Averkamp CPA Resource
Retirement Tax Planning Guide
Retirement plans can reduce taxable income, help recruit employees, and support owner wealth-building, but plan selection depends on payroll, cash flow, staff, and deadlines.
Business owners should compare SEP IRA, SIMPLE IRA, solo 401(k), traditional 401(k), profit sharing, and Roth strategies before year-end decisions are locked in.
What This Resource Covers
Use these points to move from a general tax question to the facts, records, forms, and deadlines that matter.
Compensation base
Owner contributions often depend on W-2 wages, self-employment earnings, or eligible plan compensation.
Plan design
SEP IRA, SIMPLE IRA, solo 401(k), profit sharing, Roth, and after-tax features solve different problems.
Employee impact
Eligibility, testing, employer contributions, and notices can affect the owner strategy.
Payroll timing
Deferrals and some elections generally need to happen before payroll or plan deadlines pass.
Key Rules and Review Areas
These are the technical areas that typically drive the answer for this topic.
- The 2026 401(k) elective deferral limit is $24,500.
- The 2026 defined contribution limit is $72,000 before catch-up contributions.
- Ages 60 through 63 may have a higher catch-up limit for certain plans.
- Employer contributions depend on plan terms, compensation, and nondiscrimination rules.
- Roth and pre-tax decisions depend on current and expected future tax rates.
Forms, IRS Guidance, and Filing Triggers
When a form or IRS publication applies, review the trigger and the supporting records before filing.
| Form or guidance | What it controls | When to review |
|---|---|---|
| IRS 2026 Retirement Plan Limits | Authoritative IRS or government guidance for this topic. | Use when this form or IRS topic appears in the facts. |
| IRS Publication 560 | Retirement plan setup, contribution limits, and plan rules for small business owners. | Business retirement plan contributions, limits, or eligibility need modeling. |
Documents To Gather
Good tax work starts with clean source records. Save these items before the return, election, calculation, or notice response is prepared.
- Plan documents.
- Payroll and compensation records.
- Employee census.
- Prior contributions and compliance testing results.
- Owner cash-flow and tax projections.
Quality Checks Before Filing
These checks help prevent avoidable notices, amended returns, duplicate reporting, and unsupported positions.
- Contribution limits are updated for the tax year.
- Eligible compensation is confirmed.
- Employee census and testing needs are reviewed.
- Payroll deposits and plan reports reconcile.
- Roth, pre-tax, and employer amounts are separated.
Practical Planning Workflow
Follow this order so the tax answer is built from the facts rather than from a last-minute filing scramble.
- Choose the plan type based on owner and employee goals.
- Confirm deadlines before the year closes.
- Model contribution limits using compensation.
- Coordinate payroll, bookkeeping, and plan administrator reports.
- Review Roth versus pre-tax treatment.
Common Mistakes To Avoid
These are the issues that most often create tax surprises, penalties, or extra cleanup work.
- Choosing a plan without employee cost modeling.
- Missing setup deadlines.
- Assuming owner distributions count as compensation.
- Ignoring compliance testing.
- Waiting until filing season to ask about contributions.
Frequently Asked Questions
Concise answers for the questions business owners, shareholders, partners, and self-employed taxpayers commonly ask before filing or planning.
What is the 2026 401(k) elective deferral limit?
IRS guidance lists the 2026 elective deferral limit at $24,500.
What is the 2026 defined contribution plan limit?
IRS guidance lists the 2026 annual additions limit at $72,000 before catch-up contributions.
Do S corporation distributions count as retirement plan compensation?
Generally no. W-2 compensation is usually central for shareholder-employee retirement contributions.
Can a business owner use Roth contributions?
Potentially, depending on the plan design and taxpayer goals.
Related Averkamp CPA Group Services
These service pages are the most relevant next step when the resource applies to your facts.
Official IRS References
Current IRS and government resources should control when there is a discrepancy or when a filing position needs confirmation.
This resource is general information and should not be treated as tax, legal, payroll, employee benefits, or accounting advice for your specific situation. Consult a qualified professional before acting.