29 April 2026

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

1Frameworks

7Insights

Listen

Frameworks in this episode

Finance5 steps

Small-Business Retirement Plan Selection Matrix

Match income, Roth goals, staffing, and administration to the right plan

Read →

Insights & moments

The myth-busts, hot takes, explainers, and tools worth keeping.

Myth Buster· 2

Myth Buster07:19

A Solo 401k Can Include Spouses and Multiple Owners

A solo 401k does not have to cover only one person. LaRossa says spouses can participate as owners, and multiple partners plus their spouses can remain in the plan as long as there are no non-owner employees.

A spouse can participate without automatically disqualifying the solo plan
Multiple business partners can share a solo 401k
Partners' spouses can also participate
The arrangement depends on having no non-owner employees

“you can have your spouse in the solo ka and still run the solokay. You're not going to be disqualified. Your spouse counts as another…”
Dan LaRossa · 07:20

“as long as there are no non owner employees, you're good to go.”
Dan LaRossa · 07:49

#spouses#business partners#plan eligibility

Myth Buster11:57

A Solo 401k Does Not Receive Extra ERISA Creditor Protection

Employer 401k plans and defined-benefit plans receive stronger ERISA creditor protection because they cover non-owner employees. LaRossa says solo 401k plans do not qualify for that extra protection, leaving them on the same level as SEP IRAs and regular IRAs for this purpose.

Employer 401k and defined-benefit plans receive ERISA protection
Solo 401k plans do not cover non-owner employees
That distinction prevents the enhanced ERISA protection
SEP IRAs and solo 401k plans receive the same level described for regular IRAs

“It is a common misconception that solo CAYSE because they are four one k's, also have this enhanced creditor protection.”
Dan LaRossa · 12:11

“They do not because they don't cover any non owner employees they don't have they. Don't qualify for that extra ARISA protection.”
Dan LaRossa · 12:19

#creditor protection#erisa#solo 401k

Explainer· 3

Explainer02:38

A Side-Hustle Plan Can Carry Its Own Overall Contribution Limit

LaRossa says each retirement plan has its own overall $72,000 limit at the time discussed, even when someone already participates in an employer plan. The employee deferral limit is different: its $24,500 cap aggregates across all plans, and sufficient side-business income is still required for additional contributions.

Each plan has its own overall $72,000 limit in the episode's 2026 discussion
The $24,500 employee deferral limit aggregates across plans
A side business can establish a separate solo 401k or SEP IRA
Business income must support the additional contribution

“each plan has its own seventy two thousand dollars limit.”
Dan LaRossa · 02:38

“The only thing that aggregates across all plans is the twenty four and a half thousand dollars employee deferral limit.”
Dan LaRossa · 02:46

#side hustles#contribution limits#solo 401k

Explainer06:56

The SEP IRA's Three-of-Five Rule Can Get Expensive

SEP IRA eligibility can arise after an employee has worked in three of any five years and earned more than a low compensation threshold. Once eligible, that worker must receive the same compensation percentage the owner contributes for themselves, which can rapidly increase plan costs.

SEP eligibility uses a three-of-five-years rule
The earnings threshold discussed was only about $700 or $750
Eligible employees receive the same contribution percentage as the owner
Employee contributions can make the structure expensive

“Eligibility requirement is referred to the three or five rules.”
Dan LaRossa · 06:56

“they're eligible and that means they would receive the same percentage of compensation that you're giving yourself, So that that could get expensive in a…”
Dan LaRossa · 07:09

#SEP IRA#employee eligibility#employer contributions

Explainer09:42

An April 15 Setup Date Preserves More Prior-Year Solo 401k Options

The episode says a SEP IRA can be established and funded for a prior year through the tax-filing deadline plus extension. For a solo 401k, setting up the plan by April 15, 2026 preserved both employee and employer profit-sharing contributions for 2025, with funding by the extended October 15 deadline; setting it up later limited the owner to employer contributions.

SEP IRA timing can extend through the tax-filing extension
The episode's solo 401k example used an April 15, 2026 setup deadline
Meeting that setup date preserved employee and employer contribution types
The extended funding deadline in the example was October 15, 2026
Later setup allowed only employer profit-sharing contributions

“You have until tax filing plus extension to get that plan funded”
Dan LaRossa · 09:52

“If you set up the plan after April fifteenth of this year, you can only make your employer contributions your profit sharing contributions to it”
Dan LaRossa · 10:35

#deadlines#prior-year contributions#solo 401k

Takeaway· 2

Takeaway08:28

The $250,000 Form 5500-EZ Threshold Is Easy to Miss

A solo 401k must file Form 5500-EZ once total plan assets reach $250,000 on December 31 of a plan year, according to LaRossa. He describes the form as simple but warns that non-filing penalties can reach $250 per day and as much as $150,000.

The filing trigger is $250,000 in total plan assets
Asset value is tested at the end of the plan year
Form 5500-EZ functions like a tax return for the plan
Enforcement has increased in recent years
Potential penalties dwarf the form's administrative burden

“once the plan reaches a total of two hundred and fifty thousand dollars in total plan assets on the SEMBI thirty first of any plan…”
Dan LaRossa · 08:40

“It's two hundred and. Fifty dollars a day up to one hundred and fifty thousand dollars.”
Dan LaRossa · 09:03

#form 5500-ez#compliance#penalties

Takeaway13:29

Putting a Working Spouse on Payroll Can Expand Household Savings

A spouse who is a legitimate employee of the solo practice, on payroll and receiving wages, can participate in its retirement plan. LaRossa says the spouse can contribute up to 100% of compensation within the employee-deferral cap, expanding the household's retirement savings when business revenue supports it.

The spouse must be a legitimate employee
Payroll wages are required
Contributions can reach 100% of compensation up to the deferral cap
The episode cites a $24,500 cap, or $32,500 for someone over 50
Business revenue must support the arrangement

“as long as your spouse is a legitimate employee of your solo practice. You can do that and it has tremendous benefits, but they have…”
Dan LaRossa · 13:29

“It's an easy way to kind of supercharge your household savings. Is adding your spouse to your solo practice retirement plan.”
Dan LaRossa · 14:00

#spousal employment#household savings#payroll