Self-employed retirement plans Alexandria, VA. The independence of running your own company in Alexandria, VA is one of the greatest advantages of working for yourself. Even so, this freedom often comes with certain challenges, notably when it comes to planning for retirement, as you don't have the benefit of a workplace retirement plan. Only 13% of self-employed individuals have a workplace retirement plan, although many would be better off understanding their retirement options. In addition to achieving a more secure retirement, working with a financial advisor in Alexandria, VA to establish your self-employed retirement plan offers significant tax advantages that help both you and your business to thrive.
Few Alexandria, VA investment consulting and retirement planning firms are as attuned to the requirements of small business owners better than Correct Capital. The father of our founder was a small business owner himself (read more of our story here), and our firm take pride in assisting business owners in their retirement planning needs. We understand that your goals for your business and retirement extend well past just monetary concerns, and we are dedicated to create tailored solutions to meet your unique goals. Keep reading to learn more 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 speak with a small business 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 deliver immediate benefits today. From flexible contributions to substantial tax savings, partnering with a financial advisor in Alexandria, VA allows you to create your retirement plan to suit your individual circumstances.
Flexibility That Fits Your Income
For those with fluctuating income annually, a plan like a SEP IRA or Solo 401(k) provides the option to adjust how much you save:
- Customizable Contributions: Contribute more during profitable years and cut back when income is lower, ensuring your plan aligns with your cash flow.
- Roth Options: A Roth Solo 401(k) lets you handle taxes upfront, so you can withdraw tax-free later—an advantageous choice if you believe your tax rate is likely to rise in the future.
Save Money on Taxes
Retirement plans for self-employed individuals provide significant tax benefits:
- Tax-Deductible Contributions: Contributions to a SIMPLE IRA reduce what you owe in taxes, allowing you to keep more of your earnings.
- Tax-Deferred Growth: Investments grow tax-free until withdrawal, giving your money more time to grow.
- State-Specific Incentives: Depending on where you live, you may be eligible for state-specific deductions as a business owner. These local incentives make these plans even more beneficial.
- Retirement Savings Contributions Credit (Saver’s Credit): Qualified participants can apply for a credit of up to 50% of the first $2,000 put into 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 is a smart way to mitigate financial risk while continuing to build your nest egg.
- Emergency Back-Up: Supplementing your retirement savings with a business emergency fund helps you avoid tapping into your nest egg during tough times and facing tax penalties.
Plan for the Future of Your Alexandria, VA Business
Retirement planning enables you to plan ahead for what’s next with your Alexandria, VA business:
- Selling Your Business: If you’re planning to sell, plans like SEP IRAs or Solo 401(k)s stay in your name and don’t transfer with the business. These accounts ensure the steady income you’ll need in the future. Remember that while selling your business results in a capital gain, retirement plan contributions are restricted by contribution 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: Strategically planning your contributions minimizes the taxes you might face when you transfer your business.
- Succession Planning: For those winding down or handing over their business, your retirement accounts provide a stable foundation during the change. You might want to work with a financial advisor who specializes in succession planning and retirement accounts to minimize tax burdens associated with the transaction.
With the right retirement plan, you gain control over your financial future, lower your tax bill, and build a secure foundation 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 assets for building your retirement fund. Starting early not only allows you to build a more substantial retirement fund but also reduces the pressure of catching up later in life. Here’s why it is beneficial to start now:
The Cost of Waiting
Putting off saving for retirement could lead to a substantial impact on the total you’ll have when you stop working. The primary reason is compound interest—the financial principle where your investments earn returns, and those returns, then, accumulate even more returns. The greater time span your money has to grow, the greater the effect of compounding.
Example: Alex and Taylor are both self-employed professionals. 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 puts away $7,500 annually to bridge the gap.
By age 65, with an assumption of 7% annual return:
- Alex invests $180,000 and accumulates $691,184.39*.
- Taylor puts in $195,500 but accumulates just $474,367.78*.
How Early Contributions Grow
Even modest contributions contributed over time often create substantial growth. Consider this example showing the power of consistent growth:
- 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 would result in only $235,412.97* by age 65—a gap of over $260,000, simply due to a 10-year delay.
Saving early, the less you need to save each year to meet your retirement goals.
*These calculations represent estimates derived from 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. This information is meant to provide general guidance and do not guarantee future performance. Actual results may vary based on elements like market conditions, fees, and individual circumstances. Be sure to speak with a financial advisor for personalized advice.
Take Control of Your Financial Future
For self-employed individuals in Alexandria, VA, it can be tempting to prioritize reinvesting in your business over saving for retirement. Even so, beginning a plan now allows you to:
- Take advantage of tax-deferred growth or withdrawals without taxes down the road.
- Benefit from adjustable savings that adapt to your cash flow.
- Build a financial cushion that ensures stability, no matter how your business evolves.
Getting started now, the less you’ll need to worry about catching up later in life. Taking steps toward your retirement goals today means taking control of your financial future and giving yourself the freedom to turn your attention to your goals—both for your golden years and your Alexandria, VA business.
Types of Self-Employed Retirement Plans
Multiple retirement savings options open for entrepreneurs in Alexandria, VA, each providing its own benefits and trade-offs. A financial advisor is available to help you understand the pros and cons of each option and identify the one best suited for your unique situation. Generally speaking, your self-employed retirement plan options in Alexandria, VA consist of:
Traditional or Roth IRA
Plan Overview: IRAs, or Individual Retirement Accounts, are financial tools for retirement that include key tax perks. In a standard IRA, contributions are typically tax-deductible, and returns grow free of current taxes, but retirement distributions are taxable. In contrast, Roth IRA contributions from post-tax earnings, but qualified withdrawals in retirement, including earnings, are tax-free. In both types of accounts, withdrawals come without penalties provided you are at least 59½.
