Best Retirement Plans for Solo-Owned Corporations in 2025

If you own a C or S corporation and are the only employee, setting up a retirement plan is one of the smartest tax-saving moves you can make. Not only does it help you build long-term wealth, but it also allows your corporation to deduct contributions, reducing taxable income.

The good news? Even now in 2025, you can establish a plan that benefits you for your 2024 tax year. Below, we’ll explore the best retirement plan options available to solo-owned corporations.

1. SEP-IRA: Discover the Simple and Flexible Option

A Simplified Employee Pension (SEP-IRA) is one of the easiest retirement plans to establish for a single-employee corporation. Your corporation can contribute up to 25% of your W-2 salary into a tax-advantaged retirement account.

Contribution Limits

✅ 2024 max contribution: $69,000
✅ 2025 max contribution: $70,000

Pros of a SEP-IRA

✅ Simple to set up – Establish one in minutes using Form 5305-SEP.
✅ Flexible contributions – You can contribute up to the max or nothing depending on cash flow.
✅ No annual filings – No IRS reporting required for a one-person SEP.
✅ Extended contribution deadline – Your corporation can contribute up until the extended tax return due date (October 15, 2025, for the 2024 tax year).

Example

If your corporation pays you a $276,000 salary in 2024, it can contribute the full $69,000 (25% of salary).

Cons of a SEP-IRA

🚫 Lower contribution potential than a solo 401(k) for lower salaries.
🚫 No loan options – Unlike some plans, you cannot borrow from a SEP-IRA.

Best for:

If you want the simplest retirement plan with no administrative hassle, a SEP-IRA is a great choice.

2. Defined Contribution Profit-Sharing Plan: Similar to a SEP, With Loan Options

A defined contribution profit-sharing plan allows your corporation to make tax-deductible contributions of up to 25% of your salary, just like a SEP-IRA.

Contribution Limits

✅ 2024 max contribution: $69,000
✅ 2025 max contribution: $70,000

Pros of a Profit-Sharing Plan

✅ Same high contribution limits as a SEP.
✅ Flexible contributions – You can contribute up to the max or nothing.
✅ Extended deadline – Contributions can be made up until your corporation’s tax return due date.
✅ Loan option available – You may be able to borrow up to $50,000 from the account.

Cons of a Profit-Sharing Plan

🚫 IRS reporting required if your account balance exceeds $250,000 (you must file Form 5500-EZ).
🚫 No additional contribution advantages over a SEP unless you need a loan option.

Best for:

If you want SEP-like benefits but with loan options, this plan might be a better fit.

3. SIMPLE IRA: Best for Lower-Income Corporations

A Savings Incentive Match Plan for Employees (SIMPLE IRA) is ideal if your corporation pays you a modest salary and you want to maximize contributions at lower income levels.

Contribution Limits for 2025

✅ Employee salary deferral: Up to $16,500
✅ Employer match: Up to 3% of salary
✅ Total max contribution: $17,400 (if salary = $30,000)

Catch-Up Contributions

✅ Age 50+: Additional $3,500 (total = $20,000)
✅ Ages 60-63: Additional $5,250 (total = $21,750)

Example

If you earn $30,000 in salary, you can:

• Defer $16,500 from your paycheck into your SIMPLE IRA.
• Your corporation contributes a 3% match ($900).
• Total contribution: $17,400 (more than the $7,500 max under a SEP).

Pros of a SIMPLE IRA

✅ Great for modest salaries – Allows larger contributions relative to salary than a SEP.
✅ Easy to set up – No annual IRS filings required.
✅ Employer contributions lower corporate taxes.

Cons of a SIMPLE IRA

🚫 Must be set up by October 1 of the tax year. (Too late for 2024, but still an option for 2025.)
🚫 Lower contribution limits than a solo 401(k) for higher salaries.
🚫 No loan options.

Best for:

If your corporation pays you a lower salary, a SIMPLE IRA may be the best way to maximize contributions.

4. Solo 401(k): The Most Powerful Retirement Plan

A solo 401(k) allows both:

1. Elective deferral contributions (from your salary)
2. Employer contributions (from your corporation)

Contribution Limits for 2025

✅ Elective deferral: Up to $23,500 (reduces taxable salary).
✅ Employer contribution: Up to 25% of salary.
✅ Total max contribution: $70,000.

Catch-Up Contributions

✅ Age 50+: Additional $7,500 (total max = $77,500).
✅ Ages 60-63: Additional $11,250 (total max = $81,250).

Example

If your 2025 salary is $120,000, your total solo 401(k) contribution could be $53,500:

• Elective deferral: $23,500
• Employer contribution: $30,000 (25% × $120,000)

If you’re 50+, your max jumps to $61,000!

Pros of a Solo 401(k)

✅ Highest contribution potential – Especially great if age 50+.
✅ Loan option available – Borrow up to $50,000.
✅ Flexibility – Contribute more in good years, less in bad years.

Cons of a Solo 401(k)

🚫 More complex setup – Requires plan documents and administration.
🚫 Annual IRS filing required once assets exceed $250,000.
🚫 Must be set up by December 31 (for the tax year in which contributions apply).

Best for:

If you want to contribute the most possible, especially if age 50+, a solo 401(k) is usually the best option.

Which Retirement Plan Is Best for You?

Plan	Best for…	Max 2025 Contribution	Loan Option?	IRS Filing Required?
SEP-IRA	Simplicity & high income	$70,000	❌ No	❌ No
Profit-Sharing	Same as SEP, but with loans	$70,000	✅ Yes	✅ If > $250K
SIMPLE IRA	Modest salary earners	$21,750 (with catch-up)	❌ No	❌ No
Solo 401(k)	Max savings potential	$81,250 (with catch-up)	✅ Yes	✅ If > $250K

Final Takeaways

✅ Want the simplest plan? → Choose a SEP-IRA.
✅ Have a modest salary? → A SIMPLE IRA may work best.
✅ Want the highest contribution limits? → Go with a Solo 401(k).
✅ Need to borrow from the account? → A Solo 401(k) or Profit-Sharing Plan is best.

No matter which plan you choose, setting one up can reduce your tax burden and help secure your financial future!