I own my own business and currently have no employees, with no immediate plans to hire anybody (maybe in a few years). My wife and I would like to be saving for retirement, especially now that my business is taking off and we have some extra cash. Wht is my best option since it's just me? Should I set up a Solo 401k? Or go with some kind of IRA? Are there any business implications for either, especially if I do end up hiring more employees?
Like most financial decisions, there are pros and cons to the various options but boiling it down, individual 401k allows for greater contributions at the same income level and also allows for loans up to 50% of acct balance whereas a SEP-IRA (which would be the IRA of choice for most business owners) has less administration and can accomodate additional employees.
The SEP IRA is generally going to be a better option for most small business owners. None of the other retirement options, including the Individual 401k, offer the same flexibility or are anywhere close to as easy to administer. And as a small business owner, you don't want to be wasting your time or yoru accountant's time with plan administration.
I'll put it to you like this: I invest my own retirement savings in an SEP IRA.