Self-employed retirement plans Mobile, AL. The freedom of running your own company in Mobile, AL offers many benefits of working for yourself. That said, this independence sometimes brings with certain challenges, especially regarding planning for retirement, because you don't have the benefit of employer-sponsored retirement plans. Only 13% of self-employed individuals have a workplace retirement plan, although many should consider looking into other possibilities. In addition to enjoying a financially stable retirement, seeking advice from a financial advisor in Mobile, AL to set up your self-employed retirement plan delivers significant tax advantages that help your business to grow and succeed.
Few Mobile, AL investment consulting and retirement planning firms understand the needs of small business owners quite like Correct Capital. The father of our founder was a small business owner himself (learn more about our story here), and we have a rich history of supporting entrepreneurs with their retirement planning needs. We understand that your professional and personal aspirations go far beyond basic numbers, and we work tirelessly to provide customized solutions aligned with your vision. Continue exploring to find out about your self-employed retirement plan options in Mobile, AL, or give us a call at Correct Capital at 877-930-401k or contact us online to speak with a entrepreneurial financial advisor in Mobile, AL today.
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Why Mobile, AL Self-Employed Individuals Should Have a Retirement Plan
Retirement plans for self-employed individuals not only prepare you for the future, they also provide real benefits today. From flexible contributions to substantial tax savings, consulting a financial advisor in Mobile, AL helps you design your retirement plan to align with 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 flexibility to modify how much you save:
- Customizable Contributions: Contribute more during successful years and reduce savings when revenues are down, ensuring your plan works with your cash flow.
- Roth Options: Opting for a Roth Solo 401(k) lets you settle taxes at the time of contribution, enabling you to withdraw without tax penalties in the future—an advantageous choice if you believe your tax rate to be higher in the future.
Save Money on Taxes
Self-employed retirement plans offer significant tax benefits:
- Tax-Deductible Contributions: Contributions to a SEP IRA shrink your tax liability, allowing you to keep more of your hard-earned money.
- Tax-Deferred Growth: You won't pay taxes on investment growth until you withdraw it, providing your money more time to grow.
- State-Specific Incentives: Based on your location, you might access state-specific deductions as a business owner. These local incentives help make these plans even more advantageous.
- Retirement Savings Contributions Credit (Saver’s Credit): Eligible individuals can apply for a credit of up to 50% of the first $2,000 they contribute a retirement plan, helping to lower your tax bill even more.
Protect Your Savings With Smart Investments
Planning for a safe retirement requires more than how much you save—it’s also about how you invest:
- Diversified Portfolios: Spreading your investments across a mix of stocks, bonds, and other assets is a smart way to minimize exposure to risk while continuing to build your nest egg.
- Emergency Back-Up: Supplementing your retirement savings with a dedicated business safety net prevents you from dipping into savings during tough times and facing tax penalties.
Plan for the Future of Your Mobile, AL Business
Retirement planning also helps you prepare for what’s next with your Mobile, AL business:
- Selling Your Business: When selling your business, accounts such as SEP IRAs or Solo 401(k)s remain yours and don’t transfer with the business. These accounts offer the financial stability you’ll need during retirement. Keep in mind that while selling your business results in a capital gain, contributions to retirement accounts are capped at annual limits (e.g., a maximum of $7,000 for IRAs or a maximum of $70,000 for Solo 401(k)s, factoring in catch-up contributions, according to plan rules).
- Minimizing Taxes: Making the most of retirement savings helps lower the taxes you might face when you transfer your business.
- Succession Planning: Whether you’re transferring ownership, your retirement accounts offer financial security through the transition. You might want to partner with a financial advisor with expertise in succession and retirement planning to reduce taxes associated with the transaction.
With the proper savings strategy, you can take control of your financial future, lower your tax bill, and create a solid base for both your retirement and your business goals.
Why Start a Self-Employed Retirement Plan in Mobile, AL Now?
Time remains one of the most important assets in retirement planning. Getting a head start not only helps you grow a more substantial retirement fund but also reduces the pressure of saving aggressively in the future. The following are reasons why it is beneficial to start now:
The Cost of Waiting
Putting off saving for retirement may cause a substantial impact on the total you’ll have when you retire. The biggest reason is compound interest—the financial principle where your investments earn returns, and those returns, in turn, accumulate even more returns. The longer your money has to grow, the greater the effect of this growth.
