2026 Retirement Plan Contributions and Deadlines: What California Small Business Owners Should Know
As the end of 2026 approaches, small business owners have an opportunity to review their retirement savings options and plan ahead for the coming year. Choosing the right retirement plan can help business owners save for the future while potentially reducing their taxable income.
However, different retirement plans have different contribution limits, eligibility requirements, and deadlines. Some contributions must be made before December 31, while others can be made when filing your business tax return.
If you are self employed or own a small business in California, here are some important retirement planning considerations to keep in mind before the end of the year.
Understanding Your Retirement Plan Options
There are several retirement plans available to small business owners and self employed individuals. The right option depends on factors such as your business structure, number of employees, income, and retirement goals.
Here are four common options worth considering.
A Simplified Employee Pension (SEP) IRA is a popular option for self-employed individuals and small business owners who want a relatively simple way to save for retirement.
With a SEP IRA, contributions are made by the employer rather than through employee salary deferrals. This can make it a convenient option for business owners who want flexibility in deciding how much to contribute each year.
For 2026, contributions can generally reach up to 25% of eligible compensation, subject to a maximum of $72,000.
One advantage of a SEP IRA is that contributions can generally be made by the business tax return deadline, including extensions.
Keep in mind that employers with eligible employees generally must contribute the same percentage of compensation for themselves and participating employees.
A Savings Incentive Match Plan for Employees (SIMPLE IRA) is designed for smaller businesses that want to offer retirement benefits to employees without the complexity of a traditional 401(k).
Both employees and employers contribute to the plan. Employers generally must provide either a matching contribution or a nonelective contribution.
For 2026, the standard employee contribution limit is $17,000, with additional catch-up contributions available for eligible individuals.
A SIMPLE IRA can be a practical option for businesses that want to help employees save for retirement while keeping plan administration relatively straightforward.
A Solo 401(k), also known as a one-participant 401(k), is designed for self employed individuals and business owners who have no eligible employees other than a spouse.
One of its biggest advantages is that the business owner can contribute as both an employee and an employer.
For 2026, the employee contribution limit is $24,500. Total employee and employer contributions can generally reach $72,000 before eligible catch-up contributions.
This can make a Solo 401(k) an attractive option for self employed individuals who want to maximize their retirement savings.
Traditional and Roth IRA
Individual Retirement Arrangements (IRAs) are another option for business owners and self-employed individuals.
The two main types are Traditional and Roth IRAs.
A Traditional IRA may offer a tax deduction for eligible contributions, depending on income and whether you or your spouse participate in a workplace retirement plan. Withdrawals are generally taxable.
A Roth IRA works differently. Contributions are made with after-tax dollars, but qualified withdrawals are generally tax free. Income eligibility limits apply.
For 2026, the combined contribution limit for Traditional and Roth IRAs is $7,500, or $8,600 for individuals age 50 or older.
For more information visit: Publication 560 (2025), Retirement Plans for Small Business
How Much Can You Contribute in 2026?
Contribution limits vary depending on the retirement plan you choose. Reviewing these limits can help you determine how much you may be able to set aside before the end of the year.
Here are some of the main 2026 limits:
- 401(k): $24,500 in employee contributions.
- SIMPLE IRA: $17,000 in standard employee contributions.
- SEP IRA: Up to $72,000, subject to compensation limits.
- Solo 401(k): Up to $72,000 in combined employee and employer contributions, before catch-up contributions.
- Traditional and Roth IRA: $7,500 combined.
Individuals age 50 or older may qualify for additional catch up contributions. Certain retirement plans also offer higher catch up limits for individuals ages 60 through 63.
Remember that these limits do not necessarily apply to everyone in the same way. Your income, age, business structure, and plan rules can affect how much you are eligible to contribute.
For more information visit: 401(k) limit increases to $24,500 for 2026, IRA limit increases to $7,500
Important Retirement Plan Deadlines to Know
As 2026 comes to a close, business owners should review their retirement plans and upcoming deadlines.
Here are a few important dates and considerations:
November 2 - December 31, 2026: SIMPLE IRA election period
Existing SIMPLE IRA plans must generally provide an annual election period during which employees can make or change their salary reduction contributions for the upcoming year.
December 31, 2026: Year-end retirement planning
December 31 is an important date for many retirement planning decisions. For example, employee salary-deferral elections generally need to be made before the compensation is available, and many employers should review their plan establishment requirements before year end.
April 15, 2027: Traditional and Roth IRA contributions
Eligible individuals generally have until the federal tax filing deadline to make contributions to their Traditional or Roth IRA for the 2026 tax year.
Business tax return deadline: SEP IRA contributions
SEP IRA contributions can generally be made by the employer's business tax return deadline, including extensions.
The timing rules can differ depending on the type of plan and contribution. Some first year plans also have special rules, so it is important to review your options before assuming you have additional time.
What California Business Owners Should Know About CalSavers
In addition to federal retirement plan rules, California business owners should be aware of the state's CalSavers Retirement Savings Program.
CalSavers is a state-facilitated retirement savings program designed to give employees access to retirement savings through payroll deductions.
Under California law, eligible employers that do not offer a qualifying retirement plan generally must register for CalSavers or certify an applicable exemption.
As of January 1, 2026, the requirement covers eligible employers with one or more employees.
Some important points for business owners:
- Employees contribute to their own retirement accounts through payroll deductions.
- Employers do not contribute matching funds through CalSavers.
- Businesses that already offer a qualifying retirement plan can generally request an exemption.
- Businesses with no employees other than their owners are generally exempt.
Employers should check their registration or exemption status, especially if they have received a notice from CalSavers.
For more information visit the official CalSavers employer website
Final Thoughts
Retirement planning is an important part of managing your finances as a business owner. Choosing the right plan can help you prepare for the future while potentially creating tax planning opportunities along the way.
However, the best option depends on your business structure, income, employees, and financial goals.
At DRS Accounting, Daniel Serbin, CPA, works with small business owners and self-employed individuals to help them understand their tax obligations and explore proactive tax planning strategies throughout the year.
If you are considering a retirement plan or want to understand how contributions may affect your 2026 taxes,
contact DRS Accounting to discuss your options.
