Self-employed retirement plans Chesapeake, VA. The flexibility of owning your own business in Chesapeake, VA is one of the best aspects of working for yourself. However, this flexibility often comes with potential drawbacks, notably when it comes to planning for retirement, because you don't have access to retirement programs through an employer. Only 13% of self-employed individuals have a workplace retirement plan, but many could benefit from understanding their retirement options. In addition to enjoying a more comfortable retirement, working with a financial advisor in Chesapeake, VA to establish your self-employed retirement plan delivers significant tax advantages that help both you and your business to thrive.
Few Chesapeake, VA wealth management and retirement planning firms truly grasp the challenges faced by self-employed individuals better than 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 have a rich history of helping businesses with their retirement planning needs. We recognize that your business and retirement aspirations aren’t limited to basic numbers, and we work tirelessly to create customized solutions to meet your unique goals. Continue exploring to find out about your self-employed retirement plan options in Chesapeake, VA, or call Correct Capital at 877-930-401k or contact us online to speak with a entrepreneurial financial advisor in Chesapeake, VA today.
Why Chesapeake, VA Self-Employed Individuals Should Have a Retirement Plan
Retirement plans for self-employed individuals not only prepare you for the future, they also deliver immediate benefits today. From flexible contributions to substantial tax savings, partnering with a financial advisor in Chesapeake, VA allows you to customize your retirement plan to suit your unique financial situation.
Flexibility That Fits Your Income
If your income changes annually, a plan like a SEP IRA or Solo 401(k) offers the option to modify how much you save:
- Customizable Contributions: Save extra during profitable years and reduce savings when income is lower, so your plan aligns with your financial situation.
- Roth Options: Opting for a Roth Solo 401(k) lets you settle taxes at the time of contribution, enabling you to withdraw without tax penalties in the future—an advantageous choice if you anticipate 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 SEP IRA lower your taxable income, allowing you to keep more of your income.
- Tax-Deferred Growth: Investments grow tax-free until withdrawal, which gives your money more time to accumulate.
- State-Specific Incentives: Based on your location, you may be eligible for state-specific 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 take advantage of a 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
Building a secure retirement requires more than how much you save—it’s also determined by your investment strategy:
- Diversified Portfolios: Spreading your investments across varied stocks, bonds, and alternatives can help reduce risk while helping to grow your retirement fund.
- Emergency Back-Up: Combining your retirement strategy and a financial buffer for your business helps you avoid tapping into your nest egg during challenging periods and facing tax penalties.
Plan for the Future of Your Chesapeake, VA Business
A thoughtful retirement strategy enables you to plan ahead for what’s next with your Chesapeake, VA business:
- Selling Your Business: If you’re planning to sell, plans like SEP IRAs or Solo 401(k)s remain yours and won’t be included in the sale. These accounts ensure the steady income you’ll need later on. Remember that while selling your business results in a capital gain, retirement plan contributions are restricted by contribution limits (e.g., up to $7,000 for IRAs or up to $70,000 for Solo 401(k)s, factoring in catch-up contributions, depending on plan details).
- Minimizing Taxes: Strategically planning your contributions helps lower the taxes you are required to pay when you sell your business.
- Succession Planning: If you’re passing the business on, your retirement savings offer a stable foundation as you make this shift. You can also work with a financial advisor experienced in both succession and retirement strategies to help with taxes associated with the transaction.
With the proper savings strategy, you gain control over your financial future, cut down your tax obligations, and establish a secure foundation for both your retirement and your business goals.
Why Start a Self-Employed Retirement Plan in Chesapeake, VA Now?
Time remains one of the most crucial resources in retirement planning. Starting early not only allows you to build a bigger financial cushion but also minimizes the financial burden of playing catch-up as you get older. The following are reasons why it is beneficial to start now:
The Cost of Waiting
Putting off saving for retirement may cause a major impact on the total you’ll have when you reach retirement age. The primary 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 larger the impact of this compounding process.
Example: Taylor and Alex are both entrepreneurs. They each aim to save $500,000 for retirement by age 65:
- Alex begins contributing $5,000 annually at age 30.
- Taylor postpones starting contributions to age 40 but saves $7,500 annually to catch up.
By age 65, assuming 7% annual return:
- Alex contributes $180,000 and accumulates $691,184.39*.
- Taylor invests $195,500 but only ends up with $474,367.78*.
How Early Contributions Grow
Even modest contributions invested steadily may result in significant growth. Here’s a simple scenario showing the impact of compounding:
- Starting at age 25: By investing $200 per month in a retirement plan with an projected 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 shortfall of over $260,000, simply due to a 10-year delay.
Saving early, the less you need to save each year to achieve your retirement goals.
*The figures provided in this example are estimates derived from 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. These examples are meant to provide general guidance and cannot predict actual future outcomes. Outcomes may change based on elements like market conditions, fees, and your unique situation. Be sure to speak with a financial advisor for custom recommendations.
Take Control of Your Financial Future
For self-employed individuals in Chesapeake, VA, it might seem easier to put more emphasis on reinvesting in your business instead of saving for retirement. Even so, starting a plan now enables you to:
- Leverage tax-deferred growth or penalty-free withdrawals down the road.
- Benefit from flexible contributions that align with your cash flow.
- Build a financial cushion that provides security, no matter how your business develops.
Getting started now, the less you’ll be required to worry about playing catch-up later in life. Saving for retirement now means gaining control over your financial future and creating for yourself the ability to concentrate on your goals—both for your future retirement and your Chesapeake, VA business.