Example: Two individuals, Alex and Taylor are both entrepreneurs. Both of them want to save $500,000 for retirement by age 65:
- Alex starts saving $5,000 annually at age 30.
- Taylor delays savings until age 40 but saves $7,500 annually to bridge the gap.
By age 65, assuming 7% annual return:
- Alex contributes $180,000 and achieves a total of $691,184.39*.
- Taylor puts in $195,500 but achieves a total of only $474,367.78*.
How Early Contributions Grow
Small, consistent savings made consistently can lead to substantial growth. Consider this example showing the power of compound interest:
- Starting at age 25: Putting aside $200 per month in a retirement plan with an projected return of 7%, you’ll grow to approximately $497,303.29* by age 65.
- Starting at age 35: Contributing the same $200 per month yields only $235,412.97* by age 65—a shortfall of over $260,000, all because of a 10-year delay.
Starting sooner, the lower your annual savings needs each year to reach your retirement goals.
*The figures provided in this example represent estimates derived from 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. This information is meant to provide general guidance and cannot predict actual future outcomes. Your individual results may differ depending on variables including market conditions, fees, and individual circumstances. 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 Mobile, AL, it might seem easier to put more emphasis on reinvesting in your business rather than saving for retirement. That said, beginning a plan now gives you the chance to:
- Benefit from growth that is tax-deferred or withdrawals without taxes down the road.
- Take advantage of contribution flexibility that adapt to your cash flow.
- Establish a financial cushion that offers peace of mind, no matter how your business evolves.
Getting started now, the less you’ll have to worry about playing catch-up later in life. Saving for retirement now means managing your financial future and allowing yourself the freedom to concentrate on your objectives—both for your retirement years and your Mobile, AL business.
Types of Self-Employed Retirement Plans
There are several retirement savings options open for those working for themselves in Mobile, AL, each offering its own advantages and considerations. A financial advisor can help you understand the benefits and drawbacks of each option and determine the one most suitable for your circumstances. Generally speaking, your self-employed retirement plan options in Mobile, AL consist of:
Traditional or Roth IRA
Plan Overview: Individual Retirement Accounts (IRAs), as explained here, represent long-term savings plans that provide specific tax advantages. In a traditional IRA, contributions are typically tax-deductible, and returns grow free of current taxes, but retirement distributions are taxed as income. In contrast, Roth IRAs require contributions using income already taxed, but retirement withdrawals that qualify, including earnings, are not taxed. In both types of accounts, withdrawals don’t incur penalties as long as you are at least 59½.
Eligibility: While many retirement plans, such as 401(k)s, are tied to employment, both traditional and Roth IRAs are accessible for individuals with a source of income.
Contribution Limits: For 2025, annual contribution limits for IRAs are set at $7,000, or $8,000 if you qualify for catch-up contributions.
Simplified Employee Pension Plan (SEP IRA)
Plan Overview: SEP IRAs is a retirement plan that enables those who are self-employed to save a percentage of their net business profits. Contributions are strictly employer contributions an employer, so, as a sole proprietor, you (the employee) are limited to contributions from the employer role more than the 25% you (the employer) allocate. If you have employees, it's required to contribute the same amount for them as you do for yourself. You have the flexibility to contribute a flat-dollar amount or a percentage of wages to employee accounts. A SEP IRA may be ideal for businesses that experience fluctuating revenue streams. In contrast to some alternatives, SEP IRAs lack the high fees associated with starting or maintaining other plans.
SEPs work like conventional IRAs, where the contributions are tax-deferred and withdrawals are taxed as income.
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
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, also called an Individual 401(k) or one-participant 401(k) plan, is a self-employed retirement plan designed for companies that have no employees or when the sole employee is your spouse. This type of plan operate much like traditional employer-managed 401(k) plans, and let you make contributions as both the employer and the employee with pre-tax money. This offers more savings versus SEPs or IRAs; however, the additional opportunities often come with more limited investment options. With this type of 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 may establish 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:
- Elective deferrals (as an employee) of up to 100% of your self-employed earnings, up to the annual contribution limit. In 2025, those limits are $23,500, or $31,000 if you're over 50, 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 employee contributions you made.
