Note:  This is a very brief description of the most common retirement plans.  They all have penalties that can kick in if money is withdrawn before age 59 and a half, as well as many other advantages and disadvantages depending on your perspective.  To pick the plan that is right for you and your business, please call us to set up an appointment to discuss your situation in detail.  401-K:  The 410-K plan is a good plan for a business where the business owner wants to invest and shelter more than the Simple allows (10-13k).  It allows employees to invest, and it also allows the business the option of making a profit sharing contribution.  The profit sharing contribution can be subject to vesting, if desired.  In the past, 401-Ks were extremely expensive so they were rarely seen in small businesses.  That is no longer the case.  (Prices range from about $15 - $1500 annually depending on the number of employees.)  The Simple and SEP plans are essentially free, so a 401-K is most appropriate for a high tax bracket business owner (with employees) who wants to be pretty aggressive with his or her retirement savings.  The employee contributions are subject to FICA but not federal or state withholding, while the employer profit sharing contributions are fully deductible and not subject to FICA.  There is also the option to allow the Roth feature, which allows employees to contribute after tax dollars that will grow tax free and be withdrawn tax free.  Contributions to a 401-K plan can only be established for a business, meaning you can't set one up for an individual, but any type of entity is okay.  SEP:  The SEP is a plan is a great choice for procrastinators because the deadline to open it is September 15th of the following year.  A SEP plan requires the business to make a profit sharing contribution for all eligible employees at the same percentage.  That percentage can change each year and is currently capped at 25%.  The SEP is a good choice for a business where there are only a small number of employees (if any) other than the owner.  (It gets very expensive when there are a lot of eligible employees.) For the SEP plan, only the employer makes a contribution and it is fully deductible to the business and not subject to FICA. The SEP plan is only available to businesses (not individuals). SIMPLE:  The Simple plan is a very good choice for a lot of small businesses because it allows a fairly generous contribution (11.5 - 14k) that is not limited by a percentage of earnings.  So, for instance, if a business owner only earns $9,000, all $9,000 of it can go into the Simple.  It allows employees to make contributions, but it also requires the business to make matching contributions for all eligible employees of 3% of W-2 income for each eligible employee.  (The match can be reduced as low as 1% in any two out of five years.)  The employee contributions are subject to FICA but not subject to withholding.  The employer match is fully deductible and not subject to FICA.  The Simple plan is only available to businesses (not individuals). Traditional IRA:  The traditional IRA is tax deferred plan designed for individuals.  Contributions are made with before tax money, meaning that IRA contributions are subtracted from income on the tax return, but withdrawals are taxable. Roth IRA:  Contributions to a Roth IRA are made with after tax money, so they don't help your current year tax liability at all.  But money in a Roth grows tax free and is tax free when it's withdrawn.  It's a great plan for young taxpayers who are not yet in high tax brackets.