Types of Self-Employed Retirement Plans
There are several retirement savings options open for self-employed individuals in Chesapeake, VA, each offering its own benefits and trade-offs. A financial advisor will guide you to evaluate the benefits and drawbacks of each option and determine the one best suited for your needs. Generally speaking, your self-employed retirement plan options in Chesapeake, VA consist of:
Traditional or Roth IRA
Plan Overview: IRAs, or Individual Retirement Accounts, are long-term savings plans that provide distinct tax benefits. In a traditional IRA, you can usually deduct your contributions from taxable income, and earnings grow without immediate taxation, but withdrawals in retirement are taxable. In contrast, Roth IRAs require contributions using income already taxed, but qualified withdrawals in retirement, including earnings, are not taxed. In both cases, withdrawals come without penalties provided you are at least 59½.
Eligibility: Unlike plans linked to your job, both 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 qualify for catch-up contributions.
Simplified Employee Pension Plan (SEP IRA)
Plan Overview: The Simplified Employee Pension IRA offers a way to save for retirement that enables entrepreneurs to save a percentage of their net business profits. Contributions can only be made by an employer, so, as a sole proprietor, 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 have the flexibility to contribute a fixed dollar figure or a percentage of wages to employee accounts. A SEP IRA may be ideal for companies with fluctuating revenue streams. Compared to other retirement options, SEP IRAs lack expensive setup or ongoing fees.
SEPs function like traditional IRAs, where you contribute pre-tax dollars and retirement distributions are taxable.
Eligibility: Employers of any type, including self-employed individuals 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 allowable contribution 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 designed for businesses without employees or when the sole employee is your spouse. Solo 401(k)s operate much like standard 401(k) plans, and enable contributions as both the employer and the employee with pre-tax money. This provides more savings compared to SEPs or IRAs; however, the increased savings potential can be balanced by more restricted investment choices. 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 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:
- 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 if you are 50 or older, or $34,750 if you attain age 60-63 in 2025.
- Employer 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 employee contributions you made.
The total contribution cannot exceed $70,000, or $77,500 for those aged 50 and older (for 2025), $81,250 for those aged 60-63 in 2025.
Individual Defined Benefit Plan
Plan Overview: Defined benefit plans represents a type of retirement plan that guarantees a fixed, predetermined benefit to self-employed individuals upon retirement. In contrast to the plans discussed earlier, a defined benefit plan doesn't fluctuate based on investment returns, but allows self-employed individuals to know the precise amount they'll receive in retirement. This plan is recommended for higher-income entrepreneurs who aim to accumulate a large amount for retirement and are willing to make sizeable contributions. Contributions offer tax-deferred growth, and withdrawals are taxed as income in retirement.
Eligibility: Any self-employed individual operating a solo business or with a small staff of under five can open an individual defined benefit plan, but it's typically suggested for those over 50 who earn at least $250,000 a year. Typically, good candidates for defined benefit plans tend to be:
- Business owners or partners who desire to contribute more than $70,000 (or $77,500 if over age 50)
- Organizations that already put in 3-4% and are willing to do more
- Businesses showing consistent profit patterns
- Partners or owners over age 40 who wish to accelerate savings or boost savings within a short timeframe
Contribution Limits: The cap on contributions is calculated by an actuary determined by your financial situation, age, and savings targets. Contribution limits change annually.
The Importance of a Financial Advisor in Chesapeake, VA for Your Self-Employed Retirement Plan
Working with a financial advisor in Chesapeake, VA experienced with retirement plans for the self-employed can be an important asset for entrepreneurs. They have the expertise to help understand the intricacies of saving for retirement and design a tailored strategy that matches your objectives. A financial advisor in Chesapeake, VA will evaluate your financial situation, determine how much risk you’re comfortable with, and assist you in making informed decisions about saving and investing for retirement. A key part of what we do for you involves:
- Assist in selecting a plan that best fits your needs and goals
- Tailor the plan to fit you personally even further
- Formalize a plan in writing in accordance with IRS guidelines
- Set up an asset trust plan
- Ensure you comprehend the plan's terms
- Review and modify your plan as needed
- Deliver continuous support and financial insights throughout your retirement planning process
- Maximize what you receive in retirement by maximizing your social security benefits
Self-Employed Retirement Plans in Chesapeake, VA: Correct Capital's Process
Entrepreneurs in Chesapeake, VA who lack the time, interest, or knowledge to manage their retirement savings strategy independently can become overwhelmed by their choices. Through our team at Correct Capital, our Chesapeake, VA financial advisors take on the lion's share 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 our services align for you and your business. This short conversation lets us get a sense of your goals with zero commitment or extensive time commitment on your part.
- Gather Information: Should we agree to proceed, we'll gather information, including your employee count, your present financial standing, and your future objectives. This helps us create a custom plan designed just for you.
- Review Your Plan: Once we've developed a plan from the information you provide, we'll schedule a meeting and go over your plan in detail to ensure you understand 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. Throughout our relationship, we'll meet with you and track your progress to make sure it remains aligned with your goals.
Our Chesapeake, VA financial advisors and retirement plan consultants serve as fiduciary advisors, who are obligated to they are legally and ethically bound to do what's in your best interest.
Other financial advisory services we offer in Chesapeake, VA 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 Chesapeake, VA
Your business isn't "just a business" to you, and your Chesapeake, VA financial advisors need to offer more than basic financial recommendations. With Correct Capital, we make it a priority to understand our clients and their businesses to deliver customized self-employed retirement plans. To every client in Chesapeake, VA, 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, call Correct Capital today at 877-930-401k or contact us online.
