Self-employed retirement plans Anchorage, AK. The independence of being your own boss in Anchorage, AK is one of the greatest advantages of having a self-directed career. That said, this freedom can come with certain challenges, particularly regarding planning for retirement, as you don't have the option of a workplace retirement plan. Only 13% of self-employed individuals have a workplace retirement plan, yet countless could benefit from exploring their options. In addition to enjoying a more secure retirement, seeking advice from a financial advisor in Anchorage, AK to create your self-employed retirement plan can provide significant tax advantages that enable both you and your business to thrive.
Few Anchorage, AK financial advisory and retirement planning firms are as attuned to the requirements of small business owners as well as Correct Capital. Our founder's father was a small business owner himself (read more of our story here), and Correct Capital are deeply experienced in helping businesses with their retirement planning needs. We know that your goals for your business and retirement aren’t limited to just monetary concerns, and we strive to create customized solutions that reflect your objectives. Keep reading to learn more about your self-employed retirement plan options in Anchorage, AK, or reach out to Correct Capital at 877-930-401k or contact us online to speak with a small business financial advisor in Anchorage, AK today.
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Why Anchorage, AK Self-Employed Individuals Should Have a Retirement Plan
Retirement plans for self-employed individuals not only prepare you for the future, they also offer immediate benefits today. From flexible contributions to substantial tax savings, working with a financial advisor in Anchorage, AK enables you to design 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) gives you the flexibility to tailor how much you save:
- Customizable Contributions: Set aside more during profitable years and scale back when revenues are down, ensuring your plan works with your financial situation.
- Roth Options: Choosing a Roth Solo 401(k) lets you pay taxes on contributions now, enabling you to withdraw your savings tax-free down the road—a smart decision if you expect 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 reduce what you owe in taxes, so you can keep more of your income.
- Tax-Deferred Growth: Investments grow tax-free until withdrawal, which gives your money more time to grow.
- State-Specific Incentives: In some states, you might access state-specific credits as a sole proprietor. These local incentives help make these plans even more beneficial.
- Retirement Savings Contributions Credit (Saver’s Credit): Eligible individuals can take advantage of a credit of up to 50% of the first $2,000 they contribute a retirement plan, cutting down 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 determined by your investment strategy:
- Diversified Portfolios: Distributing your investments across a mix of stocks, bonds, and alternatives serves to minimize exposure to risk while continuing to build your savings.
- Emergency Back-Up: Pairing your retirement plan with a dedicated business safety net ensures you don’t tapping into your nest egg during financial hardships and incurring penalties.
Plan for the Future of Your Anchorage, AK Business
Retirement planning enables you to plan ahead for what’s next with your Anchorage, AK business:
- Selling Your Business: For those considering a sale, accounts such as SEP IRAs or Solo 401(k)s stay in your name and won’t be included in the sale. These plans ensure the reliable income you’ll need in the future. Remember that while selling a business often leads to a capital gain, deposits into these plans 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, depending on plan details).
- Minimizing Taxes: Using retirement contributions wisely helps lower the taxes you’ll owe when you transfer your business.
- Succession Planning: For those winding down or handing over their business, your retirement savings offer a stable foundation through the transition. You might want to partner with a financial advisor experienced in both succession and retirement strategies to help with taxes on the sale.
With the proper savings 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 Anchorage, AK Now?
Time remains one of the most important resources for building your retirement fund. Starting early not only lets you accumulate a larger nest egg but also lowers the pressure of catching up later in life. This is why it is beneficial to start now:
The Cost of Waiting
Delaying your retirement savings can have a significant impact on the amount you’ll have when you retire. The primary reason is compound interest—the financial principle where your investments earn returns, and those returns, subsequently, generate even more returns. The greater time span your money has to grow, the more significant the effect of this growth.
Example: Alex and Taylor are both entrepreneurs. Both of them want to save $500,000 for retirement by age 65:
- Alex initiates savings of $5,000 annually at age 30.
- Taylor postpones starting contributions to age 40 but saves $7,500 annually to catch up.
By age 65, assuming 7% annual return:
- Alex puts in $180,000 and ends up with $691,184.39*.
- Taylor contributes $195,500 but only ends up with $474,367.78*.
How Early Contributions Grow
Regular, modest investments made consistently can lead to significant growth. Consider this example showing the impact of compounding:
- Starting at age 25: If you invest $200 per month in a retirement plan with an projected return of 7%, you’ll accumulate $497,303.29* by age 65.
- Starting at age 35: Investing 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.
Saving early, the less effort required each year to reach your retirement goals.
*The numbers shown in this scenario are estimates calculated using NerdWallet’s Compound Interest Calculator, assuming a 7% annual return. These calculations involved multiplying yearly deposits by the years contributed. These examples are for illustrative purposes only and cannot predict actual future outcomes. Your individual results may differ due to elements like market conditions, fees, and your unique situation. Be sure to speak with a financial advisor for guidance tailored to your needs.
Take Control of Your Financial Future
For self-employed individuals in Anchorage, AK, it is often the case that you focus more on reinvesting in your business over saving for retirement. Even so, beginning a plan now allows you to:
- Leverage tax-deferred growth or penalty-free withdrawals in the future.
- Take advantage of flexible contributions that align with your cash flow.
- Create a safety net that provides security, no matter how your business develops.
The sooner you start, the less you’ll be required to worry about playing catch-up later in life. Taking steps toward your retirement goals today means gaining control over your financial future and giving yourself the opportunity to concentrate on your dreams—both for your future retirement and your Anchorage, AK business.
