Investing for Retirement: Plan Options for You and Your Team

Your retirement plan should do more than check a benefits box.

As a business owner, you’re planning for more than one future at the same time. You’re building the company, supporting the people who help you run it, and preparing for your own financial independence. A well-designed retirement plan serves all three. 

For most businesses, the starting point is straightforward: help employees save, offer a benefit that competes for talent, and give the owner a structured way to build assets outside the company. As the business grows, the conversation gets more strategic. The right plan can reward key employees, manage tax exposure and support an eventual ownership transition. 

The best plan isn’t the most complex one or the one with the highest contribution ceiling. It’s the one that fits your size, your cash flow and how much ongoing administration you’re willing to take on. 

Why offer a retirement plan?

A retirement plan belongs in your business strategy, not just your benefits package.

• Recruiting and retention: a solid plan helps you compete for talent and keep the people you already have. 
• Employee financial wellness: payroll-based saving makes it easier for employees to start and stay consistent. 
• Tax advantages: employer contributions are generally deductible, which can lower your business’s taxable income. 
• Your own future: a plan gives owners a disciplined, tax-advantaged way to save alongside their team. 
• Room to grow: the plan can evolve as you add employees, become more profitable, or start planning a transition. 

Plan options for businesses 

The right plan depends on your size, your budget and how much flexibility you want. 

• SEP IRA: simple to set up and fully employer-funded. For 2026 you can contribute up to 25% of an employee’s compensation, capped at $72,000. 
• SIMPLE IRA: built for smaller employers. For 2026 employees can contribute up to $17,000, or $18,100 at businesses with 25 or fewer employees, with catch-up amounts for those 50 and older. Employers either match up to 3% of pay or make a 2% contribution for all eligible employees. 
• 401(k) and other defined contribution plans: employees can contribute up to $24,500 in 2026, with catch-up contributions starting at age 50. Combined employee and employer contributions can reach $72,000. 
• Defined benefit and cash balance plans: these pension-style plans allow larger contributions and suit established businesses with steady cash flow. The 2026 maximum annual benefit is $290,000. 

 When a 401(k) becomes the right conversation 

A 401(k) usually becomes attractive when a business wants more flexibility than an IRA-based plan can offer. Employees save directly from payroll, and the plan can include employer matching, profit sharing, Roth contributions and automatic enrollment. 

For owners, a 401(k) is also the foundation for more advanced planning. If the business is profitable and you want to save more, a profit-sharing feature or a cash balance plan can be layered on top. That is why a 401(k) is worth viewing as part of your own wealth-building strategy, not only as an employee benefit. 

 Employer matching and vesting 

A match is one of the most effective ways to encourage employees to save, and it signals that you are invested in their future. Common approaches include: 

• Full match: dollar for dollar up to a set percentage of pay. 
• Partial match: a portion of each dollar the employee contributes. 
• Tiered match: a higher match on the first few percent of pay and a smaller match on the next. 

You can also use a vesting schedule, often three to five years, so matched dollars become fully owned by the employee over time. That can support retention while protecting your investment. 

 Cash balance plans: an advanced option for profitable businesses 

For the right owner, a cash balance plan can be the most important retirement conversation on the table. It can build retirement assets faster than a 401(k) or SEP IRA alone, particularly when the business is consistently profitable, cash flow is steady and the owner is closer to retirement. 

A cash balance plan is a type of defined benefit plan, but it feels familiar to owners and employees because benefits appear in an account-like format. Rather than choosing a contribution amount each year, the plan uses actuarial calculations to set funding based on plan design, employee census, compensation and age. 

The larger funding opportunity comes with more responsibility: actuarial support, third-party administration, annual testing, investment oversight and a commitment to make required contributions in future years. It suits a consistently profitable business with predictable cash flow. It is a poor fit if cash flow is uneven or the business is in transition. 

 Traditional defined benefit plans 

Traditional defined benefit plans are pension-style arrangements built around a promised retirement benefit, usually expressed as future income. They still have a place, but most business-owner conversations today center on cash balance designs because the account-style format is easier to explain. 

Both require actuarial calculations and professional administration. The practical question is not the technical plan type. It is whether the business can support the funding commitment and whether the design accomplishes your goals. One clarification worth making: the $290,000 figure is an annual benefit limit, not a contribution limit. Cash balance contributions are actuarially determined for your specific plan and participants. 

 ESOPs: where retirement planning meets succession 

An Employee Stock Ownership Plan is a qualified retirement plan that invests primarily in employer stock. For many owners it functions as a succession tool as much as a benefit. 

An ESOP can create a market for company shares, provide shareholder liquidity, preserve the company’s independence and transition ownership gradually. For owners who care about legacy, culture and continuity, it looks very different from a third-party sale. 

An ESOP is not a simple benefit add-on. It requires planning around valuation, financing, fiduciary governance, employee communication and future share repurchase obligations, and it generally calls for stable cash flow, a capable management team and a long-term commitment to employee ownership. 

 Do not overlook your own retirement 

Many owners reinvest everything in the company and assume the business itself is the retirement plan. That can work, but it concentrates your future in one company, one industry and one eventual valuation. 

The principles that help your employees apply to you: start early, contribute consistently and let compound growth do the work. A 401(k), a profit-sharing feature, a cash balance plan or an ESOP may each have a role, depending on where the business is headed. Even modest, regular contributions add up over time. 

 Make it easy for your team 

The plans that work best are the ones employees actually use. 

• Automatic contributions: money goes in before it can be spent, then gets invested and grows. 
• Clear communication: help employees understand the match, the vesting schedule and how to enroll. 
• Periodic education: offer regular guidance on saving, investing and staying consistent. 
• Periodic reviews: revisit the plan as your business grows and as the people in it change. 
• For ESOPs: explain employee ownership, valuation, vesting and distributions, and how company performance affects account values. 

 “For most business owners, offering a retirement plan is one of the most effective ways to attract and keep good people. It is also easy to put your own retirement last. The owners who do best treat their personal savings with the same discipline they bring to the business.” – Tracy Baughman, SVP, Chief Investment Officer

 Choosing and managing a retirement plan doesn’t have to be complicated. Croghan’s wealth management team can help you compare options, weigh owner and employee goals, coordinate with your tax and plan professionals, and review whether the plan still fits as the business grows. The first step is a conversation about what you want the plan to accomplish.