Self-employed retirement plans Chattanooga, TN. The flexibility of running your own company in Chattanooga, TN is one of the best aspects of being self-employed. However, this freedom sometimes brings with potential drawbacks, particularly in terms of building your retirement fund, as you don't have the benefit of retirement programs through an employer. Only 13% of self-employed individuals have a workplace retirement plan, yet countless would be better off looking into other possibilities. In addition to achieving a more secure retirement, partnering with a financial advisor in Chattanooga, TN to set up your self-employed retirement plan offers significant tax advantages that enable both you and your business to thrive.
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 Correct Capital are deeply experienced in supporting entrepreneurs with their retirement planning needs. We know that your goals for your business and retirement aren’t limited to just monetary concerns, and we strive to offer personalized 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 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 are essential for preparing you for the future, they also offer tangible benefits today. Offering flexibility in contributions to significant tax savings, consulting a financial advisor in Chattanooga, TN allows you to customize your retirement plan to align with your specific needs.
Flexibility That Fits Your Income
For those with fluctuating income over time, a plan like a SEP IRA or Solo 401(k) offers the freedom to modify how much you save:
- Customizable Contributions: Set aside more during high-income years and scale back when income is lower, so your plan fits your current income.
- Roth Options: Choosing a Roth Solo 401(k) lets you handle taxes upfront, allowing you to withdraw tax-free later—an advantageous choice if you anticipate your tax rate will increase in the future.
Save Money on Taxes
Retirement plans for self-employed individuals provide significant tax benefits:
- Tax-Deductible Contributions: Contributions to a SIMPLE IRA lower your taxable income, allowing you to keep more of your income.
- Tax-Deferred Growth: Investments grow tax-free until withdrawal, giving your money more time to accumulate.
- State-Specific Incentives: In some states, you might access state-specific deductions as a sole proprietor. These regional incentives help make these plans even more advantageous.
- 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 put into a retirement plan, further reducing your tax bill even more.
Protect Your Savings With Smart Investments
Planning for a safe retirement isn’t only about how much you save—it’s also determined by your investment strategy:
- Diversified Portfolios: Distributing your investments across a mix of asset classes like stocks and bonds serves to mitigate financial risk while continuing to build your retirement fund.
- Emergency Back-Up: Pairing your retirement plan with a business emergency fund prevents you from tapping into your nest egg during financial hardships and risking extra costs.
Plan for the Future of Your Chattanooga, TN Business
A thoughtful retirement strategy also helps 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 are not part of the sale. These plans ensure the steady income you’ll need in the future. Keep in mind that while selling your business results in a capital gain, contributions to retirement accounts are restricted by contribution limits (e.g., a maximum of $7,000 for IRAs or a maximum of $70,000 for Solo 401(k)s, including catch-up contributions, according to plan rules).
- Minimizing Taxes: Making the most of retirement savings can reduce the taxes you are required to pay when you sell your business.
- Succession Planning: If you’re passing the business on, your retirement accounts ensure a stable foundation through the transition. You can also seek advice from a financial advisor with expertise in succession and retirement planning to help with taxes associated with the transaction.
With the right retirement plan, you can take control of 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 Chattanooga, TN Now?
Time is one of the most valuable assets when it comes to saving for retirement. Beginning sooner rather than later not only helps you grow a bigger financial cushion but also reduces the pressure of playing catch-up as you get older. This is why it pays to take action now:
The Cost of Waiting
Putting off saving for retirement could lead to a substantial impact on the amount you’ll have when you retire. The main reason is compound interest—the financial principle 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 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 postpones starting contributions to 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 achieves a total of $691,184.39*.
- Taylor invests $195,500 but only ends up with $474,367.78*.
How Early Contributions Grow
Small, consistent savings made consistently can lead to impressive 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 average annual return 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 shortfall of over $260,000, simply due to a 10-year delay.
Saving early, the less effort required each year to reach your retirement goals.
*These calculations are based on estimates generated with NerdWallet’s Compound Interest Calculator, assuming a 7% annual return. These calculations involved multiplying yearly deposits by the years contributed. This information is intended as illustrative examples and cannot predict actual future outcomes. Outcomes may change depending on 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. Even so, initiating a plan now gives you the chance to:
- Benefit from tax-deferred growth or tax-free withdrawals in the future.
- Enjoy flexible contributions that align with your earnings.
- Create 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 making up for lost time later in life. Saving for retirement now means managing your financial future and giving yourself the ability to concentrate on your goals—both for your future retirement and your Chattanooga, TN business.
Types of Self-Employed Retirement Plans
A variety of retirement savings options designed for those working for themselves in Chattanooga, TN, each providing its own pros and cons. A financial advisor will guide you to evaluate the pros and cons of each plan and determine the one ideal for your circumstances. In most cases, your self-employed retirement plan options in Chattanooga, TN include:
Traditional or Roth IRA
Plan Overview: Individual Retirement Accounts (IRAs), as explained here, represent financial tools for retirement that offer key tax perks. In a traditional IRA, contributions are typically tax-deductible, and earnings grow without immediate taxation, but money taken out during retirement are subject to income tax. In contrast, with Roth IRAs, you contribute are made with after-tax income, but qualified withdrawals in retirement, including earnings, are not taxed. In both types of accounts, withdrawals don’t incur penalties provided you are at least 59½.
