Self-employed retirement plans Chesapeake, VA. The freedom of being your own boss in Chesapeake, VA offers many benefits of working for yourself. That said, this independence sometimes brings with potential drawbacks, especially when it comes to building your retirement fund, because you don't have the benefit of employer-sponsored retirement plans. Only 13% of self-employed individuals have a workplace retirement plan, but many could benefit from exploring their options. In addition to enjoying a financially stable retirement, partnering with a financial advisor in Chesapeake, VA to set up your self-employed retirement plan can provide significant tax advantages that enable your business to grow and succeed.
Few Chesapeake, VA wealth management and retirement planning firms understand the needs of self-employed individuals quite like Correct Capital. Our company’s founder grew up with a father who was a small business owner himself (learn more about our story here), and our firm have a rich history of helping businesses with their retirement planning needs. We recognize that your professional and personal aspirations extend well past just monetary concerns, and we are dedicated to offer personalized solutions to meet your unique goals. Continue exploring to find out about your self-employed retirement plan options in Chesapeake, VA, or reach out to Correct Capital at 877-930-401k or contact us online to speak with a entrepreneurial financial advisor in Chesapeake, VA today.
Why Chesapeake, VA Self-Employed Individuals Should Have a Retirement Plan
Retirement plans for self-employed individuals help prepare you for the future, they also offer real benefits today. With customizable contribution options to significant tax savings, working with a financial advisor in Chesapeake, VA enables you to create your retirement plan to suit your unique financial situation.
Flexibility That Fits Your Income
For those with fluctuating income annually, a plan like a SEP IRA or Solo 401(k) offers the option to tailor how much you save:
- Customizable Contributions: Save extra during high-income years and cut back when revenues are down, so your plan works with your financial situation.
- Roth Options: A Roth Solo 401(k) lets you pay taxes on contributions now, enabling you to withdraw tax-free later—an advantageous choice if you anticipate your tax rate to be higher in the future.
Save Money on Taxes
Plans designed for the self-employed offer significant tax benefits:
- Tax-Deductible Contributions: Contributions to a Solo 401(k) reduce what you owe in taxes, allowing you to keep more of your income.
- Tax-Deferred Growth: You won't pay taxes on investment growth until you withdraw it, providing your money more time to compound.
- State-Specific Incentives: In some states, you could qualify for state-specific credits as a sole proprietor. These regional incentives can make these plans even more valuable.
- Retirement Savings Contributions Credit (Saver’s Credit): Qualified participants can apply for a credit of up to 50% of the first $2,000 contributed a retirement plan, further reducing your tax bill even more.
Protect Your Savings With Smart Investments
Building a secure retirement requires more than how much you save—it’s also linked to the way you invest:
- Diversified Portfolios: Allocating your investments across different asset classes like stocks and bonds can help reduce risk while still growing your retirement fund.
- Emergency Back-Up: Combining your retirement strategy and a dedicated business safety net prevents you from dipping into savings during tough times and risking extra costs.
Plan for the Future of Your Chesapeake, VA Business
A thoughtful retirement strategy enables you to prepare for what’s next with your Chesapeake, VA business:
- Selling Your Business: If you’re planning to sell, retirement accounts like SEP IRAs and Solo 401(k)s stay in your name and don’t transfer with the business. These savings offer the steady income you’ll need during retirement. Remember that while selling a business often leads to a capital gain, deposits into these plans are restricted by contribution limits (e.g., a maximum of $7,000 for IRAs or up to $70,000 for Solo 401(k)s, including catch-up contributions, according to plan rules).
- Minimizing Taxes: Strategically planning your contributions helps lower the taxes you are required to pay when you pass on your business.
- Succession Planning: For those winding down or handing over their business, your retirement savings provide financial security through the transition. You can also seek advice from a financial advisor who specializes in succession planning and retirement accounts to help with taxes during the sale.
With the best-fit retirement strategy, you gain control over your financial future, lower your tax bill, and build a strong framework for both your retirement and your business goals.
Why Start a Self-Employed Retirement Plan in Chesapeake, VA Now?
Time is one of the most important factors when it comes to saving for retirement. Starting early not only allows you to build a more substantial retirement fund but also lowers the stress of catching up later in life. Here’s why it is beneficial to start now:
The Cost of Waiting
Delaying your retirement savings may cause a significant impact on the total you’ll have when you stop working. The biggest reason is compound interest—the powerful process where your investments earn returns, and those returns, in turn, generate even more returns. The more time your money has to grow, the greater the impact of this growth.
