Self-employed retirement plans Chattanooga, TN. The freedom of owning your own business in Chattanooga, TN offers many benefits of working for yourself. That said, this flexibility sometimes brings with a lack of security, especially when it comes to retirement savings, as you don't have the option of retirement programs through an employer. Only 13% of self-employed individuals have a workplace retirement plan, yet countless could benefit from looking into other possibilities. In addition to enjoying a more comfortable retirement, working with a financial advisor in Chattanooga, TN to set up your self-employed retirement plan delivers significant tax advantages that help you to move your business forward.
Few Chattanooga, TN financial advisory and retirement planning firms understand the needs of self-employed individuals quite like Correct Capital. Our company’s founder grew up with a father who was a small business owner himself (learn more about our story here), and we take pride in helping businesses with their retirement planning needs. We recognize that your professional and personal aspirations go far beyond basic numbers, and we strive to offer customized solutions to meet your unique goals. Read on to discover about your self-employed retirement plan options in Chattanooga, TN, or reach out to Correct Capital at 877-930-401k or contact us online to talk to a self-employed financial advisor in Chattanooga, TN today.
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Why Chattanooga, TN 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. With customizable contribution options to considerable tax savings, partnering with a financial advisor in Chattanooga, TN allows you to create your retirement plan to fit your individual circumstances.
Flexibility That Fits Your Income
If your income changes annually, a plan like a SEP IRA or Solo 401(k) provides the flexibility to tailor how much you save:
- Customizable Contributions: Contribute more during profitable years and reduce savings when income is lower, ensuring your plan works with your cash flow.
- 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 anticipate your tax rate will increase in the future.
Save Money on Taxes
Plans designed for the self-employed provide powerful tax benefits:
- Tax-Deductible Contributions: Contributions to a SEP IRA shrink your tax liability, so you can keep more of your income.
- Tax-Deferred Growth: Your savings grow untaxed until withdrawn, giving your money more time to grow.
- State-Specific Incentives: Depending on where you live, you may be eligible for extra deductions as a business owner. These local incentives help make these plans even more advantageous.
- Retirement Savings Contributions Credit (Saver’s Credit): Qualified participants can claim a tax credit of up to 50% of the first $2,000 contributed a retirement plan, cutting down 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 determined by your investment strategy:
- Diversified Portfolios: Spreading your investments across a mix of asset classes like stocks and bonds serves to mitigate financial risk while still growing your retirement fund.
- Emergency Back-Up: Supplementing your retirement savings with a financial buffer for your business helps you avoid dipping into savings during tough times and risking extra costs.
Plan for the Future of Your Chattanooga, TN Business
Retirement planning can assist you plan ahead for what’s next with your Chattanooga, TN business:
- Selling Your Business: When selling your business, accounts such as SEP IRAs or Solo 401(k)s remain your personal assets and are not part of the sale. These accounts ensure the reliable income you’ll need during retirement. Keep in mind 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, factoring in catch-up contributions, depending on plan details).
- Minimizing Taxes: Using retirement contributions wisely helps lower the taxes you’ll owe when you sell your business.
- Succession Planning: If you’re passing the business on, your retirement accounts ensure the funds you need through the transition. You might want to seek advice from a financial advisor who specializes in succession planning and retirement accounts to reduce taxes on the sale.
With the right retirement plan, you gain control over 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 Chattanooga, TN Now?
There’s no denying that time is one of the most important resources when it comes to saving for retirement. Beginning sooner rather than later not only lets you accumulate a bigger financial cushion but also minimizes the stress of saving aggressively in the future. The following are reasons why it makes sense to begin today:
The Cost of Waiting
Waiting to start your retirement fund can have a substantial impact on the amount you’ll have when you reach retirement age. The biggest reason is compound interest—the financial principle where your investments grow, and those returns, in turn, accumulate even more returns. The more time your money has to grow, the greater the effect of this growth.
Example: Alex and Taylor are both self-employed individuals. Both of them want to save $500,000 for retirement by age 65:
- Alex starts saving $5,000 annually at age 30.
- Taylor waits until age 40 but saves $7,500 annually to make up for lost time.
By age 65, assuming 7% annual return:
- Alex puts in $180,000 and accumulates $691,184.39*.
- Taylor contributes $195,500 but only ends up with $474,367.78*.
How Early Contributions Grow
Small, consistent savings contributed over time may result in significant growth. Here’s a simple scenario showing the impact of compound interest:
- Starting at age 25: By investing $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: Saving 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.
Saving early, the less effort required each year to meet your retirement goals.
*These calculations 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. These examples are meant to provide general guidance and cannot predict actual future outcomes. Actual results may vary depending on elements like market conditions, fees, and personal factors. Be sure to speak with a financial advisor for guidance tailored to your needs.
Take Control of Your Financial Future
If you’re self-employed in Chattanooga, TN, it can be tempting to focus more on reinvesting in your business instead of saving for retirement. That said, beginning a plan now gives you the chance to:
- Benefit from tax-free future growth or tax-free withdrawals later on.
- Benefit from adjustable savings that align with your cash flow.
- Build a long-term safety measure that offers peace of mind, no matter how your business evolves.
Starting early, the less you’ll need to worry about making up for lost time later in life. Building your retirement savings today means managing your financial future and allowing yourself the ability to concentrate on your goals—both for your future retirement and your Chattanooga, TN business.
