Self-employed retirement plans Baltimore, MD. The freedom of running your own company in Baltimore, MD offers many benefits of being self-employed. Even so, this freedom often comes with certain challenges, notably in terms of planning for retirement, because you don't have the benefit of retirement programs through an employer. Only 13% of self-employed individuals have a workplace retirement plan, but many should consider exploring their options. In addition to having a more secure retirement, working with a financial advisor in Baltimore, MD to set up your self-employed retirement plan offers significant tax advantages that enable both you and your business to thrive.
Few Baltimore, MD investment consulting and retirement planning firms truly grasp the challenges faced by self-employed individuals quite like Correct Capital. The father of our founder was a small business owner himself (read more of our story here), and our firm have a rich history of assisting business owners in their retirement planning needs. We know that your goals for your business and retirement go far beyond basic numbers, 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 Baltimore, MD, or reach out to Correct Capital at 877-930-401k or contact us online to consult with a small business financial advisor in Baltimore, MD today.
Why Baltimore, MD Self-Employed Individuals Should Have a Retirement Plan
Retirement plans for self-employed individuals not only prepare you for the future, they also deliver immediate benefits today. From flexible contributions to significant tax savings, partnering with a financial advisor in Baltimore, MD helps you customize your retirement plan to suit your individual circumstances.
Flexibility That Fits Your Income
When your earnings vary annually, a plan like a SEP IRA or Solo 401(k) gives you the flexibility to adjust how much you save:
- Customizable Contributions: Contribute more during high-income years and cut back when income is lower, so your plan aligns with your current income.
- Roth Options: Opting for a Roth Solo 401(k) lets you settle taxes at the time of contribution, allowing you to withdraw without tax penalties in the future—an advantageous choice if you anticipate your tax rate will increase in the future.
Save Money on Taxes
Retirement plans for self-employed individuals deliver powerful tax benefits:
- Tax-Deductible Contributions: Contributions to a SIMPLE IRA shrink your tax liability, allowing you to 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 grow.
- State-Specific Incentives: Based on your location, you might access state-specific tax breaks as a business owner. These local incentives can make these plans even more beneficial.
- Retirement Savings Contributions Credit (Saver’s Credit): Those who meet the requirements 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
Building a secure retirement goes beyond just how much you save—it’s also about how you invest:
- Diversified Portfolios: Allocating your investments across a mix of stocks, bonds, and alternatives serves to mitigate financial risk while continuing to build your nest egg.
- Emergency Back-Up: Pairing your retirement plan with a dedicated business safety net ensures you don’t tapping into your nest egg during challenging periods and facing tax penalties.
Plan for the Future of Your Baltimore, MD Business
Preparing for retirement also helps you prepare for what’s next with your Baltimore, MD 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 accounts ensure the steady income you’ll need later on. Remember that while the sale of a business usually creates a capital gain, retirement plan contributions are subject to yearly maximums (e.g., up to $7,000 for IRAs or as much as $70,000 for Solo 401(k)s, including catch-up contributions, depending on plan details).
- Minimizing Taxes: Using retirement contributions wisely minimizes the taxes you’ll owe when you sell your business.
- Succession Planning: If you’re passing the business on, your retirement savings provide the funds you need through the transition. You can also partner with a financial advisor with expertise in succession and retirement planning to help with taxes on the sale.
With the right retirement plan, you manage 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 Baltimore, MD Now?
Time is one of the most important assets when it comes to saving for retirement. Starting early not only allows you to build a more substantial retirement fund but also lowers the financial burden of catching up later in life. Here’s why it is beneficial to start now:
The Cost of Waiting
Delaying your retirement savings could lead to a substantial impact on the total you’ll have when you reach retirement age. The main reason is compound interest—the concept where your investments grow, and those returns, in turn, earn even more returns. The longer your money has to grow, the larger the benefit of this growth.
Example: Taylor and Alex are both self-employed individuals. Their shared goal is to save $500,000 for retirement by age 65:
- Alex starts saving $5,000 annually at age 30.
- Taylor delays savings until age 40 but contributes $7,500 annually to catch up.
By age 65, with an assumption of 7% annual return:
- Alex puts in $180,000 and accumulates $691,184.39*.
- Taylor puts in $195,500 but achieves a total of only $474,367.78*.
How Early Contributions Grow
Even modest contributions contributed over time may result in significant growth. Consider this example showing the effect 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 leaves you with 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 achieve your retirement goals.
*The figures provided in this example represent estimates derived from NerdWallet’s Compound Interest Calculator, based on a 7% annual return. These calculations involved multiplying yearly deposits by the years contributed. These examples are intended as illustrative examples and do not guarantee future performance. Outcomes may change depending on factors such as market conditions, fees, and individual circumstances. We recommend consulting a financial advisor for personalized advice.
Take Control of Your Financial Future
For self-employed individuals in Baltimore, MD, it is often the case that you put more emphasis on reinvesting in your business over saving for retirement. Even so, beginning a plan now enables you to:
- Leverage tax-deferred growth or withdrawals without taxes later on.
- Benefit from flexible contributions that adapt to your income.
- Build a safety net that provides security, no matter how your business changes.
The sooner you start, the less you’ll need to worry about making up for lost time later in life. Building your retirement savings today means gaining control over your financial future and creating for yourself the opportunity to turn your attention to your goals—both for your future retirement and your Baltimore, MD business.
