# At The Money: How to Max Out Your Small Business Retirement Plan

An episode of [Masters in Business](https://invisiblenetwork.ai/podcast/730188152), 29 Apr 2026, 15 min.

Audio: https://podtrac.com/pts/redirect.mp3/traffic.omny.fm/d/clips/e73c998e-6e60-432f-8610-ae210140c5b1/4e4cd910-40a1-4619-a5f3-ae2b0012ffff/3a3293a2-09a3-4eb9-bfaa-b43b00f22685/audio.mp3?utm_source=Podcast&in_playlist=5873a3cb-298f-40bc-b71f-ae2b0013000d

Are you running a small business or “side hustle” that generates real income? You may not be taking full advantage of the many retirement savings plans available. 'At The Money', Barry speaks with Dan LaRosa, Director of Corporate Retirement Plans at Ritholtz Wealth Management, overseeing more than $400 million in various plans. He is a Qualified Plan Financial Consultant (QPFC) and Accredited Investment Fiduciary (AIF) and partner at the firm. They discuss how individuals can maximize their tax-deferred savings through various qualified accounts. Each week, “At the Money” discusses an important topic in money management. From portfolio construction to taxes and cutting down on fees, join Barry Ritholtz to learn the best ways to put your money to work. See omnystudio.com/listener for privacy information.

## Transcript

[0:27] Speaker 1: Saving for retirement is challenging, especially if you're a small
[0:31] Speaker 1: business owner or solo practitioner. Various retirement plans like s
[0:36] Speaker 1: e P solo CA's megabackdoor roths can really be confusing.
[0:42] Speaker 1: There are so many choices, the options have increased, and
[0:45] Speaker 1: the rules have become even more complex. To help us
[0:49] Speaker 1: unpack all of this and what it means for your
[0:51] Speaker 1: retirement portfolio, let's bring in Dan L. Rossa. He is
[0:54] Speaker 1: an expert in corporate qualified retirement accounts working with clients
[0:59] Speaker 1: all over the count Full disclosure. Dan runs the corporate
[1:03] Speaker 1: Retirement Planning Group at the Riholts Wealth Management, my firm,
[1:07] Speaker 1: and he's one of my partners. So Dan, let's start basic.
[1:11] Speaker 1: What options exist for either solo or small business owners
[1:16] Speaker 1: if they want to save more money for retirement on
[1:20] Speaker 1: a tax deferred basis.
[1:22] Speaker 2: Sure vers, the main options, or at least the options.
[1:25] Speaker 3: That you'll more likely than not start with, are a
[1:28] Speaker 3: sep IRA or a solo four one K. A lot
[1:31] Speaker 3: of people default to a sept even if you're in
[1:34] Speaker 3: a situation where the solo K might actually be a
[1:37] Speaker 3: better option. The step is just simpler, and it's often
[1:40] Speaker 3: the first thing that your CPA is going to mention
[1:43] Speaker 3: to you or recommend solo four one K with a
[1:46] Speaker 3: megabactoor Roth feature has also gotten more popular in recent years.
[1:51] Speaker 3: And once you have one of those in place, if
[1:53] Speaker 3: you're still looking for more tax deferral opportunities, a defined
[1:57] Speaker 3: benefit cash balance plan might be a good fit.
[2:00] Speaker 1: Huh really really interesting. Now, last time when we talked
[2:03] Speaker 1: about megabackdoor Roth, the total you can contribute if you're
[2:08] Speaker 1: working for a firm is seventy two thousand dollars. But
[2:12] Speaker 1: these days, so many people have side hustles. They set
[2:15] Speaker 1: up an LLC or a little company to do something,
[2:18] Speaker 1: and maybe they're a solo practitioner. Maybe it's a husband
[2:22] Speaker 1: and wife, and this is income beyond what their regular
[2:25] Speaker 1: paycheck is. If you maxed out your megabackdoor Roth at
[2:30] Speaker 1: your regular employer and you have this side gig, how
[2:34] Speaker 1: much can you add above that seventy two thousand dollars?
