SCENARIO: You operate your business as a solely owned corporation. It can be a C or an S corporation.

You are the only employee.

But you’ve not yet had your corporation set up a retirement plan for yourself. Why not?

You’re missing out on what could be significant annual tax deductions and a tax-favored retirement account for yourself. Thankfully, even now, in 2025, you can establish a plan that benefits you for your 2024 efforts.

Here are some corporation retirement plan options to consider.

Simplified Employee Pension (SEP)

The Simplified Employee Pension (SEP) is a stripped-down retirement plan for small employers, including employers with only one employee.1

Your corporation can make annual deductible contributions of up to 25 percent of your compensation (generally W-2 income) to your SEP-IRA account.2 For 2024, the maximum contribution to your account is $69,000.3 For 2025, the maximum contribution goes up to $70,000.4

SEP Pros

If your corporation pays you a healthy salary, the corporation can make generous annual deductible contributions to your SEP-IRA—up to the limits stated above. When cash is tight, the corporation always has the flexibility to contribute less than the allowable maximum or even nothing at all.

You can quickly establish a SEP at almost any brokerage firm or financial institution. You fill out Form 5305-SEP, which takes about five minutes. Done! It does not get any easier than this!

After establishing the SEP for your corporation, there are no administrative details to worry about. The government does not currently require any reporting for one-person SEPs.

You can establish a SEP as late as the extended due date of your corporation’s federal income tax return—Form 1120 or Form 1120-S—for the year for which the corporation will make its initial deductible contribution. And the corporation can defer that initial contribution until that extended due date.

For later years, the corporation can continue to defer contributions until the extended due date for its Form 1120 or Form 1120-S.5