Self-employed retirement plans Anaheim, CA. The independence of owning your own business in Anaheim, CA is one of the best aspects of having a self-directed career. However, this flexibility sometimes brings with certain challenges, especially in terms of planning for retirement, since you don't have the benefit of retirement programs through an employer. Only 13% of self-employed individuals have a workplace retirement plan, yet countless should consider looking into other possibilities. In addition to having a financially stable retirement, seeking advice from a financial advisor in Anaheim, CA to create your self-employed retirement plan offers significant tax advantages that allow you to move your business forward.
Few Anaheim, CA investment consulting and retirement planning firms are as attuned to the requirements of small business owners quite like Correct Capital. The father of our founder was a small business owner himself (check out our story here), and our firm take pride in helping businesses with their retirement planning needs. We understand that your goals for your business and retirement aren’t limited to just monetary concerns, and we are dedicated to offer tailored solutions to meet your unique goals. Read on to discover about your self-employed retirement plan options in Anaheim, CA, or give us a call at Correct Capital at 877-930-401k or contact us online to talk to a self-employed financial advisor in Anaheim, CA today.
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Why Anaheim, CA Self-Employed Individuals Should Have a Retirement Plan
Retirement plans for self-employed individuals help prepare you for the future, they also provide tangible benefits today. Offering flexibility in contributions to substantial tax savings, working with a financial advisor in Anaheim, CA allows you to customize your retirement plan to align with 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) provides the flexibility to modify how much you save:
- Customizable Contributions: Set aside more during profitable years and scale back when revenues are down, so that your plan works with your financial situation.
- Roth Options: A Roth Solo 401(k) lets you pay taxes on contributions now, allowing you to withdraw your savings tax-free down the road—an advantageous choice if you expect your tax rate is likely to rise in the future.
Save Money on Taxes
Self-employed retirement plans deliver significant tax benefits:
- Tax-Deductible Contributions: Contributions to a SEP IRA lower your taxable income, so you can keep more of your hard-earned money.
- Tax-Deferred Growth: Your savings grow untaxed until withdrawn, giving your money more time to accumulate.
- State-Specific Incentives: Depending on where you live, you might access additional deductions as a sole proprietor. These state-level incentives help make these plans even more beneficial.
- Retirement Savings Contributions Credit (Saver’s Credit): Eligible individuals can apply for a 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 requires more than how much you save—it’s also determined by your investment strategy:
- Diversified Portfolios: Distributing your investments across a mix of stocks, bonds, and other assets can help reduce risk while continuing to build your retirement fund.
- Emergency Back-Up: Supplementing your retirement savings with a financial buffer for your business ensures you don’t tapping into your nest egg during challenging periods and risking extra costs.
Plan for the Future of Your Anaheim, CA Business
A thoughtful retirement strategy enables you to prepare for what’s next with your Anaheim, CA business:
- Selling Your Business: If you’re planning to sell, retirement accounts like SEP IRAs and Solo 401(k)s remain your personal assets and don’t transfer with the business. These accounts can provide the reliable income you’ll need in the future. It’s important to note that while selling a business often leads to a capital gain, retirement plan contributions are restricted by contribution limits (e.g., up to $7,000 for IRAs or a maximum of $70,000 for Solo 401(k)s, with catch-up contributions, depending on plan details).
- Minimizing Taxes: Strategically planning your contributions minimizes the taxes you’ll owe when you sell your business.
- Succession Planning: For those winding down or handing over their business, your nest egg ensure a stable foundation as you make this shift. You may also work with a financial advisor experienced in both succession and retirement strategies to minimize tax burdens during the sale.
With the best-fit retirement strategy, you manage your financial future, cut down your tax obligations, and build a strong framework for both your retirement and your business goals.
Why Start a Self-Employed Retirement Plan in Anaheim, CA Now?
Time remains one of the most important assets when it comes to saving for retirement. Beginning sooner rather than later not only lets you accumulate a more substantial retirement fund but also lowers the pressure 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 may cause a major 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, earn even more returns. The longer your money has to grow, the more significant the benefit of compounding.
Example: Two individuals, Alex and Taylor are both self-employed individuals. Both of them want to save $500,000 for retirement by age 65:
- Alex begins contributing $5,000 annually at age 30.
- Taylor waits until age 40 but saves $7,500 annually to bridge the gap.
By age 65, with an assumption of 7% annual return:
- Alex puts in $180,000 and accumulates $691,184.39*.
- Taylor invests $195,500 but achieves a total of only $474,367.78*.
How Early Contributions Grow
Regular, modest investments made consistently may result in substantial growth. Here’s a simple scenario showing the power of compound interest:
- Starting at age 25: Putting aside $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, all because of a 10-year delay.
The earlier you begin, the lower your annual savings needs each year to reach your retirement goals.
*These calculations are estimates generated with NerdWallet’s Compound Interest Calculator, based on a 7% annual return. Annual deposits were multiplied by the number of years to estimate total contributions. This information is for illustrative purposes only and cannot predict actual future outcomes. Outcomes may change due to variables including market conditions, fees, and individual circumstances. We recommend consulting a financial advisor for custom recommendations.
Take Control of Your Financial Future
If you’re self-employed in Anaheim, CA, it might seem easier to focus more on reinvesting in your business instead of saving for retirement. That said, initiating a plan now enables you to:
- Benefit from tax-free future growth or withdrawals without taxes down the road.
- Take advantage of adjustable savings that change with your earnings.
- Build a financial cushion that offers peace of mind, no matter how your business develops.