Example: Two individuals, Alex and Taylor are both self-employed individuals. Their shared goal is to save $500,000 for retirement by age 65:
- Alex begins contributing $5,000 annually at age 30.
- Taylor postpones starting contributions to age 40 but contributes $7,500 annually to bridge the gap.
By age 65, assuming 7% annual return:
- Alex contributes $180,000 and accumulates $691,184.39*.
- Taylor contributes $195,500 but accumulates just $474,367.78*.
How Early Contributions Grow
Regular, modest investments invested steadily can lead to significant growth. Here’s a simple scenario showing the power of compound interest:
- Starting at age 25: If you invest $200 per month in a retirement plan with an expected yearly growth rate of 7%, you’ll accumulate $497,303.29* by age 65.
- Starting at age 35: Investing 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 less effort required each year to reach your retirement goals.
*The figures provided in this example are based on estimates derived from NerdWallet’s Compound Interest Calculator, with the assumption of a 7% annual return. The contributions were calculated by multiplying the annual deposit amount by the total number of years contributions were made. These examples are for illustrative purposes only and do not guarantee future performance. Outcomes may change due to elements like market conditions, fees, and individual circumstances. Always consult a financial advisor for custom recommendations.
Take Control of Your Financial Future
As a self-employed person in Chesapeake, VA, it might seem easier to prioritize reinvesting in your business over saving for retirement. However, initiating a plan now enables you to:
- Take advantage of tax-free future growth or tax-free withdrawals down the road.
- Benefit from adjustable savings that adapt to your cash flow.
- Establish a long-term safety measure that ensures stability, no matter how your business evolves.
Getting started now, the less you’ll be required to worry about catching up later in life. Taking steps toward your retirement goals today means gaining control over your financial future and giving yourself the ability to concentrate on your objectives—both for your retirement years and your Chesapeake, VA business.
Types of Self-Employed Retirement Plans
There are several retirement savings options designed for self-employed individuals in Chesapeake, VA, each providing its own benefits and trade-offs. A financial advisor is available to help you learn about the pros and cons of each choice and identify the one most suitable for your needs. In most cases, your self-employed retirement plan options in Chesapeake, VA include:
Traditional or Roth IRA
Plan Overview: IRAs, or Individual Retirement Accounts, are financial tools for retirement that include key tax perks. In a conventional IRA, you can usually deduct your contributions from taxable income, and investment earnings grow tax-deferred, but money taken out during retirement are subject to income tax. In contrast, with Roth IRAs, you contribute using income already taxed, but eligible distributions during retirement, including earnings, are not taxed. In both cases, withdrawals come without penalties as long as you are at least 59½.
Eligibility: Unlike plans linked to your job, IRAs, including traditional and Roth options are available to anyone with taxable earnings.
Contribution Limits: For 2025, annual contribution limits for IRAs are capped at $7,000, or $8,000 if you qualify for catch-up contributions.
Simplified Employee Pension Plan (SEP IRA)
Plan Overview: A Simplified Employee Pension (SEP) IRA is a retirement plan that permits entrepreneurs to set aside a portion of their self-employment income. Contributions are strictly employer contributions an employer, so, as a independent business owner, you (the employee) are limited to contributions from the employer role above the 25% you (the employer) already contributed. If you have employees, you must contribute the same amount for them as you do for yourself. You may choose to contribute a flat-dollar amount or a percentage of wages to employee accounts. This type of plan is a good option for businesses that experience periods of inconsistent earnings. In contrast to some alternatives, SEP IRAs lack costly startup or administrative fees.
SEPs function like standard IRAs, where you contribute pre-tax dollars and money withdrawn is subject to income tax.
Eligibility: Both employers and self-employed individuals can set up a SEP.
Contribution Limits: Contribution limits for employees in a SEP IRA are capped at the lower of:
- 25% of compensation, or
- $70,000 for 2025
If you’re self-employed, the contribution you can make is based on a special calculation.
Solo 401(k)
Plan Overview: A Solo 401(k) plan, commonly known as an Individual 401(k) or one-participant 401(k) plan, is a savings option for the self-employed designed for companies that have no employees or where the only employee is a spouse. This type of plan are similar to employer-sponsored 401(k) plans, and allow you to contribute as both an employer and an employee with pre-tax money. This offers more savings compared to SEPs or IRAs; however, the extra savings options can be balanced by more restricted investment choices. 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: Only business owners and their spouses are eligible to open and contribute to a solo 401(k).
