Retirement Planning for Business Owners in O'Fallon and St. Charles County

Quick answer: Business owners can choose from a Solo 401(k), SEP IRA, SIMPLE IRA, a traditional 401(k) with profit sharing, or a cash balance or other defined benefit plan. The right one depends on whether you have employees, how steady your income is, how much you want to set aside, and when you expect to step back from the business. For 2026 the IRS limit on total annual additions to a defined contribution plan is $72,000 per participant, before catch-up contributions. We are fiduciaries. Renaud & Company Registered Investment Advisors helps owners compare these plans, plan for their income after the business, and coordinate with their CPA and attorney.

Why retirement planning looks different when you own the business

An employee usually has one decision: how much to put in the 401(k). An owner has several decisions that touch each other:

Your income is not always steady. Some years are strong and some are lean, so a plan that requires a set contribution every year can fit differently than one that lets you decide each year.
Your employees may have to be included. Several plan types require you to cover eligible employees, and some require you to contribute for them at the same rate you contribute for yourself.
The business may be your largest asset. What you do with it (keep it, hand it to family, sell it to a partner or a buyer) shapes how much retirement income you will need from everything else.
The tax return and the plan are linked. How your business is taxed (sole proprietor, partnership, or S corporation) changes how your contribution limit is calculated.
Deadlines are different for each plan. Some plans can be set up after the year ends and some cannot.

Which retirement plan fits your business?

Here is a side-by-side look at the plans most small and mid-sized business owners in St. Charles County ask about. Limits are the 2026 limits published by the IRS.

Plan	Typically considered when	2026 headline limits	Employees
Solo 401(k) (also called a one-participant 401(k))	You are the only participant, or you and your spouse are	Employee deferral up to $24,500 ($32,500 if 50+; $35,750 if 60 to 63), plus employer contributions; total additions up to $72,000 before catch-up	Designed for no employees other than a spouse. Once you hire eligible employees they generally must be included
SEP IRA	You want simple employer-only contributions and flexibility from year to year	Lesser of 25% of compensation or $72,000 (the IRS rate table adjusts the percentage for self-employed owners)	You contribute at the same percentage for every eligible employee
SIMPLE IRA	You have up to 100 employees and want a low-administration plan	Employee deferral up to $17,000 ($21,000 if 50+; $22,250 if 60 to 63) plus a required employer match or contribution	Employer must match up to 3% of pay or contribute 2% for eligible employees
401(k) with profit sharing (including safe harbor designs)	You have employees, want higher limits, and want a plan with more design choices	Employee deferral up to $24,500; total additions up to $72,000 before catch-up	Employees participate; testing applies unless the plan uses a safe harbor design
Cash balance or other defined benefit plan	Income is high and steady, the owner is closer to retirement, and you want to set aside more than a defined contribution plan allows	Annual benefit limit of $290,000; the contribution is set each year by an enrolled actuary	Plan must meet IRS coverage and nondiscrimination rules, so employees are generally included

Sources: IRS COLA limits page (irs.gov/retirement-plans/cola-increases-for-dollar-limitations-on-benefits-and-contributions), IRS Notice 2025-67, IRS Publication 560, and IRS one-participant 401(k) page. Figures can change each year. Catch-up amounts shown are the IRS 2026 catch-up limits ($8,000 or $11,250 for ages 60 to 63 for 401(k) plans; $4,000 or $5,250 for SIMPLE plans) added to the base deferral.

Solo 401(k)

A Solo 401(k) is a regular 401(k) plan that covers a business owner with no employees, or the owner and a spouse. The owner contributes in two roles: as the employee, through elective deferrals, and as the employer, through contributions based on compensation. For a self-employed owner, the IRS uses "earned income" (net earnings after half of self-employment tax and after the plan contribution itself), so the math is not simply 25% of profit. A Solo 401(k) with no employees generally does not need nondiscrimination testing, but a plan with $250,000 or more in assets generally has to file Form 5500-EZ each year. If you hire eligible employees, the no-testing advantage ends.