[2:38] Speaker 3: Yeah, a lot of people don't realize this, but each
[2:42] Speaker 3: plan has its own seventy two thousand dollars limit.
[2:46] Speaker 1: Right.
[2:46] Speaker 3: The only thing that aggregates across all plans is the
[2:50] Speaker 3: twenty four and a half thousand dollars employee deferral limit. Right,
[2:54] Speaker 3: that's the amount of money that each of us can
[2:56] Speaker 3: contribute to our four one K plan. But each plan
[2:59] Speaker 3: has seventy two thousand dollars limit. So what you can
[3:02] Speaker 3: do if you have a sidehouse solo or a solo gig,
[3:06] Speaker 3: you can set up a solo four to one K
[3:08] Speaker 3: with a magabact or OFF or even just a regular
[3:10] Speaker 3: SOLOK or SEP.
[3:12] Speaker 2: As long as your income is.
[3:14] Speaker 3: High enough, you can make additional contributions into that retirement
[3:18] Speaker 3: plan of up to seventy two thousand dollars.
[3:21] Speaker 1: And how do they figure out the seventy two thousand
[3:23] Speaker 1: Is that based on over one hundred and forty five
[3:26] Speaker 1: or one hundred and fifty thousand a year? Or is
[3:29] Speaker 1: there a percentage calculation? What where does that seventy two
[3:32] Speaker 1: thousand number come from?
[3:34] Speaker 3: Yeah, well, the seventy two thousand number is just the
[3:36] Speaker 3: overall four to one K limit right or retirement plan limit.
[3:39] Speaker 3: The set actually has the same limit, but how to
[3:43] Speaker 3: get there is a bit of a loaded question, and
[3:45] Speaker 3: it's different for each of those plans. So the set
[3:49] Speaker 3: the set IRI is technically all employer contributions, So your
[3:53] Speaker 3: contribution amounts are directly tied to your earnings, all right,
[3:57] Speaker 3: So you can contribute up to twenty percent of your
[4:02] Speaker 3: net income to get to that seventy two thousand dollars number.
[4:05] Speaker 2: All right, So you do the math.
[4:07] Speaker 3: You need an income of three hundred and sixty thousand
[4:10] Speaker 3: dollars to max out and get to that seventy two
[4:13] Speaker 3: thousand all right. The solo K only a portion of
[4:16] Speaker 3: your contribution is tied to your income, so you can
[4:19] Speaker 3: contribute a lot more on a lower income, all right.
[4:23] Speaker 3: An income of about two hundred and thirty five two
[4:26] Speaker 3: hundred and forty thousand will get you to that seventy
[4:28] Speaker 3: two thousand dollars max. The megabackdoor Rough, it's a bit
[4:33] Speaker 3: of a cheat code if you have as long as
[4:36] Speaker 3: your income, as long as your net income is seventy
[4:37] Speaker 3: two thousand dollars, you can contribute all of that into
[4:42] Speaker 3: the solo for ONEK.
[4:44] Speaker 1: What are the tradeoffs between the sepira, the Solo four
[4:48] Speaker 1: or one K the solo megabackdoor Roth. It sounds like
[4:52] Speaker 1: this is really complex. Are there any advantages or disadvantages
[4:58] Speaker 1: to each of these?
[5:01] Speaker 3: Yeah, it is complex, and that's why a lot of
[5:02] Speaker 3: people just kind of default to a SEPT because it's easier,
[5:05] Speaker 3: But it really depends on your income and your objectives.
[5:09] Speaker 2: If your income is on the.
[5:10] Speaker 3: Lower side, or maybe it varies from year to year,
[5:14] Speaker 3: the solo K is going to certainly allow the most
[5:16] Speaker 3: flexibility and let you maximize your contribution even in.
[5:20] Speaker 2: Those lower income years.
[5:22] Speaker 3: If WROTH contributions are the objective, you just can't beat
[5:26] Speaker 3: the solo K with the megabackdoor WROTH it's going to
[5:29] Speaker 3: again allow you to contribute up to seventy two thousand
[5:32] Speaker 3: in rough contributions. You can't find that anywhere else. But
[5:37] Speaker 3: if your income is consistently high and ROTH is not
[5:41] Speaker 3: a priority, you just want to maximize your tax deferrals,
[5:45] Speaker 3: then a SEP is going to get the job done.
