Self-employed retirement plans Baton Rouge, LA. The freedom of being your own boss in Baton Rouge, LA is one of the greatest advantages of being self-employed. However, this flexibility sometimes brings with certain challenges, particularly when it comes to retirement savings, as you don't have the option of employer-sponsored retirement plans. Only 13% of self-employed individuals have a workplace retirement plan, although many could benefit from understanding their retirement options. In addition to achieving a more comfortable retirement, seeking advice from a financial advisor in Baton Rouge, LA to create your self-employed retirement plan can provide significant tax advantages that allow both you and your business to thrive.
Few Baton Rouge, LA financial advisory and retirement planning firms are as attuned to the requirements of entrepreneurs quite like Correct Capital. The father of our founder was a small business owner himself (check out our story here), and we are deeply experienced in helping businesses with their retirement planning needs. We know that your goals for your business and retirement extend well past just monetary concerns, and we strive to create customized solutions that reflect your objectives. Keep reading to learn more about your self-employed retirement plan options in Baton Rouge, LA, or reach out to Correct Capital at 877-930-401k or contact us online to consult with a self-employed financial advisor in Baton Rouge, LA today.
Why Baton Rouge, LA Self-Employed Individuals Should Have a Retirement Plan
Retirement plans for self-employed individuals help prepare you for the future, they also offer tangible benefits today. From flexible contributions to considerable tax savings, consulting a financial advisor in Baton Rouge, LA allows you to create your retirement plan to fit your specific needs.
Flexibility That Fits Your Income
If your income changes from year to year, a plan like a SEP IRA or Solo 401(k) gives you the flexibility to adjust how much you save:
- Customizable Contributions: Save extra during successful years and reduce savings when income is lower, so that your plan fits your current income.
- Roth Options: A Roth Solo 401(k) lets you pay taxes on contributions now, enabling you to withdraw your savings tax-free down the road—a smart decision if you believe your tax rate will increase in the future.
Save Money on Taxes
Self-employed retirement plans provide significant tax benefits:
- Tax-Deductible Contributions: Contributions to a SIMPLE IRA lower your taxable income, helping you keep more of your earnings.
- Tax-Deferred Growth: You won't pay taxes on investment growth until you withdraw it, which gives your money more time to compound.
- State-Specific Incentives: In some states, you might access additional credits as a sole proprietor. These regional incentives make these plans even more beneficial.
- Retirement Savings Contributions Credit (Saver’s Credit): Qualified participants can claim a tax credit of up to 50% of the first $2,000 they contribute a retirement plan, cutting down your tax bill even more.
Protect Your Savings With Smart Investments
Creating a stable future isn’t only about how much you save—it’s also determined by your investment strategy:
- Diversified Portfolios: Spreading your investments across a mix of stocks, bonds, and other assets is a smart way to mitigate financial risk while still growing your savings.
- Emergency Back-Up: Pairing your retirement plan with a financial buffer for your business helps you avoid using your retirement funds during financial hardships and risking extra costs.
Plan for the Future of Your Baton Rouge, LA Business
Preparing for retirement enables you to think through what’s next with your Baton Rouge, LA business:
- Selling Your Business: If you’re planning to sell, accounts such as SEP IRAs or Solo 401(k)s remain yours and don’t transfer with the business. These accounts offer the steady income you’ll need during retirement. It’s important to note that while selling your business results in a capital gain, contributions to retirement accounts are restricted by contribution limits (e.g., as much as $7,000 for IRAs or as much as $70,000 for Solo 401(k)s, with catch-up contributions, based on plan compensation).
- Minimizing Taxes: Using retirement contributions wisely minimizes the taxes you are required to pay when you sell your business.
- Succession Planning: For those winding down or handing over their business, your nest egg ensure the funds you need as you make this shift. You can also seek advice from a financial advisor with expertise in succession and retirement planning to reduce taxes during the sale.
With the proper savings strategy, you can take control of your financial future, cut down your tax obligations, and establish a solid base for both your retirement and your business goals.
Why Start a Self-Employed Retirement Plan in Baton Rouge, LA Now?
Time is one of the most valuable assets when it comes to saving for retirement. Starting early not only lets you accumulate a bigger financial cushion but also lowers the stress of catching up later in life. The following are reasons why it pays to take action now:
The Cost of Waiting
Putting off saving for retirement can have a major impact on the savings you’ll have when you reach retirement age. The biggest reason is compound interest—the financial principle where your investments earn returns, and those returns, subsequently, accumulate even more returns. The longer your money has to grow, the greater the effect of this compounding process.
