Self-employed retirement plans Alexandria, VA. The freedom of owning your own business in Alexandria, VA is one of the greatest advantages of being self-employed. That said, this independence often comes with potential drawbacks, notably regarding building your retirement fund, as you don't have the benefit of employer-sponsored retirement plans. Only 13% of self-employed individuals have a workplace retirement plan, but many should consider exploring their options. In addition to achieving a financially stable retirement, working with a financial advisor in Alexandria, VA to create your self-employed retirement plan offers significant tax advantages that allow your business to grow and succeed.
Few Alexandria, VA investment consulting and retirement planning firms understand the needs of entrepreneurs better than Correct Capital. Our founder's father was a small business owner himself (check out our story here), and our firm take pride in supporting entrepreneurs with their retirement planning needs. We understand that your business and retirement aspirations extend well past simple financial figures, and we strive to offer tailored solutions aligned with your vision. Continue exploring to find out about your self-employed retirement plan options in Alexandria, VA, or reach out to Correct Capital at 877-930-401k or contact us online to talk to a entrepreneurial financial advisor in Alexandria, VA today.
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Why Alexandria, VA Self-Employed Individuals Should Have a Retirement Plan
Retirement plans for self-employed individuals are essential for preparing you for the future, they also deliver immediate benefits today. With customizable contribution options to considerable tax savings, consulting a financial advisor in Alexandria, VA helps you design your retirement plan to suit your individual circumstances.
Flexibility That Fits Your Income
For those with fluctuating income from year to year, a plan like a SEP IRA or Solo 401(k) provides the flexibility to tailor how much you save:
- Customizable Contributions: Save extra during successful years and cut back when income is lower, so 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 tax-free later—an advantageous choice if you anticipate your tax rate to be higher in the future.
Save Money on Taxes
Retirement plans for self-employed individuals deliver powerful tax benefits:
- Tax-Deductible Contributions: Contributions to a SEP IRA lower your taxable income, 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 compound.
- State-Specific Incentives: In some states, you might access extra tax breaks as a self-employed individual. These state-level incentives help make these plans even more advantageous.
- Retirement Savings Contributions Credit (Saver’s Credit): Qualified participants 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 isn’t only about how much you save—it’s also about how you invest:
- Diversified Portfolios: Spreading your investments across a mix of asset classes like stocks and bonds can help minimize exposure to risk while continuing to build your retirement fund.
- Emergency Back-Up: Supplementing your retirement savings with a dedicated business safety net helps you avoid tapping into your nest egg during financial hardships and incurring penalties.
Plan for the Future of Your Alexandria, VA Business
Retirement planning can assist you prepare for what’s next with your Alexandria, VA business:
- Selling Your Business: When selling your business, accounts such as SEP IRAs or Solo 401(k)s remain your personal assets and don’t transfer with the business. These savings ensure the reliable income you’ll need during retirement. It’s important to note that while selling a business often leads to a capital gain, retirement plan contributions are capped at annual limits (e.g., a maximum of $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: Strategically planning your contributions 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 offer a stable foundation during the change. You can also work with a financial advisor with expertise in succession and retirement planning to help with taxes during the sale.
With the proper savings strategy, you manage your financial future, cut down your tax obligations, and create a strong framework for both your retirement and your business goals.
Why Start a Self-Employed Retirement Plan in Alexandria, VA Now?
There’s no denying that time is one of the most important factors for building your retirement fund. Getting a head start not only lets you accumulate a more substantial retirement fund but also lowers the stress of saving aggressively in the future. Here’s why it makes sense to begin today:
The Cost of Waiting
Waiting to start your retirement fund could lead to a significant impact on the savings you’ll have when you stop working. The biggest reason is compound interest—the concept where your investments earn returns, and those returns, in turn, earn even more returns. The more time your money has to grow, the greater the impact of this compounding process.
Example: Two individuals, Alex and Taylor are both self-employed professionals. They each aim 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 puts away $7,500 annually to make up for lost time.
By age 65, using a projected 7% annual return:
- Alex puts in $180,000 and achieves a total of $691,184.39*.
- Taylor contributes $195,500 but only ends up with $474,367.78*.
How Early Contributions Grow
Even modest contributions made consistently often create substantial growth. Here’s a simple scenario showing the impact of consistent growth:
- Starting at age 25: If you invest $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: Contributing the same $200 per month yields only $235,412.97* by age 65—a difference of over $260,000, just from a 10-year delay.
Starting sooner, the lower your annual savings needs each year to meet your retirement goals.
*These calculations represent estimates calculated using NerdWallet’s Compound Interest Calculator, based on 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 meant to provide general guidance and are not a promise of future results. 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 Alexandria, VA, it can be tempting to prioritize reinvesting in your business instead of saving for retirement. Even so, starting a plan now gives you the chance to:
- Benefit from tax-free future growth or withdrawals without taxes in the future.
- Enjoy flexible contributions that change with your earnings.
- Establish a long-term safety measure that offers peace of mind, no matter how your business changes.
Getting started now, the less you’ll be required to worry about playing catch-up later in life. Saving for retirement now means gaining control over your financial future and allowing yourself the freedom to focus on your objectives—both for your golden years and your Alexandria, VA business.