[5:47] Speaker 1: So if you're making one hundred or less, or two
[5:50] Speaker 1: fifty or more, or a million or more, that may
[5:54] Speaker 1: affect which of these you choose.
[5:57] Speaker 2: Yeah, for sure.
[5:58] Speaker 3: And again assuming let's work with the assumption that you
[6:01] Speaker 3: want to maximize your contributions, you want.
[6:03] Speaker 2: To contribute as much as you can.
[6:05] Speaker 3: The lower your income is, the more powerful the solo
[6:08] Speaker 3: four one K is right. You're just gonna have a
[6:10] Speaker 3: lot more flexibility with your contributions, and the higher your
[6:15] Speaker 3: income goes, you're fine with a SEP because that twenty
[6:18] Speaker 3: percent of your net income.
[6:19] Speaker 2: If your income is high.
[6:20] Speaker 3: Enough, again, over three fifty three sixty, you're going to
[6:23] Speaker 3: be putting seventy thousand plus.
[6:24] Speaker 2: Away a year.
[6:26] Speaker 1: Really intriguing. How do you count an employee if your
[6:30] Speaker 1: SOLO four one K doesn't matter if you're ten ninety
[6:33] Speaker 1: nine or W two or part time or spouse, a
[6:37] Speaker 1: husband and wife own a small business who counts as
[6:40] Speaker 1: an employee For these the SOLO.
[6:42] Speaker 2: Four one K is easy.
[6:44] Speaker 3: Once you have a W two employee that becomes eligible,
[6:47] Speaker 3: it's no longer a solo KAY and it's going to
[6:49] Speaker 3: be hard for the owner to max out without contributions
[6:52] Speaker 3: to that employee. The SEP is a little bit different.
[6:56] Speaker 3: Eligibility requirement is referred to the three or five rules.
[7:00] Speaker 3: So once you have an employee that's worked three out
[7:03] Speaker 3: of any five years earning more than something now only
[7:06] Speaker 3: I think seven hundred or seven hundred and fifty dollars,
[7:09] Speaker 3: they're eligible and that means they would receive the same
[7:13] Speaker 3: percentage of compensation that you're giving yourself, So that that
[7:17] Speaker 3: could get expensive in a hurry.
[7:19] Speaker 2: As far as a spouse.
[7:20] Speaker 3: Being classified as an employee, you can have your spouse
[7:25] Speaker 3: in the solo ka and still run the solokay. You're
[7:29] Speaker 3: not going to be disqualified. Your spouse counts as another owner. Also,
[7:34] Speaker 3: a lot of people don't realize that a soloka can
[7:37] Speaker 3: have multiple partners in them, right.
[7:40] Speaker 2: So in other words, if a.
[7:43] Speaker 3: Company has four different partners, you can have all four
[7:46] Speaker 3: partners and each of the spouses in the solo kay
[7:49] Speaker 3: as long as no non As long as there are
[7:52] Speaker 3: no non owner employees, you're good to go.
[7:55] Speaker 1: And that's seventy two thousand per person husband and wife per.
[8:00] Speaker 2: Person, again assuming the income allows for it.
[8:03] Speaker 1: But yes, really really intriguing, man, Let's talk about the
[8:09] Speaker 1: administration and compliance burdens of these various options. I know
[8:14] Speaker 1: you need plan documents, and then there's the infamous Form
[8:17] Speaker 1: fifty five hundred, and there are all sorts of record
[8:20] Speaker 1: keeping rules. What do small businesses have to know? How
[8:25] Speaker 1: do they avoid getting tripped up by all of this?
[8:28] Speaker 2: Yeah, that is the easiest, for sure.