Contribution Limits: For self-employed individuals with a solo 401(k) plan, you are allowed to make two types of contributions:
- Elective deferrals (as an employee) of up to 100% of your earned income from self-employment, up to the annual contribution limit. The contribution limits for 2025 include $23,500, or $31,000 if you're over 50, or $34,750 for individuals aged 60-63 in 2025.
- Contributions as an employer (as an employer) are limited to 25% of your adjusted self-employment income, which is defined as net profit minus half of your self-employment tax and the employee contributions you made.
The total contribution cannot exceed $70,000, or $77,500 for those aged 50 and older (as of 2025), $81,250 for those aged 60-63 in 2025.
Individual Defined Benefit Plan
Plan Overview: The defined benefit plan offers a structured retirement solution that provides a set amount to self-employed individuals upon retirement. In contrast to the plans discussed earlier, this plan is not influenced by market performance, but allows self-employed individuals to know what they'll have in retirement. This strategy is best suited for higher-income self-employed individuals who are focused on saving a large amount for retirement and can commit to making larger deposits. Contributions grow tax-free until withdrawal, and withdrawals are taxed as income upon retirement.
Eligibility: Entrepreneurs managing a one-person company or with a small staff of under five may establish an individual defined benefit plan, but it's generally suggested for those over 50 who earn at least $250,000 a year. Generally, good candidates for defined benefit plans are:
- Business owners or partners who want to invest more than $70,000 (or $77,500 for individuals 50 and older)
- Organizations that already put in 3-4% and are willing to do more
- Businesses showing consistent profit patterns
- Business leaders over age 40 who aim to quickly build retirement savings or accelerate the retirement savings
Contribution Limits: The contribution limit requires calculation from an actuary using your financial situation, age, and savings targets. Allowable contributions change annually.
The Importance of a Financial Advisor in Chesapeake, VA for Your Self-Employed Retirement Plan
Working with a financial advisor in Chesapeake, VA experienced with retirement plans for the self-employed serves as an invaluable resource for self-employed individuals. They offer the knowledge to assist guide you through the challenges of retirement planning and craft a customized plan that aligns with your goals. A financial advisor in Chesapeake, VA will review your finances, understand your risk tolerance, and help you in making informed decisions about saving and investing for retirement. Part of what we do for you involves:
- Guide you in choosing a plan that best fits your needs and goals
- Further adapt the plan to fit you personally even further
- Adopt a written plan as required by IRS rules
- Set up an asset trust plan
- Make sure you understand the plan's terms
- Track and fine-tune your plan to keep it aligned with your goals
- Deliver continuous support and financial insights throughout your retirement planning process
- Increase your retirement income by making the most of your social security
Self-Employed Retirement Plans in Chesapeake, VA: Correct Capital's Process
Chesapeake, VA business owners who lack the time, interest, or knowledge to handle their self-employed retirement plan on their own can become overwhelmed when faced with their choices. Through our team at Correct Capital, our Chesapeake, VA financial advisors manage the majority of your retirement strategy for you, to help make meeting your retirement goals as straightforward as possible for you. We will guide you in creating your self-employed retirement plan in a quick, four-step process:
- Schedule a Call: It only takes 20 minutes, a member of our advisor team will assess if we're a good fit for you and your business. This brief introduction helps us understand what you're looking for with no pressure or extensive time commitment on your part.
- Gather Information: Once we mutually decide to continue, we'll gather information, including how many employees you have (if any), your existing financial picture, and your long-term savings targets. This allows us to put together a tailored approach that aligns with your goals.
- Review Your Plan: When we finalize a plan from the information you provide, we'll meet with you and discuss your plan step by step to ensure you understand it and show how it aligns with your goals.
- Implementation and Monitoring: When we finalize on your plan, we'll set everything up so you can start saving. Over the course of our partnership, we'll check in and monitor your plan to ensure it stays suited to your needs.
Our Chesapeake, VA financial advisors and retirement plan consultants serve as fiduciary advisors, meaning they are required by law and ethical standards to do what's in your best interest.
Other financial advisory services we offer in Chesapeake, VA include:
- Retirement Income Planning
- Investment Planning
- Retirement Financial Planning
- Investment Management
- 401(k) Audit
- High-Net-Worth Wealth Management
- Retirement Planner
- Financial Planning
Call Correct Capital for Your Self-Employed Retirement Plan in Chesapeake, VA
You don't see your business as "just a business", and your Chesapeake, VA financial advisors should provide more than basic financial recommendations. With Correct Capital, we focus on building a relationship with our clients and their businesses to provide tailored self-employed retirement plans. We offer all our Chesapeake, VA clients 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, call Correct Capital today at 877-930-401k or contact us online.
