Self-employed retirement plans Baltimore, MD. The flexibility of owning your own business in Baltimore, MD is one of the best aspects of working for yourself. Even so, this flexibility often comes with a lack of security, particularly regarding retirement savings, because you don't have access to a workplace retirement plan. Only 13% of self-employed individuals have a workplace retirement plan, but many should consider understanding their retirement options. In addition to achieving a more secure retirement, partnering with a financial advisor in Baltimore, MD to establish your self-employed retirement plan can provide significant tax advantages that allow both you and your business to thrive.
Few Baltimore, MD financial advisory and retirement planning firms are as attuned to the requirements of entrepreneurs quite like Correct Capital. Our company’s founder grew up with a father who was a small business owner himself (read more of our story here), and Correct Capital have a rich history of assisting business owners in their retirement planning needs. We recognize that your professional and personal aspirations aren’t limited to just monetary concerns, and we work tirelessly to offer personalized solutions to meet your unique goals. Read on to discover 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 speak with a small business financial advisor in Baltimore, MD today.
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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 real benefits today. With customizable contribution options to significant tax savings, consulting a financial advisor in Baltimore, MD allows you to create your retirement plan to suit your specific needs.
Flexibility That Fits Your Income
For those with fluctuating income from year to year, a plan like a SEP IRA or Solo 401(k) gives you the option to tailor how much you save:
- Customizable Contributions: Set aside more during profitable years and reduce savings when your earnings dip, ensuring your plan aligns with your current income.
- Roth Options: Choosing a Roth Solo 401(k) lets you pay taxes on contributions now, allowing you to withdraw your savings tax-free down the road—a wise move if you believe your tax rate will increase in the future.
Save Money on Taxes
Retirement plans for self-employed individuals offer valuable tax benefits:
- Tax-Deductible Contributions: Contributions to a SIMPLE IRA lower your taxable income, so you can keep more of your earnings.
- Tax-Deferred Growth: Your savings grow untaxed until withdrawn, giving your money more time to compound.
- State-Specific Incentives: Based on your location, you may be eligible for extra credits as a sole proprietor. These state-level incentives make these plans even more advantageous.
- Retirement Savings Contributions Credit (Saver’s Credit): Those who meet the requirements can claim a tax 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 goes beyond just how much you save—it’s also determined by your investment strategy:
- Diversified Portfolios: Distributing your investments across different stocks, bonds, and other assets serves to reduce risk while still growing your nest egg.
- Emergency Back-Up: Pairing your retirement plan with a financial buffer for your business helps you avoid dipping into savings during challenging periods and facing tax penalties.
Plan for the Future of Your Baltimore, MD Business
A thoughtful retirement strategy also helps you think through what’s next with your Baltimore, MD 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 won’t be included in the sale. These savings can provide the steady income you’ll need during retirement. It’s important to note that while the sale of a business usually creates a capital gain, retirement plan contributions are capped at annual limits (e.g., a maximum of $7,000 for IRAs or up to $70,000 for Solo 401(k)s, including catch-up contributions, depending on plan details).
- Minimizing Taxes: Using retirement contributions wisely can reduce the taxes you’ll owe when you transfer your business.
- Succession Planning: Whether you’re transferring ownership, your retirement savings provide financial security during the change. You may also seek advice from a financial advisor who specializes in succession planning and retirement accounts to minimize tax burdens on the sale.
With the right retirement plan, you gain control over your financial future, lower your tax bill, and establish a strong framework for both your retirement and your business goals.
Why Start a Self-Employed Retirement Plan in Baltimore, MD Now?
Time remains one of the most valuable factors when it comes to saving for retirement. Getting a head start not only allows you to build a bigger financial cushion but also lowers the stress of saving aggressively in the future. The following are reasons why it pays to take action now:
The Cost of Waiting
Delaying your retirement savings can have a significant impact on the savings you’ll have when you stop working. The main reason is compound interest—the concept where your investments grow, and those returns, then, earn even more returns. The longer your money has to grow, the more significant the effect of compounding.