Total contributions are capped at $70,000, or $77,500 for individuals aged 50+ (in 2025), $81,250 if you attain age 60-63 in 2025.
Individual Defined Benefit Plan
Plan Overview: The defined benefit plan represents a type of retirement plan that guarantees a fixed, predetermined benefit to self-employed individuals upon retirement. As opposed to defined contribution plans, investment returns don’t affect the payout, but enables participants to determine what they'll get in retirement. This strategy is best suited for high-earning self-employed individuals who are focused on saving a large amount for retirement and are willing to make substantial contributions. Contributions offer tax-deferred growth, and withdrawals incur taxes as income during retirement.
Eligibility: Entrepreneurs operating a solo business or with less than five employees are eligible to open an individual defined benefit plan, but it's typically recommended for those over 50 who make $250,000 or more annually. Typically, good candidates for defined benefit plans are:
- Partners or owners who want to invest more than $70,000 (or $77,500 if over age 50)
- Companies already contributing 3-4% and are willing to do more
- Companies showing consistent profit patterns
- Partners or owners over age 40 who desire to "catch up" or accelerate the retirement savings
Contribution Limits: The maximum allowable contribution must be determined by an actuary using your financial situation, age, and savings targets. Contribution limits are updated yearly.
The Importance of a Financial Advisor in Mobile, AL for Your Self-Employed Retirement Plan
Partnering with an advisor in Mobile, AL focused on self-employed retirement strategies is an invaluable resource for those working for themselves. They offer the knowledge to assist guide you through the challenges of retirement planning and develop a tailored strategy that matches your objectives. A financial advisor in Mobile, AL will assess where you stand financially, identify your risk preferences, and assist you in selecting the best options about saving and investing for retirement. Part of what we do for you includes:
- Guide you in choosing a plan that aligns with your objectives and circumstances
- Tailor the plan to fit you personally even further
- Create a written plan in accordance with IRS guidelines
- Organize a trust plan to manage your assets
- Make sure you understand the plan's terms
- Review and modify your plan as needed
- Provide ongoing education and advice throughout your retirement planning process
- Boost your retirement earnings by maximizing your social security benefits
Self-Employed Retirement Plans in Mobile, AL: Correct Capital's Process
Self-employed individuals in Mobile, AL who aren’t equipped with the time or understanding to handle their own retirement planning themselves can become overwhelmed by their choices. Through our team at Correct Capital, our Mobile, AL financial advisors take on the lion's share of your retirement strategy for you, working to make meeting your financial objectives as easy as possible for you. We can help you get set up your self-employed retirement plan in four simple steps:
- Schedule a Call: In just 20 minutes, a member of our advisor team can determine if we're a good fit for you and your business. This initial call lets us get a sense of your goals with no obligation or major time investment on your part.
- Gather Information: Once we mutually decide to continue, we'll request information, including whether you have employees, your existing financial picture, and your long-term savings targets. This helps us create a personalized strategy that aligns with your goals.
- Review Your Plan: After we put together a plan using the information you provide, we'll schedule a meeting and go over your plan in detail to ensure you understand it and explain its fit to your circumstances.
- Implementation and Monitoring: After we agree on your plan, we'll implement the necessary steps so you can start saving. Over the course of our partnership, we'll have regular meetings and track your progress to ensure it stays suited to your needs.
Our Mobile, AL financial advisors and retirement plan consultants serve as 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 Mobile, AL include:
- 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 Mobile, AL
Your business isn't "just a business" to you, and your Mobile, AL financial advisors need to offer more than just good financial guidance. At Correct Capital, we take the time to get to know our clients and their businesses to provide personalized self-employed retirement plans. All our clients in Mobile, AL benefit from our I.O.U. promise: all guidance we provide will be independent, objective, and unbiased. To begin on your self-employment retirement plan, reach out to Correct Capital at 877-930-401k or contact us online.
