Self-employed retirement plans Alexandria, VA. The freedom of being your own boss in Alexandria, VA is one of the best aspects of being self-employed. Even so, this freedom sometimes brings with certain challenges, particularly in terms of retirement savings, since you don't have the option of a workplace retirement plan. Only 13% of self-employed individuals have a workplace retirement plan, although many could benefit from looking into other possibilities. In addition to achieving a more comfortable retirement, working with a financial advisor in Alexandria, VA to create your self-employed retirement plan delivers significant tax advantages that enable your business to grow and succeed.
Few Alexandria, VA wealth management and retirement planning firms truly grasp the challenges faced by self-employed individuals better than 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 Correct Capital have a rich history of supporting entrepreneurs with their retirement planning needs. We know that your business and retirement aspirations extend well past simple financial figures, and we work tirelessly to offer customized solutions that reflect your objectives. Read on to discover 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 consult with a self-employed financial advisor in Alexandria, VA today.
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 offer tangible benefits today. From flexible contributions to considerable tax savings, consulting a financial advisor in Alexandria, VA helps you create your retirement plan to fit your specific needs.
Flexibility That Fits Your Income
For those with fluctuating income over time, a plan like a SEP IRA or Solo 401(k) provides the freedom to adjust how much you save:
- Customizable Contributions: Save extra during successful years and scale back when your earnings dip, ensuring your plan aligns with your current income.
- Roth Options: A Roth Solo 401(k) lets you settle taxes at the time of contribution, so you can withdraw without tax penalties in the future—an advantageous choice if you believe your tax rate is likely to rise in the future.
Save Money on Taxes
Self-employed retirement plans deliver valuable 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, giving your money more time to accumulate.
- State-Specific Incentives: Based on your location, you might access state-specific deductions as a business owner. These state-level 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 isn’t only about how much you save—it’s also about how you invest:
- Diversified Portfolios: Allocating your investments across varied asset classes like stocks and bonds can help mitigate financial risk while still growing your retirement fund.
- Emergency Back-Up: Combining your retirement strategy and a financial buffer for your business prevents you from dipping into savings during challenging periods and incurring penalties.
Plan for the Future of Your Alexandria, VA Business
Preparing for retirement can assist you plan ahead for what’s next with your Alexandria, VA business:
- Selling Your Business: When selling your business, retirement accounts like SEP IRAs and Solo 401(k)s remain yours and won’t be included in the sale. These accounts offer the financial stability you’ll need later on. It’s important to note that while selling a business often leads to a capital gain, contributions to retirement accounts are restricted by contribution limits (e.g., a maximum of $7,000 for IRAs or as much as $70,000 for Solo 401(k)s, factoring in catch-up contributions, according to plan rules).
- Minimizing Taxes: Strategically planning your contributions minimizes the taxes you might face when you sell your business.
- Succession Planning: If you’re passing the business on, your nest egg ensure the funds you need as you make this shift. 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 proper savings strategy, you can take control of your financial future, cut down your tax obligations, and build a secure foundation for both your retirement and your business goals.
Why Start a Self-Employed Retirement Plan in Alexandria, VA Now?
Time is one of the most important resources when it comes to saving for retirement. Getting a head start not only lets you accumulate a larger nest egg but also minimizes the financial burden 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 can have a significant impact on the amount you’ll have when you retire. The primary reason is compound interest—the concept where your investments generate earnings, and those returns, in turn, accumulate even more returns. The greater time span your money has to grow, the larger the benefit 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 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 invests $195,500 but accumulates just $474,367.78*.
How Early Contributions Grow
Even modest contributions contributed over time may result in significant growth. Here’s a simple scenario showing the power of consistent growth:
- Starting at age 25: By investing $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 would result in only $235,412.97* by age 65—a shortfall of over $260,000, just from a 10-year delay.
Starting sooner, the less you need to save each year to meet your retirement goals.
*These calculations are estimates calculated using NerdWallet’s Compound Interest Calculator, with the assumption of a 7% annual return. Annual deposits were multiplied by the number of years to estimate total contributions. These examples are for illustrative purposes only and do not guarantee future performance. Actual results may vary based on factors such as market conditions, fees, and your unique situation. We recommend consulting a financial advisor for guidance tailored to your needs.
Take Control of Your Financial Future
As a self-employed person in Alexandria, VA, it might seem easier to put more emphasis on reinvesting in your business rather than saving for retirement. However, beginning a plan now enables you to:
- Benefit from growth that is tax-deferred or penalty-free withdrawals down the road.
- Enjoy adjustable savings that adapt to your income.
- Create a safety net that ensures stability, no matter how your business evolves.
The sooner you start, the less you’ll be required to worry about making up for lost time later in life. Saving for retirement now means gaining control over your financial future and creating for yourself the freedom to concentrate on your goals—both for your retirement years and your Alexandria, VA business.
Types of Self-Employed Retirement Plans
There are several retirement savings options open for self-employed individuals in Alexandria, VA, each with its own benefits and trade-offs. A financial advisor is available to help you learn about the advantages and disadvantages of each plan and identify the one best suited for your needs. In most cases, your self-employed retirement plan options in Alexandria, VA consist of:
Traditional or Roth IRA
Plan Overview: Individual Retirement Accounts (IRAs), as explained here, represent retirement savings vehicles that provide distinct tax benefits. In a standard IRA, contributions are typically tax-deductible, and earnings grow without immediate taxation, but retirement distributions are subject to income tax. In contrast, Roth IRAs require contributions are made with after-tax income, but eligible distributions during retirement, including earnings, are tax-free. In both types of accounts, withdrawals are penalty-free provided you are at least 59½.
