If you are an entrepreneur with employees, you know it’s not easy to balance your personal life and business obligations. You might feel like you have no time or energy left over to think about retirement planning, but you have unique responsibilities and risks as an employer.

For most small businesses, preparing for retirement is not a matter of if or when. If you want to thrive in your work, it’s essential to understand the benefits of setting up retirement plans for staff members. Read on to overview the best retirement plans for small business owners with employees.

Do small businesses have to offer retirement plans?

Small businesses don’t have to offer retirement plans, but it’s a good idea. Retirement plans are an essential benefit for employees and a valuable recruiting tool for small businesses.

Small business owners may be tempted to skip this benefit because they don’t want to pay the extra costs or don’t think they’ll have enough employees to justify offering a plan. But submitting some form of retirement plan can help your company attract and retain employees and provide them with valuable benefits in their later years.

Types of Retirement Plans

Small business owners have several options for setting up a retirement plan for their employees. The best choice depends on the size of your company, how many employees you have, and how much time you have before employees can start making 401(k) contributions. Here are some of the most common types of retirement plans for small business owners:

Traditional 401(k)

This is the most common type of corporate-sponsored retirement plan, and it allows you to save for retirement while lowering your tax bill. You contribute pre-tax money from each paycheck, and your employer makes matching or profit-sharing contributions. Once you reach age 59 ½ or older, you can withdraw funds without paying any additional taxes or penalties.

Safe harbor 401(k)

This plan is similar to a traditional 401(k), but with one key difference: You don’t have to worry about meeting nondiscrimination requirements when selecting investments for your account — because there are no nondiscrimination tests, the IRS doesn’t require that plan providers offer safe harbor options in their lineup.

Solo 401(k)

The Solo 401(k) Plan is a retirement plan for self-employed individuals with no employees. This plan allows business owners to contribute up to $55,000 annually in pre-tax dollars to their retirement accounts. The Solo 401(k) Plan is designed for small businesses that want to offer their owners a tax-advantaged way to save for retirement on a tax-deferred basis.

SIMPLE IRA

The SIMPLE IRA Plan is an IRS-approved retirement plan with many features like other employer-sponsored plans. Small businesses offer it with 100 or fewer employees, and employers who want more control over their employee benefit plans can set them up quickly.

SEP IRA

A Simplified Employee Pension Individual Retirement Account is a retirement plan that allows you to contribute on behalf of yourself and your employees. Contributions are made on a pre-tax basis and are tax-deferred until withdrawn at retirement. You can set up your own SEP-IRA through a brokerage firm or financial institution.

Traditional IRAs

The Traditional IRA is one of the most popular retirement accounts available today. It allows you to save for retirement with pretax dollars, which means you don’t pay taxes on the money you put into it until after you retire (when you start withdrawing funds). You can open an account with just $100 and invest as much as $6,000 each year (or $7,000 if you’re 50 or older). When you reach age 70½, however, your required minimum distributions kick in — generally around 5 percent annually — so consider these distributions when deciding how much to contribute to each account.

Roth IRA

A Roth IRA is an individual retirement account (IRA) that allows you to contribute after-tax dollars into an account that grows tax-free, and withdrawals after age 59½ are tax-free. Contributions are made with after-tax dollars, so there is no current tax deduction for contributions. However, all earnings grow tax-free, so no future taxes are due on distributions from a Roth IRA as long as specific requirements are met.

Rollover IRA

Rollover IRAs are one of the most common options for retirement savings for small business owners. This type of account allows you to roll over or transfer your IRA or 401(k) funds into this type of account. You can also use a rollover IRA to consolidate multiple individual retirement accounts (IRAs) into one account.