Example: Alex and Taylor are both self-employed individuals. Both of them want to save $500,000 for retirement by age 65:
- Alex initiates savings of $5,000 annually at age 30.
- Taylor delays savings until age 40 but saves $7,500 annually to catch up.
By age 65, using a projected 7% annual return:
- Alex puts in $180,000 and ends up with $691,184.39*.
- Taylor invests $195,500 but only ends up with $474,367.78*.
How Early Contributions Grow
Regular, modest investments made consistently may result in substantial growth. Consider this example showing the effect of compound interest:
- Starting at age 25: By investing $200 per month in a retirement plan with an expected yearly growth rate of 7%, you’ll grow to approximately $497,303.29* by age 65.
- Starting at age 35: Investing the same $200 per month yields only $235,412.97* by age 65—a difference of over $260,000, simply due to a 10-year delay.
Starting sooner, the less effort required each year to reach your retirement goals.
*These calculations represent estimates generated with NerdWallet’s Compound Interest Calculator, assuming a 7% annual return. The contributions were calculated by multiplying the annual deposit amount by the total number of years contributions were made. The scenarios provided are for illustrative purposes only and are not a promise of future results. Your individual results may differ due to factors such as market conditions, fees, and individual circumstances. We recommend consulting a financial advisor for guidance tailored to your needs.
Take Control of Your Financial Future
For self-employed individuals in Baton Rouge, LA, it is often the case that you prioritize reinvesting in your business rather than saving for retirement. However, initiating a plan now allows you to:
- Take advantage of growth that is tax-deferred or withdrawals without taxes in the future.
- Take advantage of flexible contributions that align with your cash flow.
- Create a financial cushion that provides security, no matter how your business evolves.
Getting started now, the less you’ll be required to worry about making up for lost time later in life. Building your retirement savings today means taking control of your financial future and allowing yourself the opportunity to concentrate on your dreams—both for your retirement years and your Baton Rouge, LA business.
Types of Self-Employed Retirement Plans
There are several retirement savings options available for self-employed individuals in Baton Rouge, LA, each with its own benefits and trade-offs. A financial advisor can help you understand the benefits and drawbacks of each choice and identify the one most suitable for your unique situation. In most cases, your self-employed retirement plan options in Baton Rouge, LA include:
Traditional or Roth IRA
Plan Overview: IRAs, or Individual Retirement Accounts, are long-term savings plans that provide specific tax advantages. In a traditional 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, Roth IRAs require contributions from post-tax earnings, but qualified withdrawals in retirement, including earnings, are tax-free. In both accounts, withdrawals are penalty-free if you are at least 59½.
Eligibility: Unlike 401(k)s, which are employer-sponsored, both traditional and Roth IRAs are open to those with a source of income.
Contribution Limits: For 2025, annual contribution limits for IRAs are set at $7,000, or $8,000 for those aged 50+.
Simplified Employee Pension Plan (SEP IRA)
Plan Overview: A Simplified Employee Pension (SEP) IRA is a retirement plan that permits entrepreneurs to save a percentage of their net business profits. Contributions must come from an employer, so, as a self-employed individual, you (the employee) cannot make additional contributions above the 25% you (the employer) have designated. If you have employees, it's required to contribute the same amount for them as you do for yourself. It's your choice whether to contribute a set monetary value or a percentage of wages to employee accounts. A SEP IRA works well for businesses that experience periods of inconsistent earnings. Unlike other plans, SEP IRAs don’t have costly startup or administrative fees.
SEPs operate like conventional IRAs, where you contribute pre-tax dollars and retirement distributions are taxable.
Eligibility: Both employers and self-employed individuals 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 allowable contribution is based on a special calculation.
Solo 401(k)
Plan Overview: Solo 401(k)s, 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 if the only employee is your spouse. Solo 401(k)s operate much like employer-sponsored 401(k) plans, and let you make contributions as both an employer and an employee with pre-tax money. This provides more savings compared to SEPs or IRAs; however, the additional opportunities may be offset by more constrained investment avenues. Using a solo 401(k), you can make either traditional or Roth deferrals, which offer the same tax benefits as their IRA contribution counterparts.
Eligibility: Only business owners and their spouses can set up and contribute to a solo 401(k).
