Great Lakes Wire

Small business owners in Michigan often focus on growing their businesses and managing daily operations, but many do not prioritize saving for retirement. Unlike employees who may have access to employer-sponsored retirement plans, business owners must take independent steps to secure their financial futures.

Several retirement savings options are available that cater specifically to entrepreneurs. One such option is the Simplified Employee Pension (SEP) IRA, which allows employers to contribute up to 25% of their income within a capped annual limit. These contributions are tax-deductible, offering both a savings opportunity and a way to reduce taxable income.

Another plan is the Savings Incentive Match Plan for Employees (SIMPLE) IRA. This plan targets businesses with 100 or fewer employees and offers straightforward administration compared to traditional 401(k) plans. Employers can match up to 3% of employee contributions or make a fixed 2% contribution regardless of participation.

A newer choice gaining traction is the Pooled Employer Plan (PEP) 401(k). This plan enables small business owners to join with other employers in a collective retirement savings program. By pooling resources, participants can lower administrative costs, broaden investment options, and benefit from professional management.

The Small Business Association of Michigan (SBAM) offers its members access to a PEP 401(k) plan through Transamerica. According to SBAM, this arrangement provides an affordable and streamlined solution for small businesses seeking robust retirement benefits without significant administrative demands.

"The path of entrepreneurship is rewarding, but financial security in retirement requires careful planning. A solid retirement plan not only ensures peace of mind but also reduces tax liability and enhances employee benefits, making businesses more attractive to top talent. For Michigan’s small business owners, the time to invest in their future is now—because a thriving business should lead to a secure retirement," wrote Nadine Burns in SBAM’s July/August 2025 issue of FOCUS magazine.

For additional information on small business resources and news related to these topics, readers can visit the Small Business Association of Michigan's website: https://www.sbam.org/news-resources/.