[8:30] Speaker 3: It's just a few forms to set up and there's
[8:32] Speaker 3: no annual maintenance, no filings. Owner just needs to track
[8:36] Speaker 3: their contributions with the solo form on K there is
[8:40] Speaker 3: a little more and the biggest thing is once the
[8:42] Speaker 3: plan reaches a total of two hundred and fifty thousand
[8:45] Speaker 3: dollars in total plan assets on the SEMBI thirty first
[8:49] Speaker 3: of any plan here a form fifty five hundred easy
[8:53] Speaker 3: must be filed.
[8:55] Speaker 2: Right. That's basically the tax return for the plan. It's
[8:58] Speaker 2: a really simple form, but the penalties are insane. It's
[9:03] Speaker 2: two hundred and.
[9:03] Speaker 3: Fifty dollars a day up to one hundred and fifty
[9:07] Speaker 3: thousand dollars. So for a very long time this really
[9:11] Speaker 3: wasn't regulated, but in recent years we've actually really seen
[9:15] Speaker 3: an uptake and enforcement of these penalties. So shouldn't prevent
[9:19] Speaker 3: you from setting up is soil, okay, but it's very
[9:21] Speaker 3: important to be aware of this when you set the
[9:24] Speaker 3: plan up.
[9:24] Speaker 1: So let's talk set up and funding. When do these
[9:28] Speaker 1: plans need to be set up and funded by you know,
[9:31] Speaker 1: we're recording this in February of twenty twenty six. Is
[9:35] Speaker 1: it too late to set something up and funded for
[9:38] Speaker 1: twenty twenty five? What are the options? What does the
[9:41] Speaker 1: timing look like?
[9:42] Speaker 2: Yeah, I know, you still have plenty of time.
[9:45] Speaker 3: The SEP is an IRA, So just like any other IRA,
[9:49] Speaker 3: it's always been able to be established and funded for
[9:52] Speaker 3: a prior year. You have until tax filing plus extension
[9:56] Speaker 3: to get that plan funded effective. I believe of last year,
[10:01] Speaker 3: the solok got a lot more leaning and kind of
[10:05] Speaker 3: follows that same path as the set So you can
[10:08] Speaker 3: establish a solokay and funded for the prior year with
[10:11] Speaker 3: some caveats if the plan is set up by April fifteenth.
[10:16] Speaker 3: Let's say say for this year, the plan is set
[10:17] Speaker 3: up by April fifteenth of twenty twenty six, you can
[10:20] Speaker 3: make employee and employer profit sharing contributions, so you can
[10:26] Speaker 3: get to that full seventy two thousand as long as
[10:29] Speaker 3: you fund by the extended filing deadline of October fifteenth
[10:32] Speaker 3: of this year, right if you can. If you set
[10:35] Speaker 3: up the plan after April fifteenth of this year, you
[10:38] Speaker 3: can only make your employer contributions your profit sharing contributions
[10:42] Speaker 3: to it, so you're going to be a little more
[10:44] Speaker 3: limited to how much.
[10:44] Speaker 2: You can fund.
[10:46] Speaker 1: Let's talk about succession planning or exit planning, or with
[10:50] Speaker 1: a husband and wife, the death of a spouse. Are
[10:52] Speaker 1: there any one structure superior to others? If the owner
[10:58] Speaker 1: either expects to sell the business or retire or maybe
[11:02] Speaker 1: even bringing partners, which is the most flexible here.
[11:06] Speaker 3: The solo case always going to give you more flexibility
[11:08] Speaker 3: than the SEP. You know, if there's multiple partners in
[11:12] Speaker 3: the solo KY, they can ease to contribute different amounts
[11:15] Speaker 3: or some not at all, and a step the contributions
[11:18] Speaker 3: are proadus, so everyone has to get the same percentage
[11:20] Speaker 3: of comm so obviously non ideal if there are going
[11:23] Speaker 3: to be multiple partners or people with different goals involved.
[11:27] Speaker 3: On the other hand, steps are just structurally a lot simpler,
[11:31] Speaker 3: easier to unwind if necessary. So it really one isn't
[11:36] Speaker 3: always going to be better than the other. It really
[11:37] Speaker 3: depends on the situation.
