Self-employed retirement plans Irvine, CA. The freedom of being your own boss in Irvine, CA offers many benefits of working for yourself. However, this flexibility sometimes brings with a lack of security, particularly in terms of planning for retirement, as you don't have access to a workplace retirement plan. Only 13% of self-employed individuals have a workplace retirement plan, yet countless would be better off understanding their retirement options. In addition to enjoying a financially stable retirement, seeking advice from a financial advisor in Irvine, CA to create your self-employed retirement plan delivers significant tax advantages that allow you to move your business forward.
Few Irvine, CA investment consulting and retirement planning firms understand the needs of entrepreneurs quite like Correct Capital. Our founder's father was a small business owner himself (learn more about our story here), and our firm take pride in helping businesses with their retirement planning needs. We understand that your professional and personal aspirations extend well past just monetary concerns, and we are dedicated to provide customized solutions aligned with your vision. Keep reading to learn more about your self-employed retirement plan options in Irvine, CA, or call Correct Capital at 877-930-401k or contact us online to speak with a entrepreneurial financial advisor in Irvine, CA today.
Why Irvine, CA Self-Employed Individuals Should Have a Retirement Plan
Retirement plans for self-employed individuals not only prepare you for the future, they also deliver immediate benefits today. Offering flexibility in contributions to substantial tax savings, consulting a financial advisor in Irvine, CA allows you to create your retirement plan to fit your specific needs.
Flexibility That Fits Your Income
For those with fluctuating income from year to year, a plan like a SEP IRA or Solo 401(k) gives you the option to modify how much you save:
- Customizable Contributions: Contribute more during profitable years and scale back when income is lower, so that your plan aligns with your current income.
- Roth Options: A Roth Solo 401(k) lets you handle taxes upfront, enabling you to withdraw tax-free later—a smart decision if you anticipate your tax rate will increase in the future.
Save Money on Taxes
Plans designed for the self-employed offer valuable tax benefits:
- Tax-Deductible Contributions: Contributions to a Solo 401(k) shrink your tax liability, helping you keep more of your income.
- Tax-Deferred Growth: You won't pay taxes on investment growth until you withdraw it, which gives your money more time to grow.
- State-Specific Incentives: Based on your location, you may be eligible for extra deductions as a sole proprietor. These state-level incentives make these plans even more valuable.
- Retirement Savings Contributions Credit (Saver’s Credit): Eligible individuals can claim a tax credit of up to 50% of the first $2,000 contributed a retirement plan, helping to lower your tax bill even more.
Protect Your Savings With Smart Investments
Building a secure retirement goes beyond just how much you save—it’s also linked to the way you invest:
- Diversified Portfolios: Distributing your investments across a mix of stocks, bonds, and alternatives is a smart way to reduce risk while still growing your savings.
- Emergency Back-Up: Pairing your retirement plan with a business emergency fund prevents you from using your retirement funds during financial hardships and facing tax penalties.
Plan for the Future of Your Irvine, CA Business
Retirement planning enables you to prepare for what’s next with your Irvine, CA business:
- Selling Your Business: If you’re planning to sell, plans like SEP IRAs or Solo 401(k)s remain yours and don’t transfer with the business. These plans ensure the financial stability you’ll need during retirement. Remember that while selling a business often leads to a capital gain, deposits into these plans are subject to yearly maximums (e.g., a maximum of $7,000 for IRAs or up to $70,000 for Solo 401(k)s, factoring in catch-up contributions, according to plan rules).
- Minimizing Taxes: Making the most of retirement savings can reduce the taxes you are required to pay when you sell your business.
- Succession Planning: If you’re passing the business on, your nest egg provide a stable foundation as you make this shift. You can also partner with a financial advisor with expertise in succession and retirement planning to reduce taxes during the sale.
With the right retirement plan, you can take control of your financial future, reduce your tax burden, and create a solid base for both your retirement and your business goals.
Why Start a Self-Employed Retirement Plan in Irvine, CA Now?
Time is one of the most important assets when it comes to saving for retirement. Starting early not only allows you to build a larger nest egg but also reduces the financial burden of playing catch-up as you get older. This is why it is beneficial to start now:
The Cost of Waiting
Delaying your retirement savings may cause a significant impact on the amount you’ll have when you reach retirement age. The biggest reason is compound interest—the concept where your investments grow, and those returns, subsequently, generate even more returns. The more time your money has to grow, the greater the benefit of this compounding process.
Example: Taylor and Alex are both entrepreneurs. Both of them want to save $500,000 for retirement by age 65:
- Alex initiates savings of $5,000 annually at age 30.
