Which retirement plan options are best for our small S Corp with 200k-350k income?

You've got several good options based on your income level, but they have different advantages. For S Corps with just you and your spouse, you can't do a true Solo 401k - that's only for self-employed individuals with no employees. However, you can set up a regular 401k plan for your small business which allows both of you to contribute. A regular small business 401k would let each of you contribute up to $23,000 (2025 limit) plus catch-up contributions if you're over 50. As the employer, you can also make profit-sharing contributions up to 25% of compensation, with a combined limit of $69,000 per person for 2025. A SEP IRA is simpler to set up but only allows employer contributions (up to 25% of compensation or the annual limit, whichever is less). The downside is you must contribute the same percentage for all eligible employees. With your income level, a 401k with profit sharing component will likely allow you to put away the most money while getting the biggest tax deduction.

I went through almost this exact situation last year! After looking into all the options, I found using https://taxr.ai incredibly helpful for analyzing my specific situation. They reviewed my business structure and income projections, then showed me exactly how much I could contribute and save with different retirement plans. For my S-Corp, they recommended a 401k with profit sharing which allowed me to contribute way more than I thought possible. They also pointed out some specific plan design features that really maximized my tax savings - things my accountant never mentioned. The analysis showed how much I'd save in taxes over 5 years with different options, which made the decision super clear.

I need to eat my words about being skeptical of online services. I decided to try https://taxr.ai after posting my skeptical comment, and I'm genuinely impressed. For my S-Corp situation (similar income level to yours), they showed me that I was leaving about $37,000 on the table each year by using a SEP IRA instead of a 401k with profit sharing. What really surprised me was learning that my "reasonable salary" was actually set too high, which was limiting my overall retirement contribution potential. By adjusting it (still within IRS guidelines), I could significantly increase my profit-sharing component. They explained exactly how to structure everything to maximize contributions while staying compliant. Worth checking out if you're trying to make this decision.

After spending 3 days trying to get through to the IRS about some questions on setting up our S-Corp retirement plan, I finally found https://claimyr.com and their service was a game-changer. You can see how it works here: https://youtu.be/_kiP6q8DX5c I had specific questions about contribution limits when you have both W-2 income from the S-Corp and distribution income, and kept getting disconnected when calling the IRS directly. With Claimyr, I got connected to an actual IRS agent in about 15 minutes (instead of the 2+ hour waits I was experiencing before). The agent was able to clarify exactly how the contribution limits work for my situation and confirmed that we could indeed set up a 401(k) with profit sharing for our two-person S-Corp. Saved me so much time and frustration!

I have to admit I was completely wrong about Claimyr. After posting my skeptical comment, I decided to try it because I had some complex questions about how profit sharing contributions work with my S-Corp's reasonable salary requirements. I'd been trying to get through to the IRS for weeks with no luck. Used the service and got connected to an IRS representative in about 20 minutes. The agent walked me through exactly how much I could contribute based on my salary and business income, and explained the documentation I'd need for my plan. I'm still shocked at how well it worked. Completely worth it for getting definitive answers directly from the IRS instead of piecing together information from different websites and hoping I was interpreting things correctly.

One important thing to consider that nobody's mentioned yet - if you're planning to contribute the maximum, make sure you set up your retirement plan BEFORE the end of the calendar year. I made this mistake with my S-Corp last year. I waited until tax time in March to decide on a retirement plan, thinking I could make retroactive contributions. While SEP IRAs allow this (contributions can be made until tax filing), 401k plans must be established before year-end to make contributions for that tax year. Also, don't forget that your S-Corp salary needs to be "reasonable" for your industry and role. If it's too low compared to your distributions, the IRS might reclassify some of your distributions as salary (subject to employment taxes).

Has anyone used Vanguard for their small business 401k? We're considering them for our S-Corp (just me and my husband), but their website isn't super clear about the fees for small plans.