Types of Self-Employed Retirement Plans
There are several retirement savings options designed for self-employed individuals in Anchorage, AK, each with its own advantages and considerations. A financial advisor is available to help you learn about the advantages and disadvantages of each choice and identify the one ideal for your needs. Generally speaking, your self-employed retirement plan options in Anchorage, AK are:
Traditional or Roth IRA
Plan Overview: Individual Retirement Accounts (IRAs), as explained here, represent retirement savings vehicles that include specific tax advantages. In a conventional IRA, the money you contribute is often tax-deductible, and investment earnings grow tax-deferred, but retirement distributions are taxable. In contrast, Roth IRA contributions are made with after-tax income, but eligible distributions during retirement, 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, IRAs, including traditional and Roth options 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 for those aged 50+.
Simplified Employee Pension Plan (SEP IRA)
Plan Overview: SEP IRAs offers a way to save for retirement that enables self-employed individuals to contribute a percentage of their net earnings. Contributions are strictly employer contributions an employer, so, as a sole proprietor, you (the employee) cannot make additional contributions 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. It's your choice whether to contribute a flat-dollar amount or a percentage of wages to employee accounts. A SEP IRA may be ideal for businesses that experience cycles of high revenue and low revenue. Compared to other retirement options, SEP IRAs are free of costly startup or administrative fees.
SEPs function like traditional IRAs, where the contributions are tax-deferred and retirement distributions are taxable.
Eligibility: Employers of any type, including 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
As a self-employed person, the contribution you can make is based on a special calculation.
Solo 401(k)
Plan Overview: The Solo 401(k), commonly known as an Individual 401(k) or one-participant 401(k) plan, is a self-employed retirement plan intended for businesses with no employees or when the sole employee is your spouse. Solo 401(k)s operate much like employer-sponsored 401(k) plans, and let you make contributions as both an employee or an employer with pre-tax money. This allows for more savings compared to SEPs or IRAs; however, the increased savings potential can be balanced by more constrained investment avenues. 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: This plan is exclusively for business owners and their spouses can set up 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-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 for individuals aged 60-63 in 2025.
- Employer profit-sharing contributions (as an employer) cannot exceed 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 represents a type of retirement plan that guarantees a pre-established payout to business owners upon retirement. Unlike defined contribution plans mentioned above, investment returns don’t affect the payout, but lets individuals clearly understand what they'll receive in retirement. This option is recommended for high-earning self-employed individuals 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 upon retirement.
Eligibility: Entrepreneurs managing a one-person company or employing fewer than five people are eligible to open an individual defined benefit plan, but it's typically suggested for individuals aged 50+ who generate a minimum of $250,000 yearly. Typically, good candidates for defined benefit plans include:
- Business owners or partners who want to invest more than $70,000 (or $77,500 for those aged 50+)
- Organizations that already put in 3-4% and are willing to do more
- Organizations showing consistent profit patterns
- Business leaders over age 40 who desire to "catch up" or increase their retirement contributions rapidly
Contribution Limits: The maximum allowable contribution requires calculation from an actuary based on your earnings, age, and retirement objectives. Allowable contributions are adjusted each year.
The Importance of a Financial Advisor in Anchorage, AK for Your Self-Employed Retirement Plan
Working with a financial advisor in Anchorage, AK focused on self-employed retirement strategies serves as an important asset for those working for themselves. They have the expertise to help understand the intricacies of saving for retirement and craft a customized plan that reflects your aspirations. A financial advisor in Anchorage, AK will assess where you stand financially, identify your risk preferences, and assist you in choosing wisely about saving and investing for retirement. Included in what we do for you includes:
- Assist in selecting a plan that aligns with your objectives and circumstances
- Further adapt the plan to your specific situation even further
- Adopt a written plan as required by IRS rules
- Arrange a trust plan for assets
- Ensure you comprehend the plan's terms
- Review and modify your plan when necessary
- Provide ongoing education and advice as you continue on the road to retirement
- Maximize what you receive in retirement by maximizing your social security benefits
Self-Employed Retirement Plans in Anchorage, AK: Correct Capital's Process
Anchorage, AK business owners who aren’t equipped with the time or understanding to handle their own retirement planning independently can become overwhelmed when faced with their available plans. At Correct Capital, our Anchorage, AK financial advisors handle the majority of your savings plan setup for you, working to make meeting your financial objectives as hassle-free as possible for you. We can help you get set 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 will assess if our services align for you and your business. This brief introduction allows us to get a sense of your goals with no obligation or major time investment on your part.
- Gather Information: If we both decide to move forward, we'll request information, including whether you have employees, your present financial standing, and your future objectives. This allows us to put together a custom plan that aligns with your goals.
- Review Your Plan: When we finalize a plan based on the information you provide, we'll sit down with you and go over your plan step by step to ensure you understand it and explain its fit to your circumstances.
- Implementation and Monitoring: After we agree on your plan, we'll set everything up so you can start saving. As time goes on, we'll check in and track your progress to make sure it remains aligned with your goals.
Our Anchorage, AK financial advisors and retirement plan consultants serve as fiduciary advisors, which means they are committed by law and ethics to act in your best interest.
Other financial advisory services we offer in Anchorage, AK 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 Anchorage, AK
To you, your business is more than "just a business", and your Anchorage, AK financial advisors need to offer more than simply sound financial advice. With Correct Capital, we make it a priority to understand our clients and their businesses to provide personalized self-employed retirement plans. To every client in Anchorage, AK, we provide our I.O.U. promise: everything we recommend 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.
