When most Americans hear the term retirement plan, they immediately think 401(k). However, what many people do not know is that there are other retirement plan options that cater to small businesses. Since about half of Americans are employed by small businesses, some of these options make a great deal of sense for the business owner who wants to help his employees prepare for retirement while avoiding the expense and complexity of the conventional 401(k) plan.

For once, something is SIMPLE: The SIMPLE IRA was designed with the small business in mind. In fact, it is reserved for companies with 100 or fewer employees who earn at least $5,000 annually. With the SIMPLE, employees are allowed to contribute up to $11,500 of their salary, and all contributions made to this account are tax-deductible. Individuals who are older than age 50 have the opportunity to defer an additional $2,500 per year for a total of $14,000. Also, businesses can make matching contributions on their employees behalf, which is tax deductible to the company.

Another attractive feature of this plan is the flexibility of investment options. Since this is an IRA, employees can invest their contributions into several options including stocks, bonds, mutual funds, and exchange traded funds.

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SEP IRA: Even though the SIMPLE IRA provides an easy retirement plan option for many business owners, its contribution limits are not as generous as other plans. The SEP IRA is an alternative to the SIMPLE that allows business owners to contribute the lesser of $50,000 or 20 percent of their net income annually to the plan. While procrastination is not recommended, this plan offers companies the privilege of waiting until the tax filing deadline, plus extensions to make tax-deductible contributions to the plan.

Another point of interest is the suitability of this plan. The SEP IRA is a good option for family owned and operated companies, but it is not always the best option for all small businesses. While contributions are not required, 100 percent of the contributions are made by the employer. Therefore, this may not be the first choice option for business owners reluctant to make contributions to employees that extend beyond their immediate families.

Safe Harbor 401(k): Sometimes business owners want to contribute more than the SIMPLE IRA limits, but do not want to be obligated to make contributions on their employees behalf. In these situations, the Safe Harbor 401(k) often presents a viable option. This plan allows employees to defer up to $17,000 of their salary per year and a catch up contribution of an additional $5,500 for those over age 50. In this type of plan, companies have the option to make matching contributions or a required contribution even if the employee does not contribute. The employers choice will depend upon many variables primarily cost and employee satisfaction.

Today, more than ever, business owners have several options to help themselves and their employees prepare for retirement. By consulting with your accountant and financial advisor, you can determine which plan is appropriate for your needs and begin making contributions for one of the most anticipated milestones in your life. To find more information, visit http://www.retirementplans.irs.gov.

Life is a journey, plan for it.

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Retirement plans can come with several options