One of the biggest shocks for new founders is the loss of the "employer match." In the corporate world, if you put 5% of your salary into a 401(k), your employer often adds another 5%. As a founder, you are both the employer and the employee. This means you have to be "highly disciplined" in contributing to your own plan . The good news is that the IRS provides several powerful retirement vehicles specifically for the self-employed that often have higher contribution limits than standard workplace plans .

The Solo 401(k): The High-Limit Powerhouse

The Solo 401(k) (also called a one-participant 401(k)) is designed for business owners with no employees other than a spouse .

Why it’s Popular

It allows you to contribute in two capacities:

As the Employee: You can make "elective deferrals" up to $23,000 (for 2024) .
As the Employer: You can contribute up to 25% of your net earnings .

The total contribution limit is a staggering $69,000 for 2024 ($76,500 if you are 50 or older) . This is significantly higher than the $7,000 limit for a traditional IRA .

The SEP IRA: The Simple Solution

The Simplified Employee Pension (SEP) IRA is the easiest plan to set up and operate, making it a favorite for freelancers and solo consultants .

Contributions: Only the employer contributes. You can put in up to 25% of your net earnings, capped at $69,000 for 2024 .
Flexibility: You can vary your contributions each year. If the business has a lean year, you can skip the contribution entirely .
The Catch: If you have employees, you must contribute the same percentage of their salary to their SEP IRAs as you do for yourself .

The SIMPLE IRA: The Small Team Choice

The Savings Incentive Match Plan for Employees (SIMPLE) IRA is best for businesses with 100 or fewer employees .

How it Works: It functions like a mini-401(k). Employees contribute via salary deferral, and the employer is required to match those contributions (usually up to 3%) or make a fixed 2% contribution for everyone .
Limits: The contribution limit is lower than a Solo 401(k)—$16,000 for 2024 ($19,500 for those 50+) .
Penalty Warning: Withdrawals before age 59½ carry a 10% penalty, but this jumps to 25% if you withdraw within the first two years of opening the account .

The HSA: The "Secret" Retirement Account

If you have a high-deductible health plan (HDHP), you can open a Health Savings Account (HSA). While designed for medical costs, it is a "triple tax-advantaged" tool: contributions are tax-deductible, growth is tax-free, and withdrawals for medical expenses are tax-free .

The Retirement Strategy: You can let the money grow for decades. After age 65, you can withdraw the money for any reason. If used for non-medical costs, it is taxed like a traditional IRA, but the penalty disappears . For the self-employed, you also save 15.3% on SECA taxes (Social Security and Medicare) on your HSA contributions .

Plan Type	Max Contribution (2024)	Best For
Solo 401(k)	$69,000	Solo owners wanting max savings
SEP IRA	$69,000 (Employer only)	Easy setup, flexible contributions
SIMPLE IRA	$16,000 + Match	Small businesses with employees
Traditional IRA	$7,000	Anyone with earned income

Step-by-Step: Setting Up Your Retirement Plan

Evaluate Your Income: Since most plans limit contributions to a percentage of profit, you won't know your exact limit until the end of the year .
Choose a Custodian: Work with a financial institution (like Fidelity or Vanguard) to open the account .
Automate: Set up a recurring transfer. "Paying yourself first" means saving before you spend on discretionary items .
Consolidate: If you have old 401(k)s from previous jobs, consider a "rollover" into your new plan to keep your assets in one place .