- Taylor waits until age 40 but puts away $7,500 annually to bridge the gap.
By age 65, using a projected 7% annual return:
- Alex puts in $180,000 and accumulates $691,184.39*.
- Taylor contributes $195,500 but achieves a total of only $474,367.78*.
How Early Contributions Grow
Regular, modest investments contributed over time may result in impressive growth. Consider this example showing the effect of compounding:
- Starting at age 25: Putting aside $200 per month in a retirement plan with an average annual return of 7%, you’ll end up with $497,303.29* by age 65.
- Starting at age 35: Saving the same $200 per month leaves you with only $235,412.97* by age 65—a gap of over $260,000, all because of a 10-year delay.
Starting sooner, the lower your annual savings needs each year to meet your retirement goals.
*The figures provided in this example represent estimates calculated using NerdWallet’s Compound Interest Calculator, assuming a 7% annual return. These calculations involved multiplying yearly deposits by the years contributed. This information is meant to provide general guidance and cannot predict actual future outcomes. Actual results may vary due to variables including market conditions, fees, and personal factors. Be sure to speak with a financial advisor for guidance tailored to your needs.
Take Control of Your Financial Future
If you’re self-employed in Irvine, CA, it might seem easier to prioritize reinvesting in your business over saving for retirement. That said, beginning a plan now allows you to:
- Benefit from tax-free future growth or penalty-free withdrawals in the future.
- Take advantage of flexible contributions that align with your income.
- Build a safety net that provides security, no matter how your business develops.
Starting early, the less you’ll need to worry about playing catch-up later in life. Saving for retirement now means managing your financial future and allowing yourself the opportunity to concentrate on your objectives—both for your retirement years and your Irvine, CA business.
Types of Self-Employed Retirement Plans
Multiple retirement savings options open for self-employed individuals in Irvine, CA, each with its own advantages and considerations. A financial advisor will guide you to understand the pros and cons of each choice and choose the one most suitable for your circumstances. Generally speaking, your self-employed retirement plan options in Irvine, CA include:
Traditional or Roth IRA
Plan Overview: IRAs, or Individual Retirement Accounts, are long-term savings plans that include specific tax advantages. In a traditional IRA, contributions are typically tax-deductible, and investment earnings grow tax-deferred, but withdrawals in retirement are taxed as income. In contrast, with Roth IRAs, you contribute from post-tax earnings, but eligible distributions during retirement, including earnings, are exempt from taxes. In both types of accounts, withdrawals are penalty-free provided you are at least 59½.
Eligibility: Unlike plans linked to your job, both traditional and Roth IRAs are accessible for individuals with taxable earnings.
Contribution Limits: For 2025, annual contribution limits for IRAs are capped at $7,000, or $8,000 for those aged 50+.
Simplified Employee Pension Plan (SEP IRA)
Plan Overview: The Simplified Employee Pension IRA serves as a retirement savings option that permits self-employed individuals to save a percentage of their net business profits. Contributions can only be made by an employer, so, as a sole proprietor, you (the employee) would not be able to contribute above the 25% you (the employer) have designated. If you have employees, you must contribute the same amount for them as you do for yourself. You have the flexibility to contribute a set monetary value or a percentage of wages to employee accounts. SEP IRAs is a good option for companies with fluctuating revenue streams. In contrast to some alternatives, SEP IRAs lack the high fees associated with starting or maintaining other plans.
SEPs function like standard IRAs, where contributions are made with pre-tax money and retirement distributions are taxable.
Eligibility: Any employer, including the self-employed can establish a SEP.
Contribution Limits: Contribution limits for employees in a SEP IRA must not exceed:
- 25% of compensation, or
- $70,000 for 2025
For self-employed individuals, the amount eligible to be contributed is based on a special calculation.
Solo 401(k)
Plan Overview: A Solo 401(k) plan, also called an Individual 401(k) or one-participant 401(k) plan, is a savings option for the self-employed intended for businesses without employees or when the sole employee is your spouse. This type of plan operate much like standard 401(k) plans, and allow you to contribute as both the employer and the employee with pre-tax money. This offers more savings compared to SEPs or IRAs; however, the extra savings options can be balanced by more constrained investment avenues. In a solo 401(k) plan, you can make either traditional or Roth deferrals, which have the same tax benefits as their IRA contribution counterparts.
Eligibility: Solo 401(k)s are available solely to business owners and their spouses are eligible to open and contribute to a solo 401(k).
Contribution Limits: As a self-employed individual with a solo 401(k) plan, you are allowed to make two types of contributions:
- Employee contributions of up to 100% of your self-employed earnings, up to the annual contribution limit. For 2025, the limits will be $23,500, or $31,000 if you are 50 or older, or $34,750 if you attain age 60-63 in 2025.