Types of Self-Employed Retirement Plans
There are several retirement savings options available for entrepreneurs in Baltimore, MD, each with its own benefits and trade-offs. A financial advisor is available to help you learn about the benefits and drawbacks of each option and choose the one best suited for your unique situation. In most cases, your self-employed retirement plan options in Baltimore, MD are:
Traditional or Roth IRA
Plan Overview: Individual Retirement Accounts (IRAs), as explained here, represent financial tools for retirement that include specific tax advantages. In a conventional IRA, contributions are typically tax-deductible, and earnings grow without immediate taxation, but retirement distributions are taxed as income. In contrast, Roth IRAs require contributions using income already taxed, but eligible distributions during retirement, including earnings, are exempt from taxes. In both types of accounts, withdrawals are penalty-free provided you are at least 59½.
Eligibility: Unlike plans linked to your job, both 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: A Simplified Employee Pension (SEP) IRA serves as a retirement savings option that enables entrepreneurs to save a percentage of their net business profits. 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) 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 flat-dollar amount or a percentage of wages to employee accounts. SEP IRAs may be ideal for companies with cycles of high revenue and low revenue. Unlike other plans, SEP IRAs don’t have costly startup or administrative fees.
SEPs work like traditional IRAs, where contributions are made with pre-tax money and retirement distributions are taxable.
Eligibility: Any employer, including the self-employed 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 allowable contribution is based on a special calculation.
Solo 401(k)
Plan Overview: The Solo 401(k), sometimes referred to as an Individual 401(k) or one-participant 401(k) plan, is a self-employed retirement plan designed for businesses with no employees or if the only employee is your spouse. Solo 401(k)s operate much like employer-sponsored 401(k) plans, and enable contributions as both the employer and the employee with pre-tax money. This allows for more savings than SEPs or IRAs; however, the extra savings options can be balanced by more restricted investment choices. Using a solo 401(k), you can make either traditional or Roth deferrals, which share 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: As a self-employed individual with a solo 401(k) plan, you can make two types of contributions:
- Employee contributions of up to 100% of your self-employed earnings, subject to the annual contribution limit. In 2025, those limits are $23,500, or $31,000 if you're over 50, or $34,750 if you attain age 60-63 in 2025.
- Contributions as an employer (as an employer) are limited to 25% of your net self-employment income, which is calculated as net profits less half of your self-employment tax and the employee contributions you made.
Total contributions are capped at $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: The defined benefit plan offers a structured retirement solution that delivers a set amount to business owners upon retirement. Unlike defined contribution plans mentioned above, this plan is not influenced by market performance, but enables participants to determine the precise amount they'll get in retirement. This strategy is best suited for high-earning entrepreneurs who are focused on saving a substantial amount for retirement and are prepared to contribute substantial contributions. Contributions offer tax-deferred growth, and withdrawals incur taxes as income in retirement.
Eligibility: Any self-employed individual operating a solo business or employing fewer than five people may establish an individual defined benefit plan, but it's most commonly advised for those over 50 who make $250,000 or more annually. In most cases, good candidates for defined benefit plans include:
- Partners or owners who aim to deposit more than $70,000 (or $77,500 for those aged 50+)
- Companies already contributing 3-4% and are willing to do more
- Companies that have demonstrated consistent profit patterns
- Partners or owners over age 40 who wish to accelerate savings or accelerate the retirement savings
Contribution Limits: The cap on contributions must be determined by an actuary based on your earnings, age, and retirement objectives. Contribution limits are updated yearly.
The Importance of a Financial Advisor in Baltimore, MD for Your Self-Employed Retirement Plan
Working with a financial advisor in Baltimore, MD experienced with retirement plans for the self-employed is an invaluable resource for those working for themselves. They have the expertise to help guide you through the challenges of retirement planning and craft a personalized approach that matches your objectives. An expert in your area will evaluate your financial situation, understand your risk tolerance, and guide you in making informed decisions about saving and investing for retirement. Included in what we do for you involves:
- Assist in selecting a plan that suits your unique requirements
- Further adapt the plan to fit you personally even further
- Create a written plan as required by IRS rules
- Set up an asset trust plan
- Ensure you comprehend the plan's terms
- Monitor and adjust your plan when necessary
- Deliver continuous support and financial insights as you continue on the road to retirement
- Increase your retirement income by making the most of your social security
Self-Employed Retirement Plans in Baltimore, MD: Correct Capital's Process
Baltimore, MD business owners who aren’t equipped with the time or understanding to manage their self-employed retirement plan themselves can become overwhelmed as they look at their available plans. Through our team at Correct Capital, our Baltimore, MD financial advisors handle the lion's share of your retirement strategy for you, working to make meeting your financial objectives as easy 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: 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 learn about your needs with zero commitment or extensive time commitment 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 existing financial picture, and your retirement goals. This helps us create a custom plan that aligns with your goals.
- Review Your Plan: After we put together a plan from the information you provide, we'll schedule a meeting and go over your plan in detail to make sure it's clear and explain its fit to your circumstances.
- Implementation and Monitoring: When we finalize on your plan, we'll set everything up so you can begin contributing. Throughout our relationship, we'll meet with you and track your progress to make sure it remains aligned with your goals.
Our Baltimore, MD financial advisors and retirement plan consultants act as fiduciary advisors, meaning they are legally and ethically bound to prioritize your needs above all else.
Other financial advisory services we offer in Baltimore, MD 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 Baltimore, MD
Your business isn't "just a business" to you, and your Baltimore, MD financial advisors must deliver more than simply sound financial advice. At Correct Capital, we take the time to get to know our clients and their businesses to create tailored self-employed retirement plans. All our clients in Baltimore, MD benefit from 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.