Contribution Limits: For self-employed individuals with a solo 401(k) plan, you can make two types of contributions:
- Elective deferrals (as an employee) of up to 100% of your self-employed earnings, capped at the annual contribution limit. The contribution limits for 2025 include $23,500, or $31,000 for those aged 50 and above, or $34,750 for those who turn 60-63 in 2025.
- Employer profit-sharing contributions (as an employer) must not surpass 25% of your net earnings from self-employment, which is calculated as net profits less half of your self-employment tax and the employee contributions you made.
Total contributions are capped at $70,000, or $77,500 for those aged 50 and older (for 2025), $81,250 for those aged 60-63 in 2025.
Individual Defined Benefit Plan
Plan Overview: A defined benefit plan is a retirement option that delivers a fixed, predetermined benefit to self-employed individuals upon retirement. Unlike defined contribution plans mentioned above, this plan is not influenced by market performance, but allows self-employed individuals to know exactly how much they'll get in retirement. This strategy is recommended for high-earning professionals who are focused on saving a significant sum for retirement and are prepared to contribute substantial contributions. Contributions are tax deferred, and withdrawals incur taxes as income during retirement.
Eligibility: Any self-employed individual managing a one-person company or with a small staff of under five may establish an individual defined benefit plan, but it's generally recommended for individuals aged 50+ who earn at least $250,000 a year. Generally, good candidates for defined benefit plans include:
- 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% and are willing to do more
- Organizations with proven consistent profit patterns
- Entrepreneurs over age 40 who wish to accelerate savings or increase their retirement contributions rapidly
Contribution Limits: The contribution limit requires calculation from an actuary determined by your income, age, and retirement goals. Limits on contributions change annually.
The Importance of a Financial Advisor in Baton Rouge, LA for Your Self-Employed Retirement Plan
Partnering with an advisor in Baton Rouge, LA specialized in self-employed retirement plans serves as an essential partner for those working for themselves. They have the expertise to help navigate the complexities of retirement planning and develop a customized plan that aligns with your goals. A financial advisor in Baton Rouge, LA will assess where you stand financially, understand your risk tolerance, and help you in choosing wisely about saving and investing for retirement. Part of what we do for you features:
- Help you choose a plan that suits your unique requirements
- Customize the plan to your specific situation even further
- Formalize a plan in writing that complies with IRS regulations
- Organize a trust plan to manage your assets
- Make sure you understand the plan's terms
- Review and modify your plan as needed
- Deliver continuous support and financial insights throughout your retirement planning process
- Boost your retirement earnings by optimizing your social security benefits
Self-Employed Retirement Plans in Baton Rouge, LA: Correct Capital's Process
Baton Rouge, LA business owners who don’t have the time or expertise to oversee their self-employed retirement plan independently can become overwhelmed by their available plans. With Correct Capital, our Baton Rouge, LA financial advisors handle the majority of your retirement planning for you, and strive to ensure meeting your future savings targets as straightforward as possible for you. We are here to assist you in setting up your self-employed retirement plan in four simple steps:
- Schedule a Call: In just 20 minutes, a member of our advisor team can help understand if we're suited to your needs for you and your business. This brief introduction helps us get a sense of your goals with no obligation or major time investment on your part.
- Gather Information: If we both decide to move forward, we'll ask for information, including whether you have employees, your present financial standing, and your long-term savings targets. This enables us to craft a tailored approach designed just for you.
- Review Your Plan: After we put together a plan from the information you provide, we'll schedule a meeting and review your plan step by step to ensure you understand it and understand how it best correlates to your needs.
- Implementation and Monitoring: Once we've agreed on your plan, we'll set everything up so you can begin contributing. Over the course of our partnership, we'll check in and monitor your plan to make sure it remains aligned with your goals.
Our Baton Rouge, LA financial advisors and retirement plan consultants are fiduciary advisors, which means they are committed by law and ethics to do what's in your best interest.
Other financial advisory services we offer in Baton Rouge, LA 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 Baton Rouge, LA
Your business isn't "just a business" to you, and your Baton Rouge, LA financial advisors must deliver more than just good financial guidance. Correct Capital takes pride in, we take the time to get to know our clients and their businesses to provide customized self-employed retirement plans. To every client in Baton Rouge, LA, we provide our I.O.U. promise: all guidance we provide will be independent, objective, and unbiased. To get started on your self-employment retirement plan, reach out to Correct Capital at 877-930-401k or contact us online.
