6 Investment Accounts Every Business Owner and Parent Should Know

Leaving Money on the Table Without Realizing It

Here's something I see all the time: hardworking entrepreneurs and parents who are unknowingly leaving significant tax savings and wealth-building potential on the table.

It's rarely because they're careless. It's usually because no one ever laid out their options clearly. When you're running a business and raising a family, researching retirement plan rules doesn't make the top of the to-do list.

So let's fix that.

In this article, I'll walk through six investment accounts everyone should have on their radar, including what each one does well, the 2026 contribution limits, and who each one is best suited for.

1. Brokerage Account: Your Opportunity Fund

A taxable brokerage account is the most flexible investment account you can have. There are no contribution limits, no age restrictions, and no rules about when you can take money out.

Think of it as your opportunity fund. It's a great place for goals outside of retirement, like a future home, a business investment, or simply building wealth you can access before 59 and a half.

The Trade-Off

That flexibility comes with fewer tax breaks. You'll generally pay taxes on dividends, interest, and capital gains along the way.

Still, long-term capital gains and qualified dividends are often taxed at lower rates than ordinary income. Holding tax-efficient investments, like broad index funds, can help keep the annual tax bill down.

2. Traditional or Roth IRA: Simple and Accessible

An IRA is one of the simplest tax-advantaged accounts available. Almost anyone with earned income can open one.

For 2026, you can contribute up to $7,500 to an IRA, or $8,600 if you're 50 or older. That limit is shared between Traditional and Roth IRAs.

Traditional vs. Roth

A Traditional IRA may give you a tax deduction now, and your money grows tax-deferred until you withdraw it in retirement.

A Roth IRA gives you no deduction today, but your money grows tax-free and qualified withdrawals in retirement are tax-free too.

Income Limits to Know

For higher earners, there are some limits. Your ability to deduct Traditional IRA contributions phases out at certain incomes if you or your spouse has a retirement plan at work.

Roth IRA contributions also phase out at higher incomes. For 2026, that range is $153,000 to $168,000 for single filers and $242,000 to $252,000 for married couples filing jointly.

If you earn too much to contribute directly to a Roth, a backdoor Roth strategy may still be an option. It involves making a nondeductible Traditional IRA contribution and converting it to a Roth. It's worth reviewing with a professional first, because other IRA balances can create unexpected taxes.

3. 401(k): The Standard for Businesses With Employees

If you have employees, a 401(k) is often the gold standard. It lets you and your team save far more than an IRA allows, and it can be a valuable tool for recruiting and keeping good people.

2026 401(k) Contribution Limits

For 2026, employees can defer up to $24,500 of their pay into a 401(k).

Those 50 and older can add a catch-up contribution of $8,000, for a total of $32,500. Thanks to SECURE 2.0, employees ages 60 through 63 get a higher catch-up of $11,250 instead.

When you add employer contributions like matching and profit sharing, the combined limit is $72,000 per person for 2026, not counting catch-up contributions.

One recent change to know: starting in 2026, employees who earned more than $150,000 in wages the prior year generally must make their catch-up contributions as Roth contributions.

What to Consider as an Employer

A traditional 401(k) has to pass annual nondiscrimination tests to make sure it doesn't unfairly favor owners and highly paid employees. A safe harbor 401(k), which requires a set employer contribution, can avoid most of that testing.

401(k) plans also come with administration costs. The good news is that small employers starting a new plan may qualify for federal tax credits that can offset a meaningful portion of those startup costs for the first few years.

4. Solo 401(k): Built for the Self-Employed

A Solo 401(k) gives self-employed business owners the same contribution power as a traditional 401(k), without the cost and complexity of covering employees.

It's available to business owners with no employees other than a spouse who works in the business.

Two Ways to Contribute

What makes a Solo 401(k) so powerful is that you contribute in two roles.

As the employee, you can defer up to $24,500 for 2026, plus catch-up contributions if you're 50 or older. As the employer, you can add a profit-sharing contribution of up to 25% of your compensation, or roughly 20% of net self-employment income if you're a sole proprietor or single-member LLC.

Together, those contributions can reach $72,000 for 2026, plus any catch-up contributions on top. Many Solo 401(k) plans also offer a Roth option.

Simple to Maintain

Solo 401(k)s are much cheaper and simpler to run than a traditional 401(k). There's no nondiscrimination testing. Once plan assets exceed $250,000, you'll need to file a short annual information return, Form 5500-EZ.

