Self-Employed Retirement Plans: The Best Options for Your Future

Being self-employed has a lot of advantages. You can follow your passions, fill needs in your community and, of course, be your own boss. But when you’re the boss, that means you’re in charge of providing for your own future, too. Sorting out the self-employed retirement options and finding the best retirement plan when you’re self-employed can be overwhelming. 

When you’re looking at self-employed retirement plans, you need to find one that best suits your needs and financial situation. What are the best retirement plans for self-employed entrepreneurs? How should you make a decision? Here are four great options to help you navigate your future.

1. SEP IRA: A Tax-Deferred Self-Employed Retirement Option

It might be for you if … You are looking for maximum flexibility and high maximums. 

With a SEP IRA, you can contribute the lesser of the SEP IRA maximum contribution:$70,000 in 2025 or 25 percent of your W-2 income. These contributions are tax-deferred and can continue to grow until you begin withdrawals, which you can start doing as early as 59 ½. However, you aren’t required to withdraw from your tax-deferred retirement accounts until you reach age 73. Unlike with other retirement plans for business owners, there are no filing requirements. Contributions are tax-advantaged for small business owners.

But … A potential limitation of this retirement plan is that you are the sole contributor. If you have employees, they have to be included in this retirement plan, too — and cannot contribute on their own. Additionally, you cannot contribute more to your plan than to theirs.

1. Solo 401(k): A High-Contribution Retirement Plan for the Self-Employed

It might be for you if … You are the sole employee and want to contribute more to your retirement. 

Since you are both the employer and the employee in your own business, you can contribute more to a solo 401(k) than most other self-employed retirement plans because you contribute as both the employer and the employee. As an employer, you can contribute up to 25 percent of your compensation; because you are also an employee, you can also contribute up to $23,500 a year as of 2025 ($31,000 if you’re 50-59 or over 64 and $34,750 if you’re 60-63). Employer contributions can be deducted as business expenses. 

But … The rules for who can open a solo 401(k) are strict. You’re only eligible if you have no employees. There are aggregate contribution maximums as of 2025 ($70,000 for those under 50, $77,500 if you’re 50-59 or over 64 and $81,250 if you’re 60-63). And if you have at least $250,000 in your account, you’ll have to file annually with the IRS.

1. SIMPLE IRA: A Retirement Plan for Small Business Owners

It might be for you if … You have fewer than 100 employees and are looking for something without high start-up and operating costs. 

As of 2025, you can contribute up to $16,500 per year into a SIMPLE IRA (or up to $20,000 if you’re 50 or older). As with the a traditional 401(k), you won’t pay taxes on your contributions until you begin to withdraw

But … You can’t contribute as much to a SIMPLE IRA as you could to other retirement plans. As an employer, you must choose either to match eligible employee contributions up to 3% of compensation or put forth a 2% nonelective contribution during the election period.  

1. Defined Benefit Plan: Maximize Retirement Savings if You’re Self-Employed

It might be for you if … You want to know what your retirement income will be. 

The money you put in a defined benefit plan can grow tax-deferred and be written off as business expenses. The defined benefit plan also plays nicely with other self-employed retirement plans. For instance, you can contribute to it while also contributing to a 401(k) or SEP IRA. But the biggest advantage of this plan is the ability to accumulate a significant amount for retirement, even in a short time. Employers can contribute more to defined benefit plans than other types of retirement savings plans. 

But … As an employer, you are responsible for all investment decision-making. Defined benefit plans are often more complicated and expensive to set up and maintain and contributing too much or too little could result in penalties. In addition, once you commit to putting away a certain amount of money, there’s no going back — you have to keep contributing that amount or face hefty penalties. These plans also take more time and money to set up, and you have to offer this retirement plan to any employees you have. 

Set Up Your Self-Employed Retirement Plan

Flexibility and choice are key to many people who choose to be self-employed. Fortunately, there are retirement plans that can offer both. And you don’t have to navigate the path to retirement alone. For questions on how to protect your future and what matters most to you, contact your Farm Bureau agent or financial advisor.