How Sole Proprietors and Partners are Classified for Retirement Plan Purposes

Sole Proprietor:

Normally, a sole proprietor is not treated as an employee of his business.

However, for retirement plan purposes, a sole proprietor is treated as both owner and employee.

In other words, a sole proprietor wears two hats for retirement plan purposes, employee and employer.

What this generally means is, when discussing retirement plan rules, the rules for employees apply to you as well as the rules for employers.

For example, if you maintain a SIMPLE plan (Savings Incentive Match Plan for Employees), you can choose to make plan contributions for yourself as if you were an employee then make a matching or nonelective contribution for yourself as an employer.


A Partner, for retirement plan purposes, is also considered an employee of the partnership. However, the partnership entity is treated as the employer if the partnership has employees, not each partner.

File your personal and small business taxes (Schedule C)