Self-employed retirement plans Chattanooga, TN. The independence of being your own boss in Chattanooga, TN is one of the greatest advantages of working for yourself. However, this independence often comes with potential drawbacks, particularly regarding planning for retirement, because you don't have the option of employer-sponsored retirement plans. Only 13% of self-employed individuals have a workplace retirement plan, although many would be better off looking into other possibilities. In addition to achieving a more comfortable retirement, working with a financial advisor in Chattanooga, TN to establish your self-employed retirement plan delivers significant tax advantages that enable you to move your business forward.
Few Chattanooga, TN wealth management and retirement planning firms truly grasp the challenges faced by self-employed individuals as well as Correct Capital. Our founder's father was a small business owner himself (learn more about our story here), and Correct Capital have a rich history of supporting entrepreneurs with their retirement planning needs. We recognize that your business and retirement aspirations extend well past just monetary concerns, and we work tirelessly to offer customized solutions that reflect your objectives. Continue exploring to find out about your self-employed retirement plan options in Chattanooga, TN, or give us a call at Correct Capital at 877-930-401k or contact us online to speak with a small business financial advisor in Chattanooga, TN today.
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 real benefits today. With customizable contribution options to significant tax savings, partnering with a financial advisor in Chattanooga, TN helps you create your retirement plan to align with your specific needs.
Flexibility That Fits Your Income
If your income changes from year to year, a plan like a SEP IRA or Solo 401(k) gives you the option to adjust how much you save:
- Customizable Contributions: Contribute more during profitable years and scale back when revenues are down, ensuring your plan works with your cash flow.
- Roth Options: Opting for a Roth Solo 401(k) lets you handle taxes upfront, so you can withdraw without tax penalties in the future—a wise move if you expect your tax rate will increase in the future.
Save Money on Taxes
Self-employed retirement plans deliver significant tax benefits:
- Tax-Deductible Contributions: Contributions to a Solo 401(k) shrink your tax liability, helping you keep more of your hard-earned money.
- Tax-Deferred Growth: You won't pay taxes on investment growth until you withdraw it, giving your money more time to compound.
- State-Specific Incentives: Based on your location, you may be eligible for state-specific deductions as a self-employed individual. These state-level incentives help make these plans even more beneficial.
- Retirement Savings Contributions Credit (Saver’s Credit): Qualified participants can claim a tax credit of up to 50% of the first $2,000 they contribute a retirement plan, further reducing your tax bill even more.
Protect Your Savings With Smart Investments
Creating a stable future isn’t only about how much you save—it’s also about how you invest:
- Diversified Portfolios: Distributing your investments across varied asset classes like stocks and bonds is a smart way to reduce risk while still growing your nest egg.
- Emergency Back-Up: Pairing your retirement plan with a business emergency fund prevents you from dipping into savings during financial hardships and risking extra costs.
Plan for the Future of Your Chattanooga, TN Business
Retirement planning can assist you think through what’s next with your Chattanooga, TN business:
- Selling Your Business: When selling your business, retirement accounts like SEP IRAs and Solo 401(k)s remain yours and don’t transfer with the business. These savings offer the reliable income you’ll need during retirement. Remember that while selling your business results in 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, factoring in catch-up contributions, depending on plan details).
- Minimizing Taxes: Using retirement contributions wisely minimizes the taxes you are required to pay when you pass on your business.
- Succession Planning: For those winding down or handing over their business, your nest egg provide the funds you need as you make this shift. You can also partner with a financial advisor experienced in both succession and retirement strategies to help with taxes during the sale.
With the right retirement plan, you manage your financial future, lower your tax bill, and create a solid base for both your retirement and your business goals.
Why Start a Self-Employed Retirement Plan in Chattanooga, TN Now?
Time is one of the most important factors for building your retirement fund. Getting a head start not only lets you accumulate a more substantial retirement fund but also minimizes the financial burden of saving aggressively in the future. Here’s why it pays to take action now:
The Cost of Waiting
Delaying your retirement savings can have a substantial impact on the amount you’ll have when you reach retirement age. The biggest reason is compound interest—the concept where your investments grow, and those returns, then, accumulate even more returns. The greater time span your money has to grow, the greater the impact of this compounding process.
Example: Alex and Taylor are both self-employed professionals. 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 contributes $7,500 annually to bridge the gap.
By age 65, using a projected 7% annual return:
- Alex contributes $180,000 and ends up with $691,184.39*.
- Taylor invests $195,500 but achieves a total of only $474,367.78*.
How Early Contributions Grow
Regular, modest investments contributed over time may result in impressive growth. Take a look at this scenario showing the effect of compounding:
- Starting at age 25: By investing $200 per month in a retirement plan with an average annual return of 7%, you’ll accumulate $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 gap of over $260,000, all because of a 10-year delay.
Starting sooner, the less you need to save each year to reach your retirement goals.
*The numbers shown in this scenario are estimates derived from NerdWallet’s Compound Interest Calculator, assuming 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. Outcomes may change due to factors such as market conditions, fees, and personal factors. Always consult a financial advisor for custom recommendations.
Take Control of Your Financial Future
If you’re self-employed in Chattanooga, TN, it can be tempting to prioritize reinvesting in your business over saving for retirement. That said, beginning a plan now enables you to:
- Leverage tax-deferred growth or withdrawals without taxes later on.
- Benefit from contribution flexibility that change with your earnings.
- Build a financial cushion that ensures stability, no matter how your business evolves.
Starting early, the less you’ll need to worry about making up for lost time later in life. Saving for retirement now means managing your financial future and giving yourself the opportunity to concentrate on your objectives—both for your golden years and your Chattanooga, TN business.
