A plain-English look at the retirement accounts built for business owners — and why pretax savings outside the business is one of the smartest Value Drivers you can build.
Somewhere along the way, most business owners quietly agree to a trade: every extra dollar goes back into the business — new equipment, marketing, payroll, inventory — and “I’ll get to my own retirement later.”
Later has a way of never quite arriving.
Here’s the part worth sitting with: the tax code actually built a set of retirement plans specifically for business owners like you. Not just your employees. Not just the corporate 9-to-5 crowd. You — the owner.
And most owners have never opened the toolbox.
“The business is often the retirement plan, the savings account, and the wealth strategy — all rolled into one asset that can’t be spent, diversified, or cashed out on a Tuesday.”
The Concentration Risk Hiding in Plain Sight
You already know the value of what you’ve built. What’s easy to miss is how much of your entire financial life is sitting inside that one asset — and how little of it you’ve moved anywhere else.
According to the Exit Planning Institute, an estimated 70–80% of a typical owner’s net worth is tied up in the company. Meanwhile, only a small percentage of small business owners consistently set aside funds specifically for retirement.
Put those two ideas side by side.
The overwhelming majority of your wealth may be concentrated in one illiquid asset — and many owners aren’t using the pretax retirement tools designed to build wealth anywhere else.
That’s not a character flaw. It’s a predictable outcome of running a business that always wants one more dollar of reinvestment.
But it’s also a gap worth closing, deliberately, this year.
Dan’s original piece also highlights the substantial contribution room potentially available through owner retirement plans, including a $72,000 overall 2026 ceiling for certain plans and a $24,500 employee deferral limit.
Why Retirement Planning Belongs in Your V.R.T. Strategy
Retirement accounts might not sound like an exit-planning topic at first. But they sit squarely inside Value Drivers — the “V” in V.R.T. Going Vertical™ — because they change what happens to you personally, regardless of what happens to the business.
A business that sells well is a great outcome.
A business that never sells, sells for less than hoped, or takes years longer than planned is a real possibility too.
Pretax retirement savings built consistently over time is wealth that exists independently of any of those outcomes — value you control directly, on a timeline you set.
Retirement Plans for Business Owners: What’s Actually Available?
This is high-level, educational terrain. Every retirement plan below has eligibility rules, deadlines and calculations that depend on your entity type, income and whether you have employees.
Think of this as a map of what exists, not a set of instructions.
1. SEP IRA
A SEP IRA is funded entirely through employer contributions — up to 25% of compensation, with a total 2026 ceiling of $72,000.
It is relatively simple to establish and offers flexibility from year to year.
Best fit: Solo owners or small teams who want simplicity over maximum contribution room.
2. Solo 401(k)
A Solo 401(k), also called an Individual 401(k), is available to business owners with no full-time employees other than a spouse.
The owner can contribute as both the “employee” and “employer,” potentially allowing the owner to reach the overall contribution ceiling at a lower income level than would be required with a SEP IRA.
Best fit: Solo owners and consultants who want to maximize pretax retirement savings without needing high six-figure income.
3. SIMPLE IRA
A SIMPLE IRA is designed for small businesses with employees. Employees can make salary-deferral contributions and the plan requires a modest employer match or fixed contribution.
It generally comes with a lower administrative burden than a traditional 401(k).
Best fit: Owners with a handful of employees who want a straightforward retirement plan.
4. Traditional 401(k) With Employer Match
This is the familiar workplace retirement plan, scaled to a growing team.
A traditional 401(k) offers more design flexibility through features such as vesting schedules, profit sharing and Safe Harbor provisions. That flexibility also brings more compliance responsibility than a SIMPLE IRA.
Best fit: Businesses with a larger or growing team that also want to use retirement benefits as a recruiting and retention tool.
5. Defined Benefit Plan
A defined benefit plan is a pension-style plan that can allow deductible contributions well beyond the limits of the plans above. It can be particularly valuable for business owners in their 50s who are trying to catch up quickly.
These plans require actuarial calculations and more administration.
Best fit: Higher-income owners later in their careers who want to defer significant income in a compressed timeframe.
These distinctions — including the different circumstances in which Dan positions each plan — come directly from his original toolbox.
Two Business Owners, Two Starting Points
The right retirement plan for a business owner depends heavily on one simple question:
Do you have employees?
Here’s how the toolbox can look for two very different owners.
Sarah: Solo Owner With No Employees
Sarah runs her independent consulting practice alone.