5. SEP IRA: Simple, With Fewer Options

A SEP IRA is one of the easiest retirement plans to set up. You can even open and fund one up until your business's tax filing deadline, including extensions.

SEP IRAs accept employer contributions only. You can contribute up to 25% of each eligible employee's compensation, with a 2026 maximum of $72,000 per person. There are no catch-up contributions.

The Employee Catch

If you have employees, you generally must contribute the same percentage of pay for every eligible employee that you contribute for yourself. That can get expensive as your team grows.

Solo 401(k) vs. SEP IRA: A Quick Example

At lower income levels, the Solo 401(k) often allows a much larger contribution than a SEP IRA, because of the employee deferral.

Say you're a sole proprietor with $100,000 in net self-employment income. A SEP IRA would allow a contribution of roughly $18,600. A Solo 401(k) could allow that same employer contribution plus a $24,500 employee deferral, for a total of roughly $43,100.

At very high incomes, the two plans can reach the same $72,000 maximum. But for many owners, the Solo 401(k) offers more room to save.

6. Cash Balance Plan: The Most Underrated Account for High-Income Owners

A cash balance plan is a type of defined benefit pension plan. It's the most underrated account for high-income business owners.

Depending on your age and income, you may be able to contribute and deduct well over $100,000 per year, and in some cases several hundred thousand dollars. That's on top of what you can put into a 401(k).

How It Works

Unlike a 401(k), where contributions are limited by a dollar cap, a cash balance plan's contributions are based on the retirement benefit it's designed to provide. An actuary calculates the contribution each year.

Because older owners have less time to reach that benefit, they can generally contribute more each year. That makes cash balance plans especially powerful for owners in their 40s, 50s, and 60s who want to catch up on retirement savings.

Many owners pair a cash balance plan with a 401(k) and profit-sharing plan to maximize their total deductible savings.

What to Know Before You Start

Cash balance plans aren't for everyone. They require consistent, high profits, because contributions are generally expected each year; a commitment to keep the plan in place for several years; annual actuarial work and higher administration costs; and contributions for eligible employees, which need to be factored into the cost.

If your business is consistently profitable and you're paying a significant amount in taxes, it's worth a serious conversation to see whether a cash balance plan fits.

2026 Contribution Limits at a Glance

Brokerage account: no contribution limit and no catch-up; best for flexible, non-retirement goals.

Traditional or Roth IRA: $7,500, with a $1,100 catch-up at age 50+; best for anyone with earned income.

401(k): $24,500 employee deferral and $72,000 total, with an $8,000 catch-up at 50+ ($11,250 at ages 60 to 63); best for businesses with employees.

Solo 401(k): $24,500 employee deferral and $72,000 total, with the same catch-up amounts; best for self-employed owners with no employees.

SEP IRA: 25% of pay up to $72,000, with no catch-up; best for simple setup with few or no employees.

Cash balance plan: contributions based on age and income, with catch-up built into the formula; best for high-income owners with steady profits.

The IRS typically announces the next year's limits each fall, so these figures will change for 2027.

How to Choose the Right Combination

None of these accounts is a one-size-fits-all solution. Most families end up using several of them together.

The right combination depends on a few key factors: your income and profit, which determine how much you can save and how valuable a tax deduction is to you today; your business structure, since being a sole proprietor, an LLC, or an S corporation affects how contributions are calculated; your employees, since having a team changes which plans make sense and what they'll cost; and your family's goals, since retirement, college, a home, or a future business all call for different types of accounts.

A common approach is to start with the accounts that offer the biggest tax advantages, like your 401(k) or Solo 401(k), then add an IRA and a brokerage account for flexibility. For high-earning owners with steady profits, a cash balance plan can take savings to another level.

Know Your Options, Then Build Your Plan

Hardworking entrepreneurs and parents often leave tax savings on the table simply because they don't know what's available.

Now you do. A brokerage account, an IRA, a 401(k), a Solo 401(k), a SEP IRA, and a cash balance plan each serve a different purpose. Used together, they can help you lower your taxes today and build wealth for the future.

The next step is figuring out which combination fits your income, your business, and your family's goals.

Sources: IRS, "401(k) Limit Increases to $24,500 for 2026, IRA Limit Increases to $7,500"; IRS, "SEP Contribution Limits"; IRS, "One-Participant 401(k) Plans."

Advisory services are offered through Daley Financial Planning, a DBA of Forefront Advisor Network. This article is for educational purposes only and is not investment, tax, or legal advice. Contribution limits and plan rules change over time; consult a qualified professional about your situation before acting.