Types of Self-Employed Retirement Plans
There are several retirement savings options designed for entrepreneurs in Chattanooga, TN, each offering its own benefits and trade-offs. A financial advisor is available to help you evaluate the advantages and disadvantages of each option and determine the one ideal for your needs. Typically, your self-employed retirement plan options in Chattanooga, TN include:
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, the money you contribute is often tax-deductible, and investment earnings grow tax-deferred, but retirement distributions are taxable. In contrast, with Roth IRAs, you contribute are made with after-tax income, but eligible distributions during retirement, including earnings, are exempt from taxes. In both accounts, withdrawals are penalty-free as long as you are at least 59½.
Eligibility: Unlike 401(k)s, which are employer-sponsored, traditional and Roth IRAs 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: SEP IRAs 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 self-employed individual, you (the employee) would not be able to contribute beyond the 25% you (the employer) have designated. If you have employees, you are obligated 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 businesses that experience fluctuating revenue streams. In contrast to some alternatives, SEP IRAs are free of costly startup or administrative fees.
SEPs work like conventional IRAs, where the contributions are tax-deferred and money withdrawn is subject to income tax.
Eligibility: Employers of any type, including self-employed individuals can establish 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 allowable contribution is based on a special calculation.
Solo 401(k)
Plan Overview: A Solo 401(k) plan, commonly known as an Individual 401(k) or one-participant 401(k) plan, is a savings option for the self-employed intended for companies that have no employees or when the sole employee is your spouse. These plans are similar to standard 401(k) plans, and let you make contributions as both an employer and an employee with pre-tax money. This offers more savings than SEPs or IRAs; however, the additional opportunities can be balanced by more constrained investment avenues. 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 are eligible to open and contribute to a solo 401(k).
Contribution Limits: If you are self-employed with a solo 401(k) plan, you can make two types of contributions:
- Employee contributions 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 for those aged 50 and above, or $34,750 if you attain age 60-63 in 2025.
- Profit-sharing contributions (as an employer) are limited to 25% of your net self-employment income, which is your net profit minus half of your self-employment tax and the deferrals you made.
Your combined contributions must not surpass $70,000, or $77,500 for those aged 50 and older (in 2025), $81,250 for those aged 60-63 in 2025.
Individual Defined Benefit Plan
Plan Overview: A defined benefit plan represents a type of retirement plan that provides a pre-established payout to entrepreneurs upon retirement. As opposed to defined contribution plans, investment returns don’t affect the payout, but allows self-employed individuals to know what they'll have in retirement. This option is recommended for high-earning self-employed individuals who want to save a substantial amount for retirement and can commit to making sizeable contributions. Contributions are tax deferred, and withdrawals are taxable as income in retirement.
Eligibility: Self-employed professionals running an owner-only business or with a small staff of under five can open an individual defined benefit plan, but it's typically recommended for those over 50 who generate a minimum of $250,000 yearly. Typically, good candidates for defined benefit plans tend to be:
- Business owners or partners who want to invest more than $70,000 (or $77,500 for those aged 50+)
- Companies already contributing 3-4% with plans to contribute more
- Companies with proven consistent profit patterns
- Partners or owners over age 40 who wish to accelerate savings or increase their retirement contributions rapidly
Contribution Limits: The cap on contributions requires calculation from an actuary determined by your income, age, and retirement goals. Allowable contributions change annually.
The Importance of a Financial Advisor in Chattanooga, TN for Your Self-Employed Retirement Plan
A financial advisor in Chattanooga, TN focused on self-employed retirement strategies can be an essential partner for entrepreneurs. They bring the skills needed to guide you through the challenges of retirement planning and craft a tailored strategy that aligns with your goals. A financial advisor in Chattanooga, TN will review your finances, determine how much risk you’re comfortable with, and help you in making informed decisions about saving and investing for retirement. Included in what we do for you includes:
- Assist in selecting a plan that best fits your needs and goals
- Tailor the plan to your needs even further
- Create a written plan that complies with IRS regulations
- Arrange a trust plan for assets
- Make sure you understand the plan's terms
- Monitor and adjust 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 Chattanooga, TN: Correct Capital's Process
Chattanooga, TN business owners who lack the time, interest, or knowledge to handle their self-employed retirement plan on their own often feel overwhelmed as they look at their options. At Correct Capital, our Chattanooga, TN financial advisors take on the bulk of your retirement planning for you, and strive to ensure meeting your future savings targets as hassle-free 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 will assess if our services align for you and your business. This initial call lets us understand what you're looking for with zero commitment or significant effort on your part.
- Gather Information: Once we mutually decide to continue, we'll ask for information, including whether you have employees, your current financial situation, and your long-term savings targets. This enables us to craft a personalized strategy suited specifically for your needs.
- Review Your Plan: After we put together a plan from the information you provide, we'll meet with you and review your plan thoroughly to ensure you understand it and understand how it best correlates to your needs.
- Implementation and Monitoring: After we agree on your plan, we'll set everything up so you can begin contributing. Over the course of our partnership, we'll have regular meetings 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, meaning they are committed by law and ethics to act in your best interest.
Other financial advisory services we offer in Chattanooga, TN include:
- Retirement Financial Planning
- Investment Management
- 401(k) Audit
- High-Net-Worth Wealth Management
- Retirement Planner
- Financial Planning
- Retirement Plan Consultants
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. Correct Capital takes pride in, we make it a priority to understand our clients and their businesses to provide personalized self-employed retirement plans. All our clients in Chattanooga, TN benefit from our I.O.U. promise: everything we recommend 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.