[11:39] Speaker 1: So one of the advantages of for one k's is
[11:42] Speaker 1: the creditor and risk of protections. Even if you lose litigation,
[11:47] Speaker 1: nobody can take your retirement money away. Do the same
[11:51] Speaker 1: things apply to the SEP or solo for on one k's,
[11:55] Speaker 1: is it really the same set of rules?
[11:57] Speaker 3: Yeah, So what you're talking about with four one K
[12:00] Speaker 3: is that additional ARISSA protection. So ARISA plans, which are
[12:04] Speaker 3: your employer four one ks and defined benefit plans have
[12:08] Speaker 3: the most.
[12:09] Speaker 2: Creditor protection of all qualified plans.
[12:11] Speaker 3: It is a common misconception that solo CAYSE because they
[12:14] Speaker 3: are four one k's, also have this enhanced creditor protection.
[12:19] Speaker 3: They do not because they don't cover any non owner
[12:23] Speaker 3: employees they don't have they.
[12:25] Speaker 2: Don't qualify for that extra ARISA protection.
[12:27] Speaker 3: So STEPS and solo k's are on the same level
[12:30] Speaker 3: in terms of predator protection, the same as a regular IRA.
[12:34] Speaker 3: If you are in a religious profession and that protection
[12:38] Speaker 3: is important, might be a good idea to roll some
[12:41] Speaker 3: of those IRA or solo key balances into your employer
[12:45] Speaker 3: four to one K or defined benefit plan if you
[12:47] Speaker 3: have one available.
[12:48] Speaker 1: Huh, that is really interesting. I would imagine doctors or
[12:53] Speaker 1: I remember back in the day brokers used to get
[12:56] Speaker 1: sued on a regular basis, so that seems to be worthwhile.
[13:01] Speaker 1: Last question, so, if you have a business owner that's married,
[13:06] Speaker 1: whether or not the spouse works for them in the business,
[13:11] Speaker 1: can that spouse also open either a solo for a
[13:16] Speaker 1: one K or SEP or megaback door WROTH for a
[13:20] Speaker 1: one K and legitimately increase the household contribution assuming the
[13:25] Speaker 1: revenue allows for it.
[13:29] Speaker 3: Yeah, as long as your spouse is a legitimate employee
[13:33] Speaker 3: of your solo practice. You can do that and it
[13:36] Speaker 3: has tremendous benefits, but they have to be an employee
[13:39] Speaker 3: on payroll receiving wages.
[13:41] Speaker 1: Right.
[13:42] Speaker 3: So okay allows you to contribute a lot, even on
[13:46] Speaker 3: a low income. Right, so a spouse would be able
[13:48] Speaker 3: to actually contribute one hundred percent of their compensation up
[13:53] Speaker 3: to that twenty four and a half thousand, or if
[13:55] Speaker 3: you're over fifty thirty two and a half, right, So
[14:00] Speaker 3: that ends up quickly. It's an easy way to kind
[14:02] Speaker 3: of supercharge your household savings. Is adding your spouse to
[14:06] Speaker 3: your solo practice retirement plan.
[14:09] Speaker 1: Huh really? All this stuff is so intriguing, and it's
[14:13] Speaker 1: just another tool in the toolbox to wrap up. If
[14:17] Speaker 1: you're a small business owner or solo practitioner and you
[14:21] Speaker 1: haven't taken advantage of the various tax deferred retirement savings plan,
[14:28] Speaker 1: whether it's a step a solo for a one K,
[14:31] Speaker 1: a megaback door routh for a one K, Speak to
[14:35] Speaker 1: your fill in the blank financial advisor, accountant, tax professional
[14:40] Speaker 1: and get hopping on this. This is an enormous way
[14:45] Speaker 1: to accumulate wealth over in the next ten or twenty
[14:48] Speaker 1: years and have various options of whether this goes in
[14:53] Speaker 1: pre tax or post tax that allows you to maximize
[14:57] Speaker 1: your long term returns. I'm Barry Ridults. You're listening to
[15:00] Speaker 1: Bloombergs at the Money Working sh

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