Choosing the Right Retirement Plan for Your Business

Selecting a retirement plan for your business involves balancing multiple objectives: maximizing tax-deductible contributions for owners, providing meaningful benefits for employees, managing administrative costs, and maintaining compliance with ERISA and IRS regulations. The wrong plan can leave money on the table or create unnecessary complexity.

At Financial Planning Hawaii, we help business owners evaluate their options — from simple SEP IRAs and SIMPLE IRAs to traditional and Roth 401(k) plans to defined benefit pension plans — and select the plan type that best aligns with their business structure, cash flow, employee count, and personal financial goals.

For Established Small Businesses

If you already have a retirement plan in place, we review its design, fees, investment options, and compliance to ensure it is still the best fit for your current situation. As your business evolves — growing revenue, adding employees, or planning for an exit — your retirement plan should evolve as well.

Defined Benefit and Cash Balance Plans

For high-income business owners seeking to shelter more income from taxes, defined benefit and cash balance plans can offer dramatically higher contribution limits — in some cases exceeding $300,000 per year. We analyze whether these plans make sense given your age, income, and retirement timeline.

The Defined Benefit Opportunity

Many small business owners are unaware that defined benefit and cash balance plans can allow annual tax-deductible contributions exceeding $300,000 — far more than the $69,000 maximum in a 401(k). This is often the most powerful tax planning tool available to high-income owners.

30+
Years of Plan Design Experience
$69K
Max 401(k) Contribution (2024, Age 50+)
$300K+
Potential Defined Benefit Contribution
20+
Findings Per Client Review
What We Cover

Business Retirement Plan Options We Evaluate

We compare all available plan types against your specific business needs and personal financial goals.

SEP IRA

Simple to set up and maintain with generous contribution limits (up to 25% of compensation). Best for sole proprietors and small businesses with few or no employees.

SIMPLE IRA

Designed for businesses with 100 or fewer employees. Lower contribution limits but includes mandatory employer match. Minimal administration.

401(k) Plans

Maximum flexibility with Roth options, profit sharing, loan provisions, and vesting schedules. Higher administrative cost but far greater contribution limits.

Defined Benefit Plans

Allows the highest deductible contributions — often exceeding $300,000/year — ideal for high-income owners nearing retirement who want to accelerate savings.

Cash Balance Plans

A hybrid plan combining defined benefit and defined contribution features. Excellent for maximizing tax-deductible contributions beyond 401(k) limits.

Existing Plan Review

We audit your current plan for fee efficiency, investment quality, compliance, and whether it still aligns with your evolving business and personal goals.

How It Works

Our Review Process

 
1

Business Assessment

We review your business structure, income, employee count, cash flow, and retirement goals.

2

Plan Comparison

We model the contribution limits, costs, and tax impact of each eligible plan type.

3

Recommendation

We recommend the plan type — or combination of plans — that maximizes benefits while managing cost and complexity.

4

Implementation Support

We coordinate with plan administrators and custodians to set up or restructure your plan.

5

Ongoing Review

We monitor your plan annually to ensure it continues to align with your evolving business and personal needs.

Business Retirement Plan Checklist

Evaluate your business retirement plan strategy:

 

Compared all plan types (SEP, SIMPLE, 401k, DB) against your business needs

 

Maximizing deductible contributions for owners/key employees

 

Plan fees and investment options benchmarked against industry standards

 

Plan compliance current (IRS Form 5500, plan document, etc.)

 

Evaluated whether a defined benefit or cash balance plan makes sense

 

Considered Roth 401(k) option alongside traditional contributions

 

Plan design balanced between owner benefits and employee obligations

 

Plan reviewed within the last 2 years as business has evolved

Common Questions

Frequently Asked Questions

Get answers to common questions about our business retirement plan services.

What is the difference between a SEP IRA and a 401(k)?
A SEP IRA is simpler and less expensive to maintain, but only allows employer contributions (not employee deferrals) and has less flexibility. A 401(k) allows both employer and employee contributions, Roth options, and features like loans and vesting schedules, but involves more administration.
Can I have both a 401(k) and a defined benefit plan?
Yes. Many high-income business owners use a combination of a 401(k) and a cash balance or defined benefit plan to maximize tax-deductible contributions. This combination can shelter well over $300,000 per year from taxes.
How do I know if my current plan fees are reasonable?
We benchmark your plan's fees against industry standards for plans of similar size. Common fees to evaluate include recordkeeping fees, investment expense ratios, and adviser fees.
Is a SIMPLE IRA ever better than a 401(k)?
For businesses with modest income and fewer employees, a SIMPLE IRA can be more cost-effective due to lower administration costs. However, the contribution limits are lower and there is less design flexibility than a 401(k).
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