SEP IRA

A SEP is a written agreement under which you contribute to a SEP IRA for yourself and for each eligible employee. Only the employer contributes, and you do not have to contribute every year. If you do contribute, it has to follow a written allocation formula and cover all eligible employees. In 2026 an eligible employee is one who is at least 21, has worked for you in at least 3 of the last 5 years, and has received at least $800 in compensation. A SEP can be set up for a year as late as the due date of your tax return, including extensions.

SIMPLE IRA

A SIMPLE IRA is available to an employer with 100 or fewer employees who earned at least $5,000 in the prior year. Employees choose how much to defer, and you either match up to 3% of pay or contribute 2% of pay for each eligible employee. It must generally be the only retirement plan you contribute to. A new SIMPLE IRA must be set up effective between January 1 and October 1 of a year, which means it is too late to start one for 2026.

401(k) with profit sharing or a safe harbor design

A traditional 401(k) works for private companies of any size. It requires a written plan document, a trust for plan assets, a recordkeeping system, and notices to employees. Profit sharing lets you decide each year whether and how much to contribute. A safe harbor design can allow the plan to avoid certain annual tests. The IRS says new 401(k) plans established after December 29, 2022 must generally include automatic enrollment, with certain exceptions. SECURE 2.0 also increased the tax credit for small-employer plan startup, so ask your CPA whether a credit may apply (IRS Publication 560 and Form 8881).

Cash balance and defined benefit plans

A defined benefit plan promises a benefit based on a formula instead of tracking an account balance funded by contributions. The IRS notes that employers can generally contribute and deduct more under a defined benefit plan than under other plans, and also that these plans are more complex to set up and maintain. They require an enrolled actuary, an annual Form 5500 with Schedule SB, and minimum funding. An excise tax applies if the minimum contribution is not made.

A cash balance plan is a defined benefit plan that states the benefit as a hypothetical account. Each year the account is credited with a pay credit and an interest credit. The employer, not the participant, bears the plan's investment risk, and benefits are generally insured by the Pension Benefit Guaranty Corporation (U.S. Department of Labor fact sheet). Because a cash balance plan creates an ongoing commitment to fund the plan, owners usually look at it only when income is consistent and the business can sustain the required contributions.

A short way to narrow the choices

Do you have employees besides a spouse? If no, a Solo 401(k) or a SEP are the usual starting points. If yes, a SEP, SIMPLE, or 401(k) are on the table.
How steady is your income? If it swings, a plan with flexible contributions (a SEP, or a 401(k) with discretionary profit sharing) may fit better than one with required contributions.
How much do you want to set aside, and how soon do you want to retire? If your goal is higher than a defined contribution plan allows, a cash balance plan may be worth a conversation with an actuary and your CPA.
What do you want for your employees? A retirement plan is also a benefit. What you offer affects who you can hire and keep.
When will you step back? The answer changes how long a plan stays in place and how much you will rely on it.

Deadlines worth putting on the calendar

SEP IRA: can be set up and funded up to the due date of your tax return for that year, including extensions.
Solo 401(k) and other qualified plans: to deduct contributions for a tax year, the plan generally must be adopted by the last day of that year. A sole proprietor with no employees who adopts a new 401(k) after year-end generally has until the filing deadline for that year's return, without extensions.
SIMPLE IRA: a new plan must be effective between January 1 and October 1.
Employee deferrals: for owner-employees, elections must be made by the end of the tax year.

Confirm timing with your CPA before you act. Missing a deadline can mean losing a year of contributions.

Planning for your income after the business

A retirement plan for the business is only one part of the picture. We also look at:

Retirement income. How Social Security, plan withdrawals, and any income from the business or its sale fit together.
Required minimum distributions. Required withdrawals from most retirement plans generally begin at age 73 or 75, depending on your birth year.
Medicare premiums. Income in the year a business is sold or a large conversion is made can raise Medicare IRMAA surcharges two years later. See our Medicare IRMAA guide.
Rollovers. If you close a plan or leave an employer plan, we help you weigh your options, including whether a 401(k) rollover makes sense for you.

