Top S Corp Retirement Plan Options: Maximize Savings & Tax Benefits
- Evin Wick
- Jun 9
- 3 min read
Updated: Jul 2
As you grow your consultancy with Scorpu, picking among the many retirement plans for S Corp can feel overwhelming. With the right S Corp retirement plan options, you’ll boost your savings, cut taxes, and stay focused on clients, not paperwork. Here’s an updated look at five top S Corp retirement plans, plus guidance on choosing the best retirement plan for S-Corp owners like you.
1. Traditional IRA and Roth IRA
Ideal For: Consultants just starting out who want simplicity and flexibility.
How It Works: You make S Corp retirement contributions from your personal account each year when filing.
2025 Limits: $7,000 under age 50; $8,000 if 50+
Deadline: April 15 (extensions don’t extend contribution window)
Benefits:
Very low setup/admin effort
Traditional IRA contributions are tax-deductible
Roth IRA offers tax-free withdrawals in retirement
Drawbacks:
Lower contribution ceilings
Income phase-outs can limit Roth eligibility
2. SEP IRA (Simplified Employee Pension)
Ideal For: Single-member LLCs taxed as S Corps—yours truly at scorpu.com—and small teams with predictable staffing.
How It Works: Your S Corp makes a profit-sharing style contribution to your SEP IRA.
2025 Limits: Up to 25% of your W-2 compensation or $71,000, whichever is less.
Deadline: Tax filing deadline (including extensions), e.g. September 15, 2026.
Benefits:
Easy to set up via most custodians
Flexible annual contributions based on company profits
No annual IRS filings required
Drawbacks:
Must contribute the same percentage for all eligible employees
Becomes costlier as you hire more staff
3. Solo 401(k)
Ideal For: S-Corp owners with no employees (or just a spouse) aiming for maximum deferrals.
How It Works: You combine an employee deferral and an employer profit-sharing contribution.
2025 Limits:
Employee: Up to $23,500 ($30,500 if 50+)
Employer profit-sharing: Up to 25% of W-2 compensation
Combined max: $71,000 (or $77,500 if 50+)
Deadline:
Employee deferrals by December 31
Employer contributions by tax-filing deadline (with extensions)
Benefits:
Highest S Corp retirement contributions available
Option for Roth deferrals
Loan features at many providers
Drawbacks:
Requires Form 5500 filing once assets exceed $250K
A bit more admin than IRAs
4. Safe Harbor 401(k)
Ideal For: S Corps with a small team who want to test the waters of profit sharing and satisfy nondiscrimination rules.
How It Works: Employees defer via payroll; the company makes either matching or non-elective contributions.
2025 Limits: Same as Solo 401(k): up to $71K total ($77.5K if 50+).
Deadline:
Plan must be in place by October 1
Deferrals by December 31
Employer contributions by tax deadline (with extensions)
Benefits:
S Corp profit sharing plan that automatically passes IRS nondiscrimination tests
Allows owner to maximize contributions without penalizing rank-and-file staff
Drawbacks:
Higher setup and ongoing fees
Mandatory contributions each year
5. SIMPLE IRA
Ideal For: S Corp owner-operators with a handful of employees who value ease over maxed-out savings.
How It Works: Employees contribute via payroll; employer matches 2–3% or makes 2% non-elective contributions.
2025 Limits: $16,000 deferral ($19,500 if 50+ catch-up).
Deadline:
Setup by October 1
Contributions by tax deadline
Benefits:
Very low administrative burden
Mandatory match keeps employees engaged
Drawbacks:
Contribution caps are lower than 401(k) and SEP options
Fixed matching formula even in lean years
Quick Comparison Table (2025)
Plan Type | Max Contribution | Best For | Setup/Deadline |
Traditional & Roth IRA | $7K–8K | Simplicity, starters | April 15 |
SEP IRA | 25% of W-2 pay or $71K | Single-owner LLCs, S Corp retirement plans | Tax deadline (w/ extensions) |
Solo 401(k) | $71K ($77.5K if 50+) | High earners, no employees | Deferrals by 12/31; contributions by tax filing |
Safe Harbor 401(k) | $71K ($77.5K if 50+) | S Corp owner retirement plan options with staff | Plan by Oct 1; deferrals by 12/31; match by tax filing |
SIMPLE IRA | $16K ($19.5K if 50+) | Small teams, simplicity | Setup by Oct 1; contributions by tax filing |
Recommendations
Best retirement plan for S-Corp owners on a modest income (you and maybe a spouse): SEP IRA offers ease plus generous limits.
Best retirement plan for S-Corp owners with higher earnings and no staff: Solo 401(k) maximizes your S Corp retirement contributions and gives Roth flexibility.
For S Corps with employees wanting to reward the team and yourself: consider a Safe Harbor 401(k) or S Corp profit sharing plan so you stay compliant and competitive.
At Scorpu, we guide you through your S-Corp retirement plan options, handle setup and compliance, and keep your bookkeeping and payroll humming—so you never miss a contribution deadline. Ready to pick the perfect retirement plan for your S Corp? Let’s chat!
Evin Wick JD, LLM is a Georgetown-trained tax lawyer and co-founder of Scorpu, where he channels two decades of small-business tax expertise into streamlined S-Corp, bookkeeping, and payroll solutions for solo consultants.
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