Self-employed retirement plans Boise City, ID. The freedom of being your own boss in Boise City, ID offers many benefits of being self-employed. That said, this independence sometimes brings with potential drawbacks, especially in terms of planning for retirement, as you don't have access to employer-sponsored retirement plans. Only 13% of self-employed individuals have a workplace retirement plan, yet countless should consider exploring their options. In addition to enjoying a financially stable retirement, seeking advice from a financial advisor in Boise City, ID to set up your self-employed retirement plan delivers significant tax advantages that enable both you and your business to thrive.
Few Boise City, ID financial advisory and retirement planning firms understand the needs of entrepreneurs better than Correct Capital. Our founder's father was a small business owner himself (check out our story here), and we have a rich history of helping businesses with their retirement planning needs. We know that your business and retirement aspirations aren’t limited to simple financial figures, and we work tirelessly to create customized solutions that reflect your objectives. Read on to discover about your self-employed retirement plan options in Boise City, ID, or give us a call at Correct Capital at 877-930-401k or contact us online to talk to a small business financial advisor in Boise City, ID today.
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Why Boise City, ID Self-Employed Individuals Should Have a Retirement Plan
Retirement plans for self-employed individuals are essential for preparing you for the future, they also offer real benefits today. With customizable contribution options to considerable tax savings, consulting a financial advisor in Boise City, ID helps you design your retirement plan to suit your specific needs.
Flexibility That Fits Your Income
When your earnings vary over time, a plan like a SEP IRA or Solo 401(k) gives you the option to modify how much you save:
- Customizable Contributions: Contribute more during successful years and cut back when income is lower, so your plan aligns with your current income.
- Roth Options: Choosing a Roth Solo 401(k) lets you handle taxes upfront, allowing you to withdraw your savings tax-free down the road—an advantageous choice if you believe your tax rate to be higher in the future.
Save Money on Taxes
Plans designed for the self-employed provide significant tax benefits:
- Tax-Deductible Contributions: Contributions to a SEP IRA lower your taxable income, 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 extra deductions as a self-employed individual. These regional incentives can make these plans even more beneficial.
- Retirement Savings Contributions Credit (Saver’s Credit): Qualified participants can take advantage of 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
Creating a stable future goes beyond just how much you save—it’s also linked to the way you invest:
- Diversified Portfolios: Distributing your investments across a mix of asset classes like stocks and bonds is a smart way to minimize exposure to risk while still growing your savings.
- Emergency Back-Up: Combining your retirement strategy and a dedicated business safety net ensures you don’t using your retirement funds during tough times and facing tax penalties.
Plan for the Future of Your Boise City, ID Business
Preparing for retirement enables you to think through what’s next with your Boise City, ID business:
- Selling Your Business: For those considering a sale, accounts such as SEP IRAs or Solo 401(k)s stay in your name and are not part of the sale. These savings can provide the reliable income you’ll need during retirement. It’s important to note that while the sale of a business usually creates a capital gain, contributions to retirement accounts are subject to yearly maximums (e.g., a maximum of $7,000 for IRAs or a maximum of $70,000 for Solo 401(k)s, including catch-up contributions, based on plan compensation).
- Minimizing Taxes: Strategically planning your contributions can reduce the taxes you are required to pay when you pass on your business.
- Succession Planning: If you’re passing the business on, your nest egg provide the funds you need through the transition. You may also partner with a financial advisor experienced in both succession and retirement strategies to reduce taxes during the sale.
With the best-fit retirement strategy, you can take control of your financial future, cut down your tax obligations, and build a solid base for both your retirement and your business goals.
Why Start a Self-Employed Retirement Plan in Boise City, ID Now?
Time is one of the most important factors when it comes to saving for retirement. Getting a head start not only lets you accumulate a bigger financial cushion but also minimizes the stress of playing catch-up as you get older. This is 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 primary reason is compound interest—the financial principle where your investments earn returns, and those returns, in turn, generate even more returns. The greater time span your money has to grow, the more significant the impact of this compounding process.
Example: Alex and Taylor are both self-employed professionals. Their shared goal is to save $500,000 for retirement by age 65:
- Alex starts saving $5,000 annually at age 30.
- Taylor waits until age 40 but puts away $7,500 annually to make up for lost time.
By age 65, with an assumption of 7% annual return:
- Alex invests $180,000 and ends up with $691,184.39*.
- Taylor puts in $195,500 but achieves a total of only $474,367.78*.
How Early Contributions Grow
Even modest contributions made consistently often create significant growth. Take a look at this scenario showing the effect of compounding:
- Starting at age 25: If you invest $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 yields only $235,412.97* by age 65—a difference of over $260,000, simply due to a 10-year delay.
The earlier you begin, the lower your annual savings needs each year to achieve your retirement goals.
*The numbers shown in this scenario are based on estimates calculated using NerdWallet’s Compound Interest Calculator, assuming a 7% annual return. These calculations involved multiplying yearly deposits by the years contributed. This information is meant to provide general guidance and do not guarantee future performance. Your individual results may differ due to elements like market conditions, fees, and personal factors. We recommend consulting a financial advisor for guidance tailored to your needs.
Take Control of Your Financial Future
For self-employed individuals in Boise City, ID, it might seem easier to focus more on reinvesting in your business over saving for retirement. That said, starting a plan now allows you to:
- Take advantage of tax-free future growth or penalty-free withdrawals down the road.
- Benefit from contribution flexibility that align with your earnings.
- Establish a safety net that offers peace of mind, no matter how your business changes.
Getting started now, the less you’ll be required to worry about playing catch-up later in life. Building your retirement savings today means managing your financial future and allowing yourself the ability to focus on your dreams—both for your golden years and your Boise City, ID business.