Example: Two individuals, Alex and Taylor are both entrepreneurs. Their shared goal is 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 puts away $7,500 annually to make up for lost time.
By age 65, assuming 7% annual return:
- Alex invests $180,000 and ends up with $691,184.39*.
- Taylor contributes $195,500 but achieves a total of only $474,367.78*.
How Early Contributions Grow
Regular, modest investments contributed over time may result in significant growth. Here’s a simple scenario showing the effect of consistent growth:
- Starting at age 25: Putting aside $200 per month in a retirement plan with an expected yearly growth rate 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, all because of a 10-year delay.
The earlier you begin, the lower your annual savings needs each year to achieve your retirement goals.
*These calculations represent estimates generated with NerdWallet’s Compound Interest Calculator, based on a 7% annual return. The contributions were calculated by multiplying the annual deposit amount by the total number of years contributions were made. The scenarios provided are intended as illustrative examples and are not a promise of future results. Actual results may vary 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
As a self-employed person in Baltimore, MD, it is often the case that you prioritize reinvesting in your business instead of saving for retirement. Even so, starting a plan now allows you to:
- Take advantage of tax-deferred growth or penalty-free withdrawals later on.
- Take advantage of flexible contributions that adapt to your earnings.
- Create a safety net that ensures stability, no matter how your business changes.
The sooner you start, the less you’ll have to worry about playing catch-up later in life. Building your retirement savings today means managing your financial future and allowing yourself the opportunity to focus on your dreams—both for your future retirement and your Baltimore, MD business.
Types of Self-Employed Retirement Plans
A variety of retirement savings options available for entrepreneurs in Baltimore, MD, each offering its own advantages and considerations. A financial advisor is available to help you learn about the pros and cons of each choice and identify the one best suited for your circumstances. Generally speaking, your self-employed retirement plan options in Baltimore, MD are:
Traditional or Roth IRA
Plan Overview: Individual Retirement Accounts (IRAs), as explained here, represent retirement savings vehicles that include key tax perks. In a traditional IRA, you can usually deduct your contributions from taxable income, and investment earnings grow tax-deferred, but money taken out during retirement are subject to income tax. In contrast, Roth IRA contributions using income already taxed, 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: Unlike 401(k)s, which are employer-sponsored, both traditional and Roth IRAs are available to anyone with an earned income.
Contribution Limits: For 2025, annual contribution limits for IRAs are set at $7,000, or $8,000 if you're 50 or older.
Simplified Employee Pension Plan (SEP IRA)
Plan Overview: A Simplified Employee Pension (SEP) IRA serves as a retirement savings option that allows entrepreneurs to save a percentage of their net business profits. Contributions must come from an employer, so, as a self-employed individual, you (the employee) cannot make additional contributions above the 25% you (the employer) allocate. If you have employees, you must contribute the same amount for them as you do for yourself. You may choose to contribute a set monetary value or a percentage of wages to employee accounts. This type of plan works well for businesses that experience cycles of high revenue and low revenue. Compared to other retirement options, SEP IRAs lack costly startup or administrative fees.
SEPs work like traditional IRAs, where contributions are made with pre-tax money 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 capped at the lower of:
- 25% of compensation, or
- $70,000 for 2025
For self-employed individuals, the amount eligible to be contributed 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 self-employed retirement plan meant for companies that have no employees or if the only employee is your spouse. This type of plan are similar to employer-sponsored 401(k) plans, and let you make contributions as both an employer and an employee with pre-tax money. This allows for more savings than SEPs or IRAs; however, the increased savings potential often come with more constrained investment avenues. 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 are eligible to open 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:
- Elective deferrals (as an employee) of up to 100% of your earned income from self-employment, capped at the annual contribution limit. In 2025, those limits are $23,500, or $31,000 if you are 50 or older, or $34,750 for individuals aged 60-63 in 2025.
