Employer-Sponsored Retirement Accounts

Choosing The Right Option For Your Future

Planning for retirement is a critical step toward financial security, and employer-sponsored retirement accounts can make a significant difference for you and your company. These plans offer tax advantages, flexibility, and opportunities for employers and employees to save for the future. Learning about the different types of employer-sponsored retirement accounts and comparing their features can help you make an informed decision. Whether you’re trying to decide which account is best for you, or choosing a plan to offer your employees, we can help!

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Common Types of Employer-Sponsored Retirement Accounts

SIMPLE IRA

A SIMPLE IRA (Savings Incentive Match Plan for Employees) is designed for small businesses with 100 or fewer employees.

Employer Contribution
Required, either matching up to 3% of an employee’s compensation or a 2% fixed contribution.

Employee Contribution Limit (2024)
$15,500, with a catch-up contribution of $3,500 for those aged 50 or older.

Key Features
Easy to set up, lower administrative costs, no loans available.

SEP IRA

A SEP IRA (Simplified Employee Pension) is geared toward self-employed individuals and small business owners.

Employer Contribution Only
Up to 25% of an employee’s compensation or $66,000 (2024 limit), whichever is less.

Key Features
High contribution limits, employer-only funding, no Roth option, no loans allowed.

Solo 401(k)

The Solo 401(k) is a retirement plan for self-employed individuals or business owners with no employees (except a spouse).

Contribution Limits
Up to $66,000 (2024) with an additional $7,500 catch-up contribution for those 50 and older.

Roth Option
Available for after-tax contributions.

Key Features
High contribution limits, flexibility in contributions, and loans available.

Small Business 401(k)

A Small Business 401(k) is designed for businesses of all sizes and offers both traditional and Roth options.

Employer Contributions
Optional, matching or profit-sharing available.

Employee Contribution Limit (2024)
$22,500, with a $7,500 catch-up contribution for those 50 or older.

Key Features
High contribution limits, loan options, customizable plans for specific needs.

Roth 401(k)

The Roth 401(k) is an account under the 401(k) umbrella that allows for after-tax contributions.

Tax Benefits
Contributions are taxed upfront, but withdrawals in retirement (including earnings) are tax-free.

Employer Contributions
Tax-deferred, not Roth.

Key Features
Ideal for those who expect to be in a higher tax bracket during retirement.

Roth IRA Plans

A Roth IRA is a personal retirement account that can be funded in addition to an employer-sponsored plan.

Contribution Limit (2024)
$6,500, with a $1,000 catch-up contribution for individuals aged 50 or older.

Income Limits
Contribution eligibility phases out based on income levels.

Key Features
Tax-free growth, no required minimum distributions (RMDs).

Comparison Chart: Employer-Sponsored Retirement Accounts

Plan Type	Employer Contribution Limit	Employee Contribution Limit	Roth Option Available	Loans Allowed	Best For
SIMPLE IRA	Required, up to 3% match or 2% fixed	$15,500 ($3,500 catch-up)	No	No	Small businesses (≤100 employees)
SEP IRA	Up to 25% of compensation or $66,000	None	No	No	Self-employed, high-income earners
Solo 401(k)	Up to $66,000 ($7,500 catch-up)	Up to $22,500 ($7,500 catch-up)	Yes	Yes	Self-employed, no employees
Small Business 401(k)	Customizable	$22,500 ($7,500 catch-up)	Yes	Yes	Businesses of all sizes
Roth 401(k)	Same as traditional 401(k)	$22,500 ($7,500 catch-up)	Yes (after-tax only)	No	Tax-free withdrawals in retirement
Roth IRA	None	$6,500 ($1,000 catch-up)	Yes	No	Additional savings, tax-free growth

Frequently Asked Questions

Yes, you can contribute to both as long as you meet the eligibility requirements and contribution limits for each.

Most employer-sponsored plans allow you to roll over your funds into an IRA or another employer plan without penalty.

Consider your current tax bracket and expected tax rate in retirement. A Roth plan is generally better for those expecting higher taxes in the future.

Let Sandvold Financial Group Help You Plan Your Retirement

Contemplating retirement account options can feel overwhelming, but you don’t have to do it alone! Our experienced financial advisors can help you evaluate your goals and select the best retirement strategies for your and your company’s needs. Contact us today to get started on your path towards financial security!

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