Eligibility: Unlike 401(k)s, which are employer-sponsored, IRAs, including traditional and Roth options are accessible for individuals with a source of income.
Contribution Limits: For 2025, annual contribution limits for IRAs remain $7,000, or $8,000 for those aged 50+.
Simplified Employee Pension Plan (SEP IRA)
Plan Overview: SEP IRAs serves as a retirement savings option that allows entrepreneurs to set aside a portion of their self-employment income. Contributions must come from an employer, so, as a independent business owner, you (the employee) cannot make additional contributions beyond the 25% you (the employer) have designated. If you have employees, you must 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 works well for companies with periods of inconsistent earnings. In contrast to some alternatives, SEP IRAs are free of the high fees associated with starting or maintaining other plans.
SEPs work like conventional IRAs, where the contributions are tax-deferred and money withdrawn is subject to income tax.
Eligibility: Both employers and self-employed individuals can establish a SEP.
Contribution Limits: Contribution limits for employees in a SEP IRA are the lesser of:
- 25% of compensation, or
- $70,000 for 2025
For self-employed individuals, the allowable contribution 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 retirement savings plan intended 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 let you make contributions as both the employer and the employee with pre-tax money. This provides more savings compared to SEPs or IRAs; however, the additional opportunities often come with 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: This plan is exclusively for business owners and their spouses may establish 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-employment income, subject to 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 your net profit minus half of your self-employment tax and the deferrals you made.
The total contribution cannot exceed $70,000, or $77,500 if you're over age 50 (as of 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 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 lets individuals clearly understand exactly how much they'll get in retirement. This plan is ideal for wealthier entrepreneurs who are focused on saving a large amount for retirement and are willing to make sizeable contributions. Contributions grow tax-free until withdrawal, and withdrawals incur taxes as income upon retirement.
Eligibility: Entrepreneurs running an owner-only business or employing fewer than five people may establish an individual defined benefit plan, but it's most commonly recommended for those over 50 who make $250,000 or more annually. In most cases, good candidates for defined benefit plans include:
- Entrepreneurs who aim to deposit more than $70,000 (or $77,500 for individuals 50 and older)
- Companies already contributing 3-4% but are open to increasing contributions
- Organizations showing consistent profit patterns
- Entrepreneurs over age 40 who desire to "catch up" or increase their retirement contributions rapidly
Contribution Limits: The contribution limit requires calculation from an actuary using your earnings, age, and retirement objectives. Limits on contributions are adjusted each year.
The Importance of a Financial Advisor in Chattanooga, TN for Your Self-Employed Retirement Plan
A financial advisor in Chattanooga, TN specialized in self-employed retirement plans 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 customized plan that matches your objectives. An expert in your area will review your finances, determine how much risk you’re comfortable with, and assist you in selecting the best options about saving and investing for retirement. Included in what we do for you includes:
- Help you choose a plan that suits your unique requirements
- Customize the plan to your needs even further
- Adopt a written plan as required by IRS rules
- Arrange a trust plan for assets
- Ensure you comprehend the plan's terms
- Monitor and adjust your plan as needed
- Offer continued financial education and guidance throughout your retirement planning process
- Maximize what you receive in retirement by optimizing your social security benefits
Self-Employed Retirement Plans in Chattanooga, TN: Correct Capital's Process
Entrepreneurs in Chattanooga, TN who lack the time, interest, or knowledge to manage their self-employed retirement plan on their own often feel overwhelmed by their choices. Through our team at Correct Capital, our Chattanooga, TN financial advisors take on the bulk of your retirement planning for you, working to make meeting your retirement goals 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: It only takes 20 minutes, a member of our advisor team can help understand if we're suited to your needs for you and your business. This short conversation allows us to learn about your needs with no pressure or extensive time commitment on your part.
- Gather Information: Should we agree to proceed, we'll request information, including how many employees you have (if any), your current financial situation, and your future objectives. This helps us create a personalized strategy designed just for you.
- Review Your Plan: Once we've developed a plan from the information you provide, we'll sit down with you and go over your plan in detail to help you fully grasp it and explain its fit to your circumstances.
- Implementation and Monitoring: After we agree on your plan, we'll put everything in place so you can initiate your savings journey. Over the course of our partnership, we'll have regular meetings and review your strategy to make sure it remains aligned with your goals.
Our Chattanooga, TN financial advisors and retirement plan consultants act as fiduciary advisors, who are obligated to they are required by law and ethical standards to do what's in your best interest.
Other financial advisory services we offer in Chattanooga, TN 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 Chattanooga, TN
You don't see your business as "just a business", and your Chattanooga, TN financial advisors should provide more than just good financial guidance. With Correct Capital, we take the time to get to know our clients and their businesses to provide customized 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 get started on your self-employment retirement plan, contact Correct Capital now at 877-930-401k or contact us online.