- Profit-sharing contributions (as an employer) are limited to 25% of your net earnings from self-employment, which is defined as net profit minus half of your self-employment tax and the employee contributions you made.
Total contributions are capped at $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: Defined benefit plans offers a structured retirement solution that provides a set amount to entrepreneurs upon retirement. As opposed to defined contribution plans, a defined benefit plan doesn't fluctuate based on investment returns, but enables participants to determine the precise amount they'll have in retirement. This plan is recommended for high-earning entrepreneurs who are focused on saving a significant sum for retirement and are prepared to contribute larger deposits. Contributions are tax deferred, and withdrawals are taxed as income upon retirement.
Eligibility: Any self-employed individual managing a one-person company or employing fewer than five people can open an individual defined benefit plan, but it's most commonly advised for people above age 50 who earn at least $250,000 a year. In most cases, good candidates for defined benefit plans tend to be:
- Partners or owners who aim to deposit more than $70,000 (or $77,500 for those aged 50+)
- Organizations that already put in 3-4% with plans to contribute more
- Organizations that have demonstrated consistent profit patterns
- Partners or owners over age 40 who desire to "catch up" or boost savings within a short timeframe
Contribution Limits: The cap on contributions requires calculation from an actuary based on your income, age, and retirement goals. Contribution limits change annually.
The Importance of a Financial Advisor in Baltimore, MD for Your Self-Employed Retirement Plan
A financial advisor in Baltimore, MD focused on self-employed retirement strategies is an important asset for self-employed individuals. They bring the skills needed to navigate the complexities of retirement planning and design a customized plan that matches your objectives. An expert in your area will assess where you stand financially, understand your risk tolerance, and help you in selecting the best options about saving and investing for retirement. A key part of what we do for you features:
- Assist in selecting a plan that aligns with your objectives and circumstances
- Tailor the plan to fit you personally even further
- Adopt a written plan in accordance with IRS guidelines
- Organize a trust plan to manage your assets
- Ensure you comprehend the plan's terms
- Review and modify your plan to keep it aligned with your goals
- Offer continued financial education and guidance as you continue on the road to retirement
- Increase your retirement income by maximizing your social security benefits
Self-Employed Retirement Plans in Baltimore, MD: Correct Capital's Process
Self-employed individuals in Baltimore, MD who don’t have the time or expertise to handle their own retirement planning independently often feel overwhelmed when faced with their choices. Through our team at Correct Capital, our Baltimore, MD financial advisors take on the lion's share of your retirement strategy for you, working to make meeting your future savings targets as hassle-free as possible for you. We will guide you in creating 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 determine if our services align for you and your business. This brief introduction allows us to learn about your needs with no obligation or major time investment on your part.
- Gather Information: If we both decide to move forward, we'll gather information, including how many employees you have (if any), your existing financial picture, and your future objectives. This helps us create a personalized strategy designed just for you.
- Review Your Plan: Once we've developed a plan using the information you provide, we'll meet with you and go over your plan thoroughly to ensure you understand it and understand how it best correlates to your needs.
- Implementation and Monitoring: When we finalize on your plan, we'll implement the necessary steps so you can start saving. Over the course of our partnership, we'll check in and review your strategy to keep it tailored to your evolving circumstances.
Our Baltimore, MD financial advisors and retirement plan consultants are fiduciary advisors, which means they are legally and ethically bound to act in your best interest.
Other financial advisory services we offer in Baltimore, MD 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 Baltimore, MD
Your business isn't "just a business" to you, and your Baltimore, MD financial advisors need to offer more than basic financial recommendations. With Correct Capital, we take the time to get to know our clients and their businesses to deliver personalized self-employed retirement plans. To every client in Baltimore, MD, we provide our I.O.U. promise: everything we recommend will be independent, objective, and unbiased. To begin on your self-employment retirement plan, call Correct Capital today at 877-930-401k or contact us online.
