• Whether you want to contribute for employees
  
• Your age, income, and personal savings goals
  
• What kind of flexibility you want around loans, matching, and withdrawals

Whichever plan makes most sense for you, choosing the right one is a surefire way to diversify your assets, build liquidity, and protect your wealth.

Need an advisor?

Arvo Advisors can walk you through your options, show you the tax impacts of each, and help you make a decision that makes sense.

Let’s talk.