- Contributions as an employer (as an employer) must not surpass 25% of your net self-employment income, which is calculated as net profits less half of your self-employment tax and the elective deferrals you made.
The total contribution cannot exceed $70,000, or $77,500 if you're over age 50 (as of 2025), $81,250 for individuals turning 60-63 in 2025.
Individual Defined Benefit Plan
Plan Overview: A defined benefit plan offers a structured retirement solution that provides a fixed, predetermined benefit to business owners upon retirement. In contrast to the plans discussed earlier, a defined benefit plan doesn't fluctuate based on investment returns, but allows self-employed individuals to know exactly how much they'll get in retirement. This plan is ideal for higher-income professionals who want to save a substantial amount for retirement and are willing to make larger deposits. Contributions grow tax-free until withdrawal, and withdrawals are taxed as income upon retirement.
Eligibility: Any self-employed individual managing a one-person company or with less than five employees may establish an individual defined benefit plan, but it's generally suggested for individuals aged 50+ who make $250,000 or more annually. Typically, good candidates for defined benefit plans are:
- Business owners or partners who aim to deposit more than $70,000 (or $77,500 for individuals 50 and older)
- Organizations that already put in 3-4% but are open to increasing contributions
- Organizations showing consistent profit patterns
- Business leaders over age 40 who aim to quickly build retirement savings or boost savings within a short timeframe
Contribution Limits: The maximum allowable contribution requires calculation from an actuary using your income, age, and retirement goals. Contribution limits are adjusted each year.
The Importance of a Financial Advisor in Irvine, CA for Your Self-Employed Retirement Plan
Working with a financial advisor in Irvine, CA specialized in self-employed retirement plans can be an important asset for those working for themselves. They bring the skills needed to guide you through the challenges of retirement planning and craft a customized plan that reflects your aspirations. A financial advisor in Irvine, CA will review your finances, identify your risk preferences, and assist you in choosing wisely about saving and investing for retirement. A key part of what we do for you involves:
- Help you choose a plan that best fits your needs and goals
- Tailor the plan to your specific situation even further
- Formalize a plan in writing as required by IRS rules
- Arrange a trust plan for assets
- Ensure you comprehend the plan's terms
- Track and fine-tune your plan to keep it aligned with your goals
- Provide ongoing education and advice as you continue on the road to retirement
- Maximize what you receive in retirement by maximizing your social security benefits
Self-Employed Retirement Plans in Irvine, CA: Correct Capital's Process
Self-employed individuals in Irvine, CA who don’t have the time or expertise to handle their self-employed retirement plan independently can become overwhelmed when faced with their available plans. With Correct Capital, our Irvine, CA financial advisors handle the lion's share of your retirement planning for you, and strive to ensure meeting your financial objectives as hassle-free as possible for you. We will guide you in creating your self-employed retirement plan in a quick, four-step process:
- Schedule a Call: In just 20 minutes, a member of our advisor team can determine if we're suited to your needs for you and your business. This initial call helps us learn about your needs with zero commitment or major time investment on your part.
- Gather Information: If we both decide to move forward, we'll gather information, including whether you have employees, your present financial standing, and your future objectives. This enables us to craft a personalized strategy designed just for you.
- Review Your Plan: When we finalize a plan using the information you provide, we'll meet with you and discuss your plan in detail to make sure it's clear and show how it aligns with your goals.
- Implementation and Monitoring: Once we've agreed on your plan, we'll put everything in place so you can start saving. Throughout our relationship, we'll have regular meetings and monitor your plan to ensure it stays suited to your needs.
Our Irvine, CA financial advisors and retirement plan consultants are fiduciary advisors, who are obligated to they are legally and ethically bound to prioritize your needs above all else.
Other financial advisory services we offer in Irvine, CA include:
- Investment Management
- 401(k) Audit
- High-Net-Worth Wealth Management
- Retirement Planner
- Financial Planning
- Retirement Plan Consultants
- Fiduciary Financial Advisor
Call Correct Capital for Your Self-Employed Retirement Plan in Irvine, CA
To you, your business is more than "just a business", and your Irvine, CA financial advisors need to offer more than just good financial guidance. With Correct Capital, we make it a priority to understand our clients and their businesses to provide tailored self-employed retirement plans. To every client in Irvine, CA, we provide our I.O.U. promise: all of the advice you get from us will be independent, objective, and unbiased. To begin on your self-employment retirement plan, contact Correct Capital now at 877-930-401k or contact us online.