Exit and succession planning

Many owners think about exit planning only when a buyer calls. Planning ahead gives you more choices. The questions we work through with you include:

When do you want to step back, and how fully? Full retirement, a gradual handoff, and a sale are different plans.
Who is the likely successor? A family member, a partner, a key employee, an outside buyer, or an employee stock ownership plan (ESOP) each have different legal and tax steps.
What does the business need to be worth to you? We help you estimate the retirement income you will need from your other assets, so the sale price is measured against a number, not a hope.
What happens if something happens to you first? A buy-sell agreement and key-person planning can matter if an owner dies or becomes disabled. See the library article on buy-sell agreements and succeeding at business succession.
How does the rest of your estate plan fit? Our estate planning coordination page explains how we work with your attorney.

A sale or transfer involves several professionals. Your attorney handles the entity, the sale or transfer agreements, and legal strategy. Your CPA models the tax effects, including how the sale is structured. A business valuation or sale-process professional may be needed. Our role is the personal side: your retirement income, your investments, and how your decisions line up with your goals.

Tax coordination with your CPA

Retirement decisions for owners are tax decisions. Renaud Tax & Accounting LLC, led by Jeannie Renaud, CPA (30+ years in income taxation), is a separate firm in the same O'Fallon office. With your written permission, your advisor and your CPA can work from the same facts. You are not required to use Renaud Tax & Accounting LLC. If your CPA is someone else, we will coordinate with that CPA with your permission.

Examples of questions where both seats matter:

How your entity is taxed. For sole proprietors and partners, compensation for plan purposes is net earnings from self-employment. For an S corporation owner, it is generally W-2 wages.
Timing of contributions relative to a strong or weak year.
Estimated taxes and cash flow in a year with a large contribution or a sale.
Roth conversions in lower-income years, and how they interact with Medicare premiums.
The year of a sale, when income, deductions, and plan contributions all land on one return.

Renaud & Company, LLC and its advisors do not provide tax or legal advice. Renaud Tax & Accounting LLC provides tax preparation and accounting under a separate engagement. Read more about how the two firms work together.

How we work with business owners

Inventory. We map your business, your personal accounts, any current plans, and your goals for the next 5 to 20 years.
Compare. We lay out the plan options that fit your situation, with the trade-offs and the deadlines.
Coordinate. With your permission, we work with your CPA, attorney, and any plan administrator or actuary so the pieces fit.
Review. We revisit the plan as your business, staff, and goals change.

Meet the people. Matthew J. Renaud Sr., ChFC®, founded Renaud & Company in 1998 and has 34 years in financial services. His son, Matthew Renaud Jr., AWMA®, is an Investment Advisor Representative at the firm. Meet the team.

Who this is for, and who it is not

A good fit: owners of established small and mid-sized businesses, professional practices, and self-employed owners in O'Fallon, St. Charles County, and the St. Louis metro who want retirement, tax, and exit questions handled together. Probably not the right fit: you are looking only for a payroll or recordkeeping vendor for a large employee plan. In that case we will tell you so.

Serving O'Fallon, St. Charles County, and the St. Louis metro

Our office is at 2112 Bryan Valley Commercial Drive in O'Fallon. We work with owners across O'Fallon, St. Charles, Lake Saint Louis, Wentzville, and St. Peters, and meet in person or virtually.

FAQ

Which retirement plan is best for a small business owner?

There is no single best plan. The right choice depends on whether you have employees, how steady your income is, how much you want to set aside, and how soon you plan to step back from the business. A Solo 401(k) or SEP IRA is common for an owner with no employees, a SEP, SIMPLE IRA, or 401(k) for an owner with employees, and a cash balance plan for some owners with high, steady income. We help you compare the options and coordinate with your CPA on the tax side.

What is the difference between a Solo 401(k) and a SEP IRA?

