Share buttons




Small Business Retirement Plans for Tax Benefits and Better Futures

Woman leaning on brick building

Retirement Plans for Small Businesses

Employer-sponsored retirement plans offer employers many benefits. Generally, you're allowed a tax credit for establishing the plan and a deduction for contributions. However, employers must include certain employees in the plan and give a portion of your contributions to those participating employees. A retirement plan can provide you with a tax-advantaged method to save funds for your own retirement while providing your employees with a powerful benefit.

Profit-sharing plans

Profit-sharing plans establish separate accounts for each participant with the plan. Employers allocate regular contributions to each participant based on the plan's formula. Each participant's account must be credited with their share of investment income.

401(k) plans

Participants contribute a portion of their salary to 401(k) plans rather than the employer. 401(k) plans are expensive to administer, but because employers often match employee deferrals as an incentive to participate in the plan, the employer's contribution cost is generally minimal. In the long run, 401(k) plans tend to be relatively inexpensive and are ideal for small businesses.

Money purchase pension plans

According to the plan document's formula, participants of money purchase pension plans receive their respective shares. Money purchase pension plans are relatively straightforward and inexpensive to maintain but are less popular than profit-sharing or 401(k) plans because of the annual contribution requirement.

Defined benefit program

Defined benefit programs use a formula, generally stated as a percentage of pay, that determines how much each participant will receive annually after retirement. An actuary certifies how much will be required each year to fund the projected retirement payments for all employees. The employer then makes contributions based on the actuarial determination.


Employees defer up to $14,000 of annual compensation by contributing to a SIMPLE (Savings Incentive Match Plan for Employees) IRA plan. Employees aged 50+ may make an extra contribution. Employers must match deferrals, up to 3% of the contribution. SIMPLE IRA plans are cheaper to maintain but limit the amount highly paid employees can receive. Employers cannot maintain other retirement plans, and employers with more than 100 employees cannot utilize SIMPLE plans.

Find a Small Business Retirement Plan That’s Right for You

Contact the Horizon Trust & Investments team to find the best small business retirement plan for you. 

Call us Contact us Learn more about retirement plans

The web site you have selected is an external site not operated by Horizon Bank. This link is provided for convenience and informational purposes only and Horizon does not endorse and is not responsible for the content links, privacy policy or security policy of this website or app you are about to visit.  Horizon Bank is not responsible for (and does not provide) any products, services or content for this third-party site or app, except for products and services that explicitly carry the Horizon Bank name. Click Proceed to continue or Cancel to go back.