Eligibility: While many retirement plans, such as 401(k)s, are tied to employment, traditional and Roth IRAs are open to those with taxable earnings.
Contribution Limits: For 2025, annual contribution limits for IRAs remain $7,000, or $8,000 if you qualify for catch-up contributions.
Simplified Employee Pension Plan (SEP IRA)
Plan Overview: SEP IRAs offers a way to save for retirement that allows entrepreneurs to contribute a percentage of their net earnings. Contributions can only be made by an employer, so, as a sole proprietor, you (the employee) are limited to contributions from the employer role beyond 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 have the flexibility to contribute a set monetary value or a percentage of wages to employee accounts. SEP IRAs works well for companies with periods of inconsistent earnings. Unlike other plans, SEP IRAs don’t have expensive setup or ongoing fees.
SEPs work like conventional IRAs, where you contribute pre-tax dollars and retirement distributions are taxable.
Eligibility: Any employer, including the self-employed 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
For self-employed individuals, 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 retirement savings plan intended for businesses without employees or when the sole employee is your spouse. Solo 401(k)s function similarly to traditional employer-managed 401(k) plans, and allow you to contribute as both an employee or an employer with pre-tax money. This provides more savings versus SEPs or IRAs; however, the extra savings options often come with more limited investment options. 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: Only business owners and their spouses can set up and contribute to a solo 401(k).
Contribution Limits: As a self-employed individual with a solo 401(k) plan, you have the ability to make two types of contributions:
- Deferrals as an employee of up to 100% of your self-employment income, capped at 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) cannot exceed 25% of your adjusted self-employment income, which is calculated as net profits less half of your self-employment tax and the employee contributions you made.
Your combined contributions must not surpass $70,000, or $77,500 for individuals aged 50+ (as of 2025), $81,250 for individuals turning 60-63 in 2025.
Individual Defined Benefit Plan
Plan Overview: A defined benefit plan is a retirement option that guarantees a fixed, predetermined benefit to entrepreneurs upon retirement. As opposed to defined contribution plans, this plan is not influenced by market performance, but allows self-employed individuals to know the precise amount they'll have in retirement. This option is best suited for wealthier entrepreneurs who aim to accumulate a significant sum for retirement and are willing to make substantial contributions. Contributions are tax deferred, and withdrawals are taxed as income during retirement.
Eligibility: Entrepreneurs operating a solo business or with less than five employees may establish an individual defined benefit plan, but it's typically suggested for individuals aged 50+ who earn at least $250,000 a year. Typically, good candidates for defined benefit plans include:
- Partners or owners who aim to deposit more than $70,000 (or $77,500 if over age 50)
- Organizations that already put in 3-4% but are open to increasing contributions
- Businesses that have demonstrated consistent profit patterns
- Partners or owners over age 40 who aim to quickly build retirement savings or accelerate the retirement savings
Contribution Limits: The maximum allowable contribution is calculated by an actuary determined by your earnings, age, and retirement objectives. Limits on contributions are adjusted each year.
The Importance of a Financial Advisor in Alexandria, VA for Your Self-Employed Retirement Plan
A financial advisor in Alexandria, VA focused on self-employed retirement strategies is an essential partner for self-employed individuals. They offer the knowledge to assist navigate the complexities of retirement planning and craft a personalized approach that reflects your aspirations. Your advisor in Alexandria, VA will evaluate your financial situation, identify your risk preferences, and guide 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
- Further adapt the plan to your needs even further
- Formalize a plan in writing that complies with IRS regulations
- Set up an asset trust plan
- Help you understand the plan's terms
- Monitor and adjust your plan as needed
- Offer continued financial education and guidance to help you navigate your retirement journey
- Maximize what you receive in retirement by optimizing your social security benefits
Self-Employed Retirement Plans in Alexandria, VA: Correct Capital's Process
Self-employed individuals in Alexandria, VA who aren’t equipped with the time or understanding to manage their retirement savings strategy themselves often feel overwhelmed when faced with their available plans. With Correct Capital, our Alexandria, VA financial advisors handle the bulk of your retirement planning for you, working to make meeting your retirement goals as hassle-free as possible for you. We are here to assist you in setting up your self-employed retirement plan in a quick, four-step process:
- Schedule a Call: A quick 20-minute call is all it takes, a member of our advisor team can help understand if we're suited to your needs for you and your business. This brief introduction allows us to understand what you're looking for with no pressure 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 existing financial picture, and your retirement goals. This enables us to craft a personalized strategy designed just for you.
- Review Your Plan: After we put together a plan from the information you provide, we'll meet with you and go over your plan step by step to help you fully grasp it 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 initiate your savings journey. Over the course of our partnership, we'll have regular meetings and monitor your plan to make sure it remains aligned with your goals.
Our Alexandria, VA financial advisors and retirement plan consultants serve as fiduciary advisors, which means they are required by law and ethical standards to do what's in your best interest.
Other financial advisory services we offer in Alexandria, VA include:
- Financial Planning for Business Owners
- Comprehensive Financial Planning
- Retirement Income Planning
- Investment Planning
- Retirement Financial Planning
- Independent Financial Advisor
- Roth Conversion
- Investment Management
- 401(k) Audit
- High-Net-Worth Wealth Management
Call Correct Capital for Your Self-Employed Retirement Plan in Alexandria, VA
Your business isn't "just a business" to you, and your Alexandria, VA financial advisors should provide more than just good financial guidance. Correct Capital takes pride in, we make it a priority to understand our clients and their businesses to provide customized self-employed retirement plans. All our clients in Alexandria, VA benefit from our I.O.U. promise: everything we recommend will be independent, objective, and unbiased. To get started on your self-employment retirement plan, call Correct Capital today at 877-930-401k or contact us online.