A Solo 401(k) lets the owner contribute as both employee and employer, and it can include a Roth option if the plan allows it. A SEP IRA takes employer contributions only. For 2026 the IRS limit on total contributions for a participant in either plan is $72,000, but the Solo 401(k) also allows catch-up contributions for owners age 50 and over. A SEP is simpler to administer, and a Solo 401(k) with $250,000 or more in assets generally files Form 5500-EZ each year. Your income and your CPA's calculation will determine which allows more in your situation.

Can I have a Solo 401(k) if I have employees?

A Solo 401(k) is designed for an owner with no employees other than a spouse. If you hire employees who meet the plan's eligibility requirements, they generally must be included in the plan, and the testing advantage of a Solo 401(k) ends. In that case owners often compare a SEP, a SIMPLE IRA, or a 401(k) with profit sharing.

When should a business owner consider a cash balance plan?

A cash balance plan is a defined benefit plan that can allow an owner to contribute and deduct more than a defined contribution plan allows. It generally fits owners with high, steady income who are closer to retirement and whose business can support required contributions. It requires an enrolled actuary, annual filings, and generally covering eligible employees, and an excise tax applies if the minimum contribution is missed. We would review it with your CPA and an actuary before you decide.

What are the 2026 contribution limits for SEP, SIMPLE, and Solo 401(k) plans?

For 2026 the IRS limits are: 401(k) employee deferral of $24,500, with catch-up contributions of $8,000 at age 50 and over or $11,250 at ages 60 to 63; total additions to a defined contribution plan of $72,000 before catch-up; SEP contributions of the lesser of 25% of compensation or $72,000; and SIMPLE IRA deferrals of $17,000, with a $4,000 catch-up or $5,250 at ages 60 to 63. Compensation counted for these plans is capped at $360,000. These figures change each year.

What are the deadlines to set up and fund a plan?

A SEP can be set up and funded up to the due date of your tax return, including extensions. To deduct contributions for a year, a Solo 401(k) or other qualified plan generally must be adopted by the last day of that year, though a sole proprietor with no employees may adopt a new 401(k) after year-end up to the return's filing deadline without extensions. A new SIMPLE IRA must be effective between January 1 and October 1. Check the dates with your CPA before you act.

How should I plan to exit or hand off my business?

Start by deciding when you want to step back and who the successor is likely to be: a family member, a partner, a key employee, an outside buyer, or an employee stock ownership plan. Your attorney handles the legal documents, your CPA models the tax effects, and we work with you on retirement income, investments, and how the plan fits your goals. Planning ahead gives you more choices than planning once an offer arrives.

Do you and my CPA work together on my plan?

With your written permission, yes. Renaud Tax & Accounting LLC, led by Jeannie Renaud, CPA, is a separate firm in the same O'Fallon office, and you can use it or keep your current CPA. In either case we coordinate with your CPA and attorney, and we do not provide tax or legal advice.

Next step: Book a 45-minute coordination meeting at (636) 240-5055 or info@renaudco.com. If we are not the right fit, we will say so.

Renaud & Company Registered Investment Advisors · 2112 Bryan Valley Commercial Drive, O'Fallon, MO 63366 · (636) 240-5055 · Mon–Thu 8:00 AM–4:30 PM, Fri 8:00 AM–3:00 PM (extended hours in tax season)

Important disclosures: Renaud & Company, LLC is an SEC-registered investment adviser (CRD 115337). Registration does not imply a certain level of skill or training. We are fiduciaries when we provide investment advice. Renaud & Company, LLC and its advisors do not provide tax or legal advice. Renaud Tax & Accounting LLC is a separate CPA firm; tax preparation and accounting services are provided by that firm under a separate engagement. Our Form ADV Part 2A and Form CRS describe our services and conflicts of interest and are available at adviserinfo.sec.gov or on request. This page is educational and is not individualized investment, tax, or legal advice. Plan limits and rules are as published by the IRS for 2026 as of October 27, 2026 and can change. There is no guarantee that any plan or strategy will achieve any particular result.