If you have a highly profitable business, recent laws have created fantastic retirement fund options that are a real boon for accumulating wealth in your retirement accounts. On the flip side, as a business owner, the total responsibility for securing your retirement falls on your shoulders. Luckily, you have several options that will allow you to deposit more money into your retirement accounts than most.

HR 10 Plans

HR 10 Plans are a form of defined-contribution plans, a class of “qualified plan” available as an option for the self-employed. You can create a “money purchase” HR 10 plan that requires an inflexible, defined percent of your business income saved per year, or a “profit-sharing” plan that allows changes in the amount of business income you pay into your — and your employees' — plan accounts.

You must be self-employed to be eligible for an HR 10 retirement savings plan — meaning you are a sole proprietor, a partner in a business, or own an LLP or LLC. You are not eligible if you own an “S” or “C” corporation.

You must declare the percentage of your income you'll put into a “money purchase” HR 10 plan the year the plan is created; as long as the plan exists, you must stick to your investment target. You are able to change the percentage of your business income that you save if you have a “profit-sharing”HR 10.

If you have employees and you contribute to your own HR 10 plan in a year, you generally must contribute to the HR 10 plan accounts of all your employees. If you retain control of HR 10 plan investing and don't do a good job, you can be held responsible for breach of fiduciary duty over your employees' retirement funds, something you want to avoid at all costs.

If you qualify, you can maximize contributions to tax-advantaged retirement accounts by contributing a moderate level of business income to your HR 10 each year, and adding more to tax-advantaged IRAs when you have extra funds.

Retirement Plan Contribution Maximums, 2006 to 2008

*In 2008, traditional and Roth IRA maximums will change to $5,000 and $6,000 for individuals less than and greater than 50 years old, respectively.

** HR 10 and 401(k) plan maximums change with inflation every year

Savings Incentive Match Plan for Employees (SIMPLE)

The Savings Incentive Match Plan for Employees (SIMPLE) can be set up either as an IRA or 401(k) in the name of each employee covered by the plan. SIMPLE plans have lower contribution limits than 401(k) plans (usually 1 to 3 percent of an employee's income), but administration tends to be less costly to plan members. SIMPLE plans are only for employers with 100 or fewer workers who earn at least $5,000 in a given year and who aren't covered by another retirement plan.

SIMPLE plans have other benefits and limitations, including these:

• Maximum contributions in 2006 were $10,000 for those under age 50, and $12,500 for those over age 50.

• Employee and employer matching contributions are put into the account on a pretax basis — no taxes are paid until you withdraw funds.

• If other employees receive funds for the year, all employees who earned more than $5,000 in a given year must generally receive an employer's matching contribution.

• Matching contributions are required to be either dollar-for-dollar up to a maximum of 3 percent of the employee's total pay, or 2 percent of the employee's pay, whether she contributes to the plan or not.

• All contributions vest immediately in a SIMPLE IRA and a SIMPLE 401(k).

• Early withdrawals are treated as ordinary income and incur a 10 percent penalty. In the first two years of deposits, you would incur a penalty of 25 percent, plus pay ordinary income tax.

Simplified Employee Pension (SEP) IRA

A simplified employee pension (SEP) IRA is a tax-advantaged retirement plan option for the self-employed, typically used by those with fewer than ten employees. This option is perhaps most advantageous for sole proprietors or small partnerships who want maximum benefits and limited paperwork.

As a business owner, the contributions you make to your profit-sharing SEP IRA can go as high as 20 percent of your self-employment net income (defined as income less expenses, one half your self-employment tax, and the deduction for the contribution to your own SEP IRA), up to $44,000.

However, calculating your SEP IRA personal maximum contribution limit is tricky. The IRS provides two separate forms on its website to facilitate the process. Some SEP IRA limitations and benefits include the following:

• Contributions are always deductible, no matter what your income or whether you participate in other retirement plans.

• Employer contributions to employees' SEP IRA accounts are typically discretionary until they have been employed for three out of the last five years.

• Distributions from SEP IRAs are generally subject to the same tax rules as those for traditional IRAs. (See IRS publication 560 for more details, available online.)

Be aware that if you establish a SEP IRA for your small business and have employees over the age of 21 who have worked for you for at least three of the last five years, you will have to contribute an equal percentage to their accounts. For example, if your eligible income was $50,000 and you opt for a 10 percent contribution, you will have to deposit $3,000 into the SEP IRA of an employee earning $30,000. Also, whatever funds you deposit into an employee's SEP IRA are immediately 100 percent vested, which means they can quit and take their funds one month after you open their account.