Getting started now, the less you’ll need to worry about making up for lost time later in life. Taking steps toward your retirement goals today means taking control of your financial future and allowing yourself the ability to focus on your goals—both for your golden years and your Anaheim, CA business.
Types of Self-Employed Retirement Plans
A variety of retirement savings options designed for self-employed individuals in Anaheim, CA, each offering its own pros and cons. A financial advisor will guide you to evaluate the pros and cons of each option and identify the one ideal for your unique situation. Typically, your self-employed retirement plan options in Anaheim, CA consist of:
Traditional or Roth IRA
Plan Overview: IRAs, or Individual Retirement Accounts, are long-term savings plans that offer distinct tax benefits. In a conventional IRA, contributions are typically tax-deductible, and returns grow free of current taxes, but retirement distributions are subject to income tax. In contrast, Roth IRA contributions are made with after-tax income, but retirement withdrawals that qualify, including earnings, are exempt from taxes. In both types of accounts, withdrawals come without penalties as long as 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 an earned income.
Contribution Limits: For 2025, annual contribution limits for IRAs remain $7,000, or $8,000 for those aged 50+.
Simplified Employee Pension Plan (SEP IRA)
Plan Overview: The Simplified Employee Pension IRA offers a way to save for retirement that enables self-employed individuals to save a percentage of their net business profits. Contributions can only be made by an employer, so, as a independent business owner, you (the employee) cannot make additional contributions more than the 25% you (the employer) have designated. 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 is a good option for companies with periods of inconsistent earnings. Compared to other retirement options, SEP IRAs don’t have costly startup or administrative fees.
SEPs work like standard IRAs, where you contribute pre-tax dollars and retirement distributions are taxable.
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 contribution you can make is based on a special calculation.
Solo 401(k)
Plan Overview: The Solo 401(k), also called 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 if the only employee is your spouse. Solo 401(k)s are similar to traditional employer-managed 401(k) plans, and let you make 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 can be balanced 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 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:
- Deferrals as an employee of up to 100% of your self-employed earnings, up to the annual contribution limit. For 2025, the limits will be $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) are limited to 25% of your net earnings from self-employment, which is your net profit minus half of your self-employment tax and the employee contributions you made.
The total contribution cannot exceed $70,000, or $77,500 for individuals aged 50+ (for 2025), $81,250 for individuals turning 60-63 in 2025.
Individual Defined Benefit Plan
Plan Overview: The defined benefit plan offers a structured retirement solution that guarantees a set amount to business owners upon retirement. In contrast to the plans discussed earlier, a defined benefit plan doesn't fluctuate based on investment returns, but enables participants to determine what they'll get in retirement. This option is recommended for wealthier entrepreneurs who are focused on saving a large amount for retirement and can commit to making sizeable contributions. Contributions offer tax-deferred growth, and withdrawals are taxable as income in retirement.
Eligibility: Any self-employed individual running an owner-only business or with less than five employees can open an individual defined benefit plan, but it's generally advised for those over 50 who make $250,000 or more annually. Generally, good candidates for defined benefit plans are:
- Business owners or partners who aim to deposit more than $70,000 (or $77,500 for individuals 50 and older)
- Businesses currently investing 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 cap on contributions is calculated by an actuary using your income, age, and retirement goals. Contribution limits change annually.
The Importance of a Financial Advisor in Anaheim, CA for Your Self-Employed Retirement Plan
A financial advisor in Anaheim, CA specialized in self-employed retirement plans serves as an invaluable resource for entrepreneurs. They bring the skills needed to guide you through the challenges of retirement planning and craft a tailored strategy that reflects your aspirations. Your advisor in Anaheim, CA will review your finances, identify your risk preferences, and help you in making informed decisions about saving and investing for retirement. Part of what we do for you features:
- Guide you in choosing a plan that best fits your needs and goals
- Further adapt the plan to fit you personally even further
- Adopt a written plan that complies with IRS regulations
- Arrange a trust plan for assets
- Ensure you comprehend the plan's terms
- Track and fine-tune your plan when necessary
- Provide ongoing education and advice to help you navigate your retirement journey
- Boost your retirement earnings by making the most of your social security
Self-Employed Retirement Plans in Anaheim, CA: Correct Capital's Process
Entrepreneurs in Anaheim, CA who lack the time, interest, or knowledge to manage their retirement savings strategy themselves often feel overwhelmed by their choices. Through our team at Correct Capital, our Anaheim, CA financial advisors handle the majority of your savings plan setup for you, to help make meeting your retirement goals as hassle-free as possible for you. We will guide you in creating your self-employed retirement plan in four simple steps:
- Schedule a Call: It only takes 20 minutes, a member of our advisor team can help understand if we're suited to your needs for you and your business. This initial call lets us understand what you're looking for with zero commitment or significant effort on your part.
- Gather Information: Once we mutually decide to continue, we'll request 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: After we put together a plan based on the information you provide, we'll schedule a meeting and review your plan step by step to ensure you understand it and show how it aligns with your goals.
- Implementation and Monitoring: When we finalize on your plan, we'll implement the necessary steps so you can initiate your savings journey. As time goes on, we'll meet with you and monitor your plan to make sure it remains aligned with your goals.
Our Anaheim, CA 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 Anaheim, CA 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 Anaheim, CA
To you, your business is more than "just a business", and your Anaheim, CA financial advisors must deliver more than just good financial guidance. With Correct Capital, we make it a priority to understand our clients and their businesses to provide customized self-employed retirement plans. To every client in Anaheim, CA, we provide our I.O.U. promise: all guidance we provide will be independent, objective, and unbiased. To begin on your self-employment retirement plan, contact Correct Capital now at 877-930-401k or contact us online.
