Retirement Plan Options Available for 2025
If you're self-employed or run a small business, there’s still time to reduce your 2025 tax liability while building long-term financial security. The IRS allows you to set up and fund certain retirement plans as late as your tax filing deadline—often giving you until April 15, 2026 (or later with an extension) to make deductible contributions.
Here’s a breakdown of the top options for 2025:
1. SEP IRA (Simplified Employee Pension)
Contribution limit for 2025: Up to $71,000 (25% of compensation, up to a cap of $355,000).
Who it’s best for: Sole proprietors, freelancers, and small business owners with no or few employees.
Key advantage: Easy to set up and flexible—no annual funding requirement.
Deadline: Can be established and funded up to the 2025 tax filing deadline, including extensions.
2. Solo 401(k)
Contribution limit for 2025: Up to $76,500 if age 50 or older ($69,000 if under 50).
Includes both employee salary deferral and employer profit-sharing contributions.
Best for: Business owners with no full-time employees (except a spouse).
Bonus: Can include Roth contributions and loan features (depending on provider).
Deadline: Must be established by December 31, 2025, but you can fund contributions up to the filing deadline.
3. SIMPLE IRA
Contribution limit for 2025: Up to $17,000, or $20,500 if age 50+.
Who it’s for: Businesses with up to 100 employees looking for a lower-cost, lower-maintenance plan.
Deadline: Must be established by October 1, 2025 to be effective for 2025.
Employer match: Required, typically 3% of compensation.
4. Keogh Plan
Contribution limit: Same as SEP/Profit-Sharing, but allows additional plan design options (like defined benefit plans).
Best for: High-income earners seeking large deductible contributions and possibly plan loans.
Note: More complex and less commonly used, but still valid.
Why This Matters Now
Reduce your 2025 taxable income—up to $71,000 or more in deductions available.
Defer taxes on retirement growth until withdrawal.
Still time to act: In many cases, you can set up and fund your plan by April 15 or even October 15, 2026, depending on the plan and your filing status.
Let’s Strategize Together
Not sure which plan is right for your income level and business structure? Let’s walk through your options now so you can lock in the best tax savings for 2025.