Qualified plans: not just a checklist.
June 6, 2026
If you're a business owner and you don't currently sponsor a retirement plan, rest assured: you're in good company! Many business owners, particularly small business owners, get so busy with day-to-day operations that they don't have time to research retirement plans. The fact is, a qualified retirement plan can be a powerful tool for business owners to attract and retain top talent, save on taxes, and build wealth for themselves and their employees. Additionally, many states currently require -- or soon will require -- employers to offer a retirement plan to their employees, so it's important to understand your options and obligations. The good news is that this can be both less complicated and less expensive than you might expect.
On the other hand, maybe you already have a retirement plan in place. Maybe it's working well for you and your employees. Maybe you're considering changes to get more value from it or reduce your administrative burden.
When I sat down and starting writing this post, I thought I'd provide the standard information: what plan types are out there, how much can you contribute, what are the tax advantages, etc. But as I typed, I realized that this information is all widely available online and in other resources, and if you're here, you're probably looking for something that will help answer your questions, not give you more information to sift through.
So instead of just providing a list of facts, I'd like to suggest some questions to ask yourself as you think about retirement.
- What does your business look like today? What will it look like in five years, ten years, or twenty-five years?
- What are your goals for the business? Are you looking to grow slowly or quickly? Are you planning to sell the business in the future, or do you want to keep it running and potentially pass it on to someone else?
- If your retirement plan could do anything for you, what would it do? Are you looking to attract and retain top talent? Are you focused on tax savings? Are you mostly focused on building wealth for yourself and your employees? Of course, the answer may well be "all three, and more!"
- What are your biggest concerns about retirement plans? Are you worried about the cost? The complexity? The time commitment? The fiduciary responsibility?
As you think about these questions, keep in mind that there are many different types of retirement plans, and each one has its own advantages and disadvantages. The best plan for you will depend on your specific situation and goals. There is no "one size fits all" solution that will provide the outcomes you desire. That's where Seashore and our advisor partners come in.
In my "day job" as a TPA for 401(k) plans, one issue I see unfortunately frequently relates to "solo" 401(k) plans. While these are popular and generally very easy to set up, business owners can find themselves in trouble if the right questions weren't asked when the plan is established and continually reviewed as their business evolves and grows. The IRS does not use the term "solo" 401(k) -- they call them "one-participant" plans -- and the rules for these plans are the same as for any other 401(k) plan, including coverage and nondiscrimination testing. Many popular one-participant 401(k) plan documents are drafted to allow the business owner to fill out a quick set of checkboxes to establish the plan, but the providers selling them may not be providing sufficient guidance on how to do so or what the ramifications might be. Frequently, the business owner may select options that work well for their plan on day one, but that cause compliance problems as they grow and add employees. This can result in unexpected expenses and hassles, including IRS audits, penalties, and even plan disqualification.
A common example is a "solo" 401(k) plan that is set up with no eligibility requirements, meaning that any employee of the business is eligible to participate in the plan on the day they're hired. This works perfectly when the business owner is the only employee, but all too often I see situations where the business owner hires employees and just assumes their employees aren't eligible -- they were sold a "solo" plan, after all! Unfortunately, it's not quite that simple. Those employees were eligible to participate in the plan from day one according to the plan document, so if they weren't offered the opportunity to do so, there's a problem. This can result in the business owner being required to make corrective contributions to those employees, to take corrective distributions from their accounts to retroactively correct testing failures, or even to pay penalties to the IRS. All of these outcomes are stress and expense you don't need, and they're completely preventable. Our goal is to help you avoid this sort of problem by asking the right questions up front and making sure you're getting the expert guidance you need, not just a document to fill out.
-Tim
