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Tax Strategy7 min readMar 17, 2026
Tax Planning for Business Owners Approaching Retirement
Business owners face unique retirement planning challenges. From choosing the right retirement account to planning a business exit, here's your guide.
Retirement Tax Planning for Business Owners
Retirement Account Options
SEP-IRA (Simplified Employee Pension)
- Contribute up to 25% of compensation or $69,000 (2025), whichever is less
- Easy to set up, flexible contributions
- No catch-up contributions
Solo 401(k)
- Higher contribution limits than SEP-IRA for those under $100k income
- Employee contribution: $23,500 (2025)
- Employer contribution: Up to 25% of compensation
- Total limit: $70,000 ($77,500 with catch-up)
- Allows Roth contributions
SIMPLE IRA
- Good for small employers with employees
- Employee: $16,500; catch-up: $3,500 (2025)
- Employer must match 3% of compensation
Defined Benefit Plan
- Can shelter the most income ($280,000+/year)
- Best for high-income owners near retirement
- More complex to administer
Exit Strategy Tax Planning
- Structure the sale for installment payments to spread gain
- Consider employee ownership transition (ESOP) for tax benefits
- Qualified Small Business Stock (QSBS) exclusion
Transition Timing
- Retire in a year when income will be low to maximize conversions
- Plan Social Security timing around retirement account drawdowns
Business owner planning for retirement? Let's build a strategy that minimizes taxes at every stage.