Eligibility: Unlike plans linked to your job, traditional and Roth IRAs are available to anyone 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 is a retirement plan that enables those who are self-employed to set aside a portion of their self-employment income. Contributions can only be made by an employer, so, as a self-employed individual, you (the employee) are limited to contributions from the employer role beyond 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. You may choose to contribute a flat-dollar amount or a percentage of wages to employee accounts. SEP IRAs may be ideal for entrepreneurs facing cycles of high revenue and low revenue. In contrast to some alternatives, SEP IRAs lack expensive setup or ongoing fees.
SEPs function like standard IRAs, where the contributions are tax-deferred and retirement distributions are taxable.
Eligibility: Both employers and self-employed individuals can set up a SEP.
Contribution Limits: Contribution limits for employees in a SEP IRA are the lesser 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: Solo 401(k)s, also called an Individual 401(k) or one-participant 401(k) plan, is a retirement savings plan meant for companies that have no employees or when the sole employee is your spouse. Solo 401(k)s operate much like standard 401(k) plans, and let you make contributions as both the employer and the employee with pre-tax money. This allows for more savings compared to SEPs or IRAs; however, the additional opportunities may be offset by more restricted investment choices. 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: Solo 401(k)s are available solely to business owners and their spouses can set up and contribute to a solo 401(k).
Contribution Limits: If you are self-employed with a solo 401(k) plan, you are allowed to make two types of contributions:
- Deferrals as an employee of up to 100% of your self-employment income, up to the annual contribution limit. For 2025, the limits will be $23,500, or $31,000 if you are 50 or older, or $34,750 for individuals aged 60-63 in 2025.
- Employer profit-sharing contributions (as an employer) must not surpass 25% of your net self-employment income, which is defined as net profit minus half of your self-employment tax and the elective deferrals you made.
Your combined contributions must not surpass $70,000, or $77,500 if you're over age 50 (as of 2025), $81,250 if you attain age 60-63 in 2025.
Individual Defined Benefit Plan
Plan Overview: Defined benefit plans represents a type of retirement plan that delivers a fixed, predetermined benefit to self-employed individuals upon retirement. In contrast to the plans discussed earlier, investment returns don’t affect the payout, but enables participants to determine exactly how much they'll receive in retirement. This option is recommended for wealthier entrepreneurs who want to save a substantial amount for retirement and are prepared to contribute substantial contributions. Contributions are tax deferred, and withdrawals are taxed as income during retirement.
Eligibility: Self-employed professionals running an owner-only business or with a small staff of under five are eligible to open an individual defined benefit plan, but it's generally advised for those over 50 who earn at least $250,000 a year. Generally, good candidates for defined benefit plans tend to be:
- Entrepreneurs who aim to deposit more than $70,000 (or $77,500 if over age 50)
- Companies already contributing 3-4% but are open to increasing contributions
- Companies with proven consistent profit patterns
- Partners or owners over age 40 who aim to quickly build retirement savings or boost savings within a short timeframe
Contribution Limits: The contribution limit requires calculation from an actuary based on your income, age, and retirement goals. Allowable contributions 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 focused on self-employed retirement strategies is an important asset for entrepreneurs. They have the expertise to help understand the intricacies of saving for retirement and develop a personalized approach that aligns with your goals. A financial advisor in Alexandria, VA will evaluate your financial situation, understand your risk tolerance, and help you in choosing wisely about saving and investing for retirement. Included in what we do for you features:
- Help you choose a plan that best fits your needs and goals
- Tailor the plan to your needs even further
- Create a written plan in accordance with IRS guidelines
- Set up an asset trust plan
- Help you understand the plan's terms
- Monitor and adjust your plan when necessary
- Offer continued financial education and guidance as you continue on the road to retirement
- Boost your retirement earnings by optimizing your social security benefits
Self-Employed Retirement Plans in Alexandria, VA: Correct Capital's Process
Self-employed individuals in Alexandria, VA who lack the time, interest, or knowledge to oversee their retirement savings strategy on their own often feel overwhelmed by their choices. Through our team at Correct Capital, our Alexandria, VA financial advisors handle the lion's share of your retirement planning for you, and strive to ensure 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 four simple steps:
- Schedule a Call: It only takes 20 minutes, a member of our advisor team can determine if our services align for you and your business. This short conversation lets us get a sense of your goals with no obligation or significant effort on your part.
- Gather Information: If we both decide to move forward, we'll ask for information, including how many employees you have (if any), your present financial standing, and your long-term savings targets. This helps us create a personalized strategy that aligns with your goals.
- Review Your Plan: Once we've developed a plan based on the information you provide, we'll schedule a meeting and go over your plan step by step 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 start saving. As time goes on, we'll meet with you and review your strategy to ensure it stays suited to your needs.
Our Alexandria, VA financial advisors and retirement plan consultants are fiduciary advisors, which means they are legally and ethically bound to prioritize your needs above all else.
Other financial advisory services we offer in Alexandria, VA 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 Alexandria, VA
You don't see your business as "just a business", and your Alexandria, VA financial advisors must deliver more than simply sound financial advice. At Correct Capital, we make it a priority to understand our clients and their businesses to create tailored self-employed retirement plans. All our clients in Alexandria, VA benefit from our I.O.U. promise: all of the advice you get from us 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.