Types of Self-Employed Retirement Plans
A variety of retirement savings options available for entrepreneurs in Alexandria, VA, each with its own advantages and considerations. A financial advisor will guide you to evaluate the pros and cons of each option and choose the one most suitable for your circumstances. Typically, your self-employed retirement plan options in Alexandria, VA consist of:
Traditional or Roth IRA
Plan Overview: IRAs, or Individual Retirement Accounts, are long-term savings plans that provide 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 taxable. In contrast, Roth IRA contributions are made with after-tax income, but retirement withdrawals that qualify, including earnings, are tax-free. In both cases, withdrawals are penalty-free 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 open to those with an earned 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: The Simplified Employee Pension IRA serves as a retirement savings option that enables self-employed individuals to contribute a percentage of their net earnings. Contributions can only be made by an employer, so, as a self-employed individual, you (the employee) cannot make additional contributions beyond the 25% you (the employer) already contributed. If you have employees, you are obligated to contribute the same amount for them as you do for yourself. You have the flexibility to contribute a fixed dollar figure or a percentage of wages to employee accounts. SEP IRAs works well for companies with cycles of high revenue and low revenue. Unlike other plans, SEP IRAs are free of costly startup or administrative fees.
SEPs operate like traditional IRAs, where contributions are made with pre-tax money and withdrawals are taxed as income.
Eligibility: Both employers and self-employed individuals can open a SEP.
Contribution Limits: Contribution limits for employees in a SEP IRA are the lesser of:
- 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, sometimes referred to as an Individual 401(k) or one-participant 401(k) plan, is a savings option for the self-employed intended for businesses with no employees or where the only employee is a spouse. This type of plan function similarly to traditional employer-managed 401(k) plans, and enable contributions as both an employer and an employee with pre-tax money. This offers more savings versus SEPs or IRAs; however, the increased savings potential may be offset by more restricted investment choices. In a solo 401(k) plan, you can make either traditional or Roth deferrals, which offer the same tax benefits as their IRA contribution counterparts.
Eligibility: Solo 401(k)s are available solely to business owners and their spouses may establish 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 earned income from self-employment, up to the annual contribution limit. For 2025, the limits will be $23,500, or $31,000 if you're over 50, or $34,750 for those who turn 60-63 in 2025.
- Employer profit-sharing contributions (as an employer) cannot exceed 25% of your adjusted self-employment income, which is calculated as net profits less half of your self-employment tax and the deferrals you made.
Your combined contributions must not surpass $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 offers a structured retirement solution that delivers 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 lets individuals clearly understand exactly how much they'll get in retirement. This plan is best suited for wealthier professionals who aim to accumulate a large amount for retirement and can commit to making substantial contributions. Contributions grow tax-free until withdrawal, and withdrawals are taxable as income upon retirement.
Eligibility: Any self-employed individual managing a one-person company or employing fewer than five people are eligible to open an individual defined benefit plan, but it's generally advised for people above age 50 who make $250,000 or more annually. In most cases, good candidates for defined benefit plans are:
- Partners or owners who desire to contribute more than $70,000 (or $77,500 if over age 50)
- Companies already contributing 3-4% and are willing to do more
- Organizations that have demonstrated consistent profit patterns
- Partners or owners over age 40 who desire to "catch up" or increase their retirement contributions rapidly
Contribution Limits: The maximum allowable contribution is calculated by an actuary using your income, age, and retirement goals. Contribution limits are updated yearly.
The Importance of a Financial Advisor in Alexandria, VA for Your Self-Employed Retirement Plan
Working with a financial advisor in Alexandria, VA experienced with retirement plans for the self-employed serves as an essential partner for self-employed individuals. They bring the skills needed to guide you through the challenges of retirement planning and craft a personalized approach that matches your objectives. An expert in your area will assess where you stand financially, determine how much risk you’re comfortable with, and assist you in making informed decisions about saving and investing for retirement. A key part of what we do for you features:
- Assist in selecting a plan that best fits your needs and goals
- Further adapt the plan to your needs even further
- Create a written plan in accordance with IRS guidelines
- Organize a trust plan to manage your assets
- Help you understand the plan's terms
- Review and modify your plan to keep it aligned with your goals
- Provide ongoing education and advice throughout your retirement planning process
- Boost your retirement earnings by making the most of your social security
Self-Employed Retirement Plans in Alexandria, VA: Correct Capital's Process
Alexandria, VA business owners who lack the time, interest, or knowledge to oversee their retirement savings strategy independently can become overwhelmed when faced with their options. Through our team at Correct Capital, our Alexandria, VA financial advisors manage the majority of your retirement strategy for you, to help make meeting your retirement goals as easy as possible for you. We are here to assist you in setting up your self-employed retirement plan in just four steps:
- Schedule a Call: A quick 20-minute call is all it takes, a member of our advisor team can help understand if our services align for you and your business. This brief introduction allows us to understand what you're looking for with zero commitment or significant effort on your part.
- Gather Information: Should we agree to proceed, we'll gather information, including your employee count, your current financial situation, and your future objectives. This enables us to craft a custom plan suited specifically for your needs.
- Review Your Plan: After we put together a plan using the information you provide, we'll schedule a meeting and go over your plan thoroughly to make sure it's clear and explain its fit to your circumstances.
- Implementation and Monitoring: When we finalize on your plan, we'll put everything in place so you can initiate your savings journey. As time goes on, we'll have regular meetings and monitor your plan to keep it tailored to your evolving circumstances.
Our Alexandria, VA financial advisors and retirement plan consultants act as fiduciary advisors, who are obligated to they are required by law and ethical standards to prioritize your needs above all else.
Other financial advisory services we offer in Alexandria, VA 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 Alexandria, VA
To you, your business is more than "just a business", and your Alexandria, VA financial advisors must deliver more than just good financial guidance. Correct Capital takes pride in, we make it a priority to understand our clients and their businesses to deliver customized self-employed retirement plans. We offer all our Alexandria, VA clients our I.O.U. promise: all guidance we provide will be independent, objective, and unbiased. To take the first step on your self-employment retirement plan, call Correct Capital today at 877-930-401k or contact us online.