That opens up the full range of solo-owner tools, including a SEP IRA or Solo 401(k), without the added complexity of covering employees.
What is she weighing?
A Solo 401(k) could allow her to reach the same overall ceiling as a SEP IRA at a lower income level. A SEP IRA may be simpler to administer if she prefers fewer moving parts.
Marcus: Business Owner With a Team
Marcus owns a business with eight employees.
Any retirement plan Marcus establishes for himself generally has to account for eligible employees too. His decision therefore becomes both a personal wealth strategy and an employee-benefits strategy.
A SIMPLE IRA may offer a lower-maintenance way to provide retirement benefits for his team. A traditional 401(k) provides more design flexibility at the cost of more administration.
V.R.T. Going Vertical™ — The “V” Dimension
Value Drivers: Wealth That Doesn’t Depend on a Sale
Every dollar you move into a qualified retirement account is a dollar of personal wealth that exists on its own — outside the business, outside the eventual transaction, outside anyone else’s decision but yours.
It won’t replace a well-built exit.
But it changes the stakes of that exit dramatically.
An owner who has been consistently funding a retirement account for fifteen years has options an owner who hasn’t simply does not have.
That is why retirement savings belongs in a conversation about Value Drivers. The original V.R.T. section makes this distinction explicitly: this wealth exists independently of the eventual sale of the company.
Why So Few Business Owners Use These Retirement Plans
If these tools are this available, why does only a small fraction of owners use them consistently?
The answer is almost always the same: the business’s appetite for capital reliably outcompetes the owner’s future self.
New equipment feels urgent. A retirement contribution feels like it can wait.
It can wait — right up until it’s been waiting for twenty years.
The fix isn’t complicated: pick a plan that fits your situation, automate the contribution the same way you automate payroll and revisit the choice once a year as your income and team change.
Pay Your Future Self Like a Vendor
You already know how to prioritize an invoice.
Treat your own retirement contribution the same way — a recurring line item, not an afterthought.
It’s one of the few Value Drivers you build entirely under your own control, on your own timeline, protected from whatever the business does or doesn’t do next.
You built the business.
Now build the toolbox that protects you no matter what the business eventually does.
Ready to see where retirement savings fits into your broader exit-readiness picture? Take the V.R.T. Assessment at BizicalFitness.com to see where your business stands today.
Frequently Asked Questions About Retirement Plans for Business Owners
What is the best retirement plan for a business owner?
The best retirement plan for a business owner depends on factors including whether the business has employees, the owner’s income, desired contribution level and how much administrative complexity the owner is comfortable taking on. Solo owners may consider options such as a Solo 401(k) or SEP IRA, while businesses with employees may look at SIMPLE IRAs or traditional 401(k) plans.
Is a Solo 401(k) or SEP IRA better for a business owner?
Neither is automatically better. A Solo 401(k) can provide greater contribution flexibility for some solo business owners because the owner can contribute in both an employee and employer capacity. A SEP IRA can be simpler to administer and offers flexible employer contributions. The right choice depends on income, business structure and individual circumstances.
Can a business owner have a 401(k)?
Yes. Business owners can establish 401(k) plans. An owner with no eligible full-time employees other than a spouse may qualify for a Solo 401(k), while businesses with employees can establish traditional small-business 401(k) plans subject to applicable rules and requirements.
Why should business owners save for retirement outside their business?
Building retirement savings outside the company can reduce an owner’s dependence on a future business sale. A business is an illiquid asset and its eventual sale price and timing are never guaranteed. Building personal retirement assets creates wealth that exists independently of the eventual transaction.
How does retirement planning affect business exit planning?
Retirement planning gives a business owner more flexibility when it eventually comes time to exit. An owner with meaningful personal assets outside the company may have more freedom to decide when to sell, who to sell to and what terms to accept rather than relying entirely on the business sale to fund retirement.
Do business owners with employees have different retirement plan options?
Yes. Having employees can significantly affect which plans are available and how they operate. Plans established for an owner may also need to cover eligible employees, which makes the decision both a personal retirement strategy and an employee-benefits decision. Dan illustrates exactly this distinction with Sarah, the solo consultant, and Marcus, the owner of an eight-person team.
Disclosure: This article is published by Bizical Fitness® (Exit Hunter LLC, DBA Bizical Fitness®) for educational purposes only. It does not constitute legal, tax or investment advice. Contribution limits and plan rules referenced here are current as of 2026 and subject to change. Consult your own investment advisor and tax professional before establishing or funding any retirement plan.