Types of Self-Employed Retirement Plans
Multiple retirement savings options open for self-employed individuals in Boise City, ID, each with its own benefits and trade-offs. A financial advisor will guide you to evaluate the pros and cons of each plan and identify the one best suited for your circumstances. In most cases, your self-employed retirement plan options in Boise City, ID consist of:
Traditional or Roth IRA
Plan Overview: Individual Retirement Accounts (IRAs), as explained here, represent retirement savings vehicles that offer specific tax advantages. In a standard IRA, you can usually deduct your contributions from taxable income, and earnings grow without immediate taxation, but retirement distributions are taxed as income. In contrast, Roth IRA contributions using income already taxed, but retirement withdrawals that qualify, including earnings, are not taxed. In both accounts, withdrawals are penalty-free if you are at least 59½.
Eligibility: Unlike 401(k)s, which are employer-sponsored, IRAs, including traditional and Roth options are open to those with a source of 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 is a retirement plan that enables entrepreneurs to set aside a portion of their self-employment income. Contributions can only be made by an employer, so, as a independent business owner, you (the employee) would not be able to contribute above the 25% you (the employer) already contributed. If you have employees, you must contribute the same amount for them as you do for yourself. You may choose to contribute a fixed dollar figure or a percentage of wages to employee accounts. This type of plan is a good option for businesses that experience periods of inconsistent earnings. In contrast to some alternatives, SEP IRAs don’t have the high fees associated with starting or maintaining other plans.
SEPs function like conventional IRAs, where contributions are made with pre-tax money and retirement distributions are taxable.
Eligibility: Employers of any type, including self-employed individuals can set up a SEP.
Contribution Limits: Contribution limits for employees in a SEP IRA must not exceed:
- 25% of compensation, or
- $70,000 for 2025
As a self-employed person, the amount eligible to be contributed 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 businesses with no employees or if the only employee is your spouse. These plans are similar to traditional employer-managed 401(k) plans, and allow you to contribute 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 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: 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 have the ability to make two types of contributions:
- Deferrals as an employee of up to 100% of your earned income from self-employment, 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 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 elective deferrals you made.
Your combined contributions must not surpass $70,000, or $77,500 if you're over age 50 (in 2025), $81,250 for those aged 60-63 in 2025.
Individual Defined Benefit Plan
Plan Overview: A defined benefit plan offers a structured retirement solution that provides 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 lets individuals clearly understand exactly how much they'll get in retirement. This option is recommended for wealthier entrepreneurs who want to save a significant sum for retirement and can commit to making sizeable contributions. Contributions offer tax-deferred growth, and withdrawals incur taxes as income in retirement.
Eligibility: Entrepreneurs 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 typically advised for individuals aged 50+ who generate a minimum of $250,000 yearly. Typically, good candidates for defined benefit plans tend to be:
- Business owners or partners who aim to deposit more than $70,000 (or $77,500 if over age 50)
- Organizations that already put in 3-4% but are open to increasing contributions
- Organizations that have demonstrated consistent profit patterns
- Business leaders over age 40 who desire to "catch up" or boost savings within a short timeframe
Contribution Limits: The maximum allowable contribution must be determined by an actuary based on your financial situation, age, and savings targets. Allowable contributions are updated yearly.
The Importance of a Financial Advisor in Boise City, ID for Your Self-Employed Retirement Plan
Working with a financial advisor in Boise City, ID specialized in self-employed retirement plans can be an invaluable resource for entrepreneurs. They bring the skills needed to understand the intricacies of saving for retirement and design a personalized approach that aligns with your goals. A financial advisor in Boise City, ID will assess where you stand financially, understand your risk tolerance, and guide you in selecting the best options about saving and investing for retirement. A key part of what we do for you includes:
- Help you choose a plan that suits your unique requirements
- Customize the plan to your needs even further
- Create a written plan that complies with IRS regulations
- Set up an asset trust plan
- Make sure you understand the plan's terms
- Track and fine-tune your plan as needed
- Deliver continuous support and financial insights throughout your retirement planning process
- Boost your retirement earnings by maximizing your social security benefits
Self-Employed Retirement Plans in Boise City, ID: Correct Capital's Process
Boise City, ID business owners who don’t have the time or expertise to oversee their self-employed retirement plan on their own can become overwhelmed when faced with their options. With Correct Capital, our Boise City, ID financial advisors manage the bulk of your retirement strategy for you, working to make meeting your financial objectives as straightforward 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: In just 20 minutes, a member of our advisor team can determine if we're suited to your needs for you and your business. This initial call lets us get a sense of your goals with no obligation or extensive time commitment on your part.
- Gather Information: Once we mutually decide to continue, we'll request information, including how many employees you have (if any), your existing financial picture, and your future objectives. This enables us to craft a custom plan designed just for you.
- Review Your Plan: Once we've developed a plan based on the information you provide, we'll meet with you and review your plan in detail to help you fully grasp it and understand how it best correlates to your needs.
- Implementation and Monitoring: After we agree on your plan, we'll implement the necessary steps 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 Boise City, ID financial advisors and retirement plan consultants act as fiduciary advisors, which means they are required by law and ethical standards to act in your best interest.
Other financial advisory services we offer in Boise City, ID 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 Boise City, ID
To you, your business is more than "just a business", and your Boise City, ID financial advisors must deliver more than simply sound financial advice. At Correct Capital, we focus on building a relationship with our clients and their businesses to create personalized self-employed retirement plans. To every client in Boise City, ID, we provide our I.O.U. promise: everything we recommend will be independent, objective, and unbiased. To take the first step on your self-employment retirement plan, reach out to Correct Capital at 877-930-401k or contact us online.
