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@SeattleCPA I'm curious about this question as well. I'm an owner/operator with an S-Corp in a similar business profit bracket ($130kish anticipated in 2023). I've been using a Solo 401(k) for taking the personal 401(k) deduction plus 20% company profit sharing. The way I understand it, Simple IRAs have lower contribution limits ($15,500 in 2023 vs $22,500 for Solo 401k) but are easier to set up + manage. Simple IRAs are also not subject to nondiscrimination testing if employees were to later come into the picture. Solo 401(k)s are subject to nondiscrimination testing unless the only other employee than the owner is the spouse, who is considered a common law employee.
SEP IRA is also another option but is limited to employer contributions (25% of employee's compensation).
For OP, if you're thinking of reaching $300k/year in business profits but without taking on employees, the Solo 401(k) could be a good option. That way you could maximize your personal deduction of $22,500, plus kick in another $43,500 (for a total of $66,000 combined employee and employer contributions in 2023).
If you'd be getting employees in the foreseeable future, another plan could be better suited.
Also, if you have a spouse that doesn't have access to a retirement plan where they work (or if they don't have a job), you could also consider adding them to payroll + opening a 401(k) for them, too. My wife works a day job but isn't offered a retirement plan. So, I am considering adding her as a PT employee and paying her a salary of $22,500 + taxes, then opening up her own 401(k) and maxing that, plus another $4,500 in employer match.
I am not a tax professional nor a lawyer. I am a fellow SB owner. I get the feeling this post will need lots of fact checking by a professional, so I'm calling on SeatleCPA for some sage advice if you will!