Types of Self-Employed Retirement Plans
There are several retirement savings options available for those working for themselves in Chattanooga, TN, each with its own advantages and considerations. A financial advisor can help you understand the benefits and drawbacks of each plan and choose the one ideal for your circumstances. Typically, your self-employed retirement plan options in Chattanooga, TN consist of:
Traditional or Roth IRA
Plan Overview: IRAs, or Individual Retirement Accounts, are retirement savings vehicles that include specific tax advantages. In a standard IRA, you can usually deduct your contributions from taxable income, and returns grow free of current taxes, but withdrawals in retirement are subject to income tax. In contrast, Roth IRAs require contributions using income already taxed, but retirement withdrawals that qualify, including earnings, are exempt from taxes. In both types of accounts, withdrawals are penalty-free 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 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: SEP IRAs is a retirement plan that enables those who are self-employed to contribute a percentage of their net earnings. Contributions must come from an employer, so, as a self-employed individual, you (the employee) are limited to contributions from the employer role more than the 25% you (the employer) allocate. If you have employees, it's required to contribute the same amount for them as you do for yourself. You may choose to contribute a flat-dollar amount or a percentage of wages to employee accounts. A SEP IRA may be ideal for companies with periods of inconsistent earnings. Compared to other retirement options, SEP IRAs lack expensive setup or ongoing fees.
SEPs operate like standard IRAs, where contributions are made with pre-tax money and withdrawals are taxed as income.
Eligibility: Any employer, including the self-employed can open 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: The Solo 401(k), also called an Individual 401(k) or one-participant 401(k) plan, is a savings option for the self-employed meant for businesses without employees or if the only employee is your spouse. This type of plan operate much like traditional employer-managed 401(k) plans, and allow you to contribute as both an employee or an employer with pre-tax money. This allows for more savings versus SEPs or IRAs; however, the extra savings options can be balanced by more limited investment options. 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: 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:
- Deferrals as an employee of up to 100% of your self-employment income, up to the annual contribution limit. The contribution limits for 2025 include $23,500, or $31,000 for those aged 50 and above, or $34,750 for individuals aged 60-63 in 2025.
- Employer profit-sharing contributions (as an employer) are limited to 25% of your adjusted self-employment income, which is your 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 if you're over age 50 (for 2025), $81,250 if you attain age 60-63 in 2025.
Individual Defined Benefit Plan
Plan Overview: A defined benefit plan is a retirement option that delivers a set amount to business owners upon retirement. As opposed to defined contribution plans, a defined benefit plan doesn't fluctuate based on investment returns, but enables participants to determine exactly how much they'll receive in retirement. This option is best suited for wealthier self-employed individuals who want to save a substantial amount for retirement and are prepared to contribute sizeable contributions. Contributions are tax deferred, and withdrawals are taxable as income in retirement.
Eligibility: Self-employed professionals running an owner-only business or employing fewer than five people are eligible to open an individual defined benefit plan, but it's generally advised for people above age 50 who earn at least $250,000 a year. Typically, good candidates for defined benefit plans tend to be:
- Entrepreneurs who aim to deposit more than $70,000 (or $77,500 for those aged 50+)
- Organizations that already put in 3-4% but are open to increasing contributions
- Businesses with proven consistent profit patterns
- Entrepreneurs over age 40 who aim to quickly build retirement savings or accelerate the retirement savings
Contribution Limits: The cap on contributions is calculated by an actuary based on your financial situation, age, and savings targets. Contribution limits are updated yearly.
The Importance of a Financial Advisor in Chattanooga, TN for Your Self-Employed Retirement Plan
Partnering with an advisor in Chattanooga, TN experienced with retirement plans for the self-employed serves as an important asset for entrepreneurs. They bring the skills needed to understand the intricacies of saving for retirement and craft a customized plan that reflects your aspirations. Your advisor in Chattanooga, TN will review your finances, understand your risk tolerance, and guide you in making informed decisions about saving and investing for retirement. A key part of what we do for you includes:
- Guide you in choosing a plan that best fits your needs and goals
- Customize the plan to your specific situation 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
- Monitor and adjust your plan to keep it aligned with your goals
- Deliver continuous support and financial insights to help you navigate your retirement journey
- Increase your retirement income by optimizing your social security benefits
Self-Employed Retirement Plans in Chattanooga, TN: Correct Capital's Process
Chattanooga, TN business owners who don’t have the time or expertise to handle their retirement savings strategy independently may end up overwhelmed by their options. With Correct Capital, our Chattanooga, TN financial advisors handle the majority of your savings plan setup for you, to help make meeting your financial objectives as hassle-free as possible for you. We are here to assist you in setting 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 can determine if we're suited to your needs for you and your business. This initial call allows us to understand what you're looking for with zero commitment or major time investment on your part.
- Gather Information: Once we mutually decide to continue, we'll ask for information, including how many employees you have (if any), your current financial situation, and your long-term savings targets. This enables us to craft a personalized strategy 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 review your plan step by step to help you fully grasp it and understand how it best correlates to your needs.
- Implementation and Monitoring: Once we've agreed on your plan, we'll implement the necessary steps so you can begin contributing. As time goes on, we'll meet with you and monitor your plan to make sure it remains aligned with your goals.
Our Chattanooga, TN financial advisors and retirement plan consultants serve as fiduciary advisors, which means they are legally and ethically bound to act in your best interest.
Other financial advisory services we offer in Chattanooga, TN 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 Chattanooga, TN
Your business isn't "just a business" to you, and your Chattanooga, TN financial advisors must deliver more than just good financial guidance. At Correct Capital, we make it a priority to understand our clients and their businesses to deliver personalized self-employed retirement plans. To every client in Chattanooga, TN, we provide our I.O.U. promise: all of the advice you get from us 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.
