Self-employed retirement plans Chula Vista, CA. The freedom of owning your own business in Chula Vista, CA offers many benefits of working for yourself. Even so, this freedom often comes with a lack of security, notably when it comes to planning for retirement, since you don't have the benefit of retirement programs through an employer. Only 13% of self-employed individuals have a workplace retirement plan, although many would be better off exploring their options. In addition to having a more comfortable retirement, working with a financial advisor in Chula Vista, CA to set up your self-employed retirement plan delivers significant tax advantages that enable both you and your business to thrive.
Few Chula Vista, CA investment consulting 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 professional and personal aspirations go far beyond simple financial figures, and we strive to create tailored solutions that reflect your objectives. Continue exploring to find out about your self-employed retirement plan options in Chula Vista, CA, or reach out to Correct Capital at 877-930-401k or contact us online to talk to a entrepreneurial financial advisor in Chula Vista, CA today.
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Why Chula Vista, CA Self-Employed Individuals Should Have a Retirement Plan
Retirement plans for self-employed individuals help prepare you for the future, they also offer tangible benefits today. Offering flexibility in contributions to significant tax savings, consulting a financial advisor in Chula Vista, CA allows you to customize your retirement plan to fit your unique financial situation.
Flexibility That Fits Your Income
For those with fluctuating income over time, a plan like a SEP IRA or Solo 401(k) provides the option to modify how much you save:
- Customizable Contributions: Set aside more during successful years and scale back when your earnings dip, so that your plan fits your cash flow.
- Roth Options: A Roth Solo 401(k) lets you pay taxes on contributions now, enabling you to withdraw without tax penalties in the future—a smart decision if you expect your tax rate will increase in the future.
Save Money on Taxes
Self-employed retirement plans offer valuable tax benefits:
- Tax-Deductible Contributions: Contributions to a SEP IRA lower your taxable income, helping you keep more of your hard-earned money.
- Tax-Deferred Growth: You won't pay taxes on investment growth until you withdraw it, which gives your money more time to accumulate.
- State-Specific Incentives: Depending on where you live, you may be eligible for extra credits as a business owner. These regional incentives can make these plans even more advantageous.
- Retirement Savings Contributions Credit (Saver’s Credit): Qualified participants can take advantage of a credit of up to 50% of the first $2,000 put into a retirement plan, helping to lower 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: Spreading your investments across different asset classes like stocks and bonds serves to minimize exposure to risk while helping to grow your savings.
- Emergency Back-Up: Supplementing your retirement savings with a business emergency fund helps you avoid using your retirement funds during financial hardships and incurring penalties.
Plan for the Future of Your Chula Vista, CA Business
A thoughtful retirement strategy also helps you think through what’s next with your Chula Vista, CA 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 savings can provide the financial stability you’ll need later on. Remember that while selling your business results in a capital gain, contributions to retirement accounts are capped at annual limits (e.g., as much as $7,000 for IRAs or as much as $70,000 for Solo 401(k)s, with catch-up contributions, depending on plan details).
- Minimizing Taxes: Using retirement contributions wisely can reduce the taxes you’ll owe when you sell your business.
- Succession Planning: If you’re passing the business on, your retirement savings ensure the funds you need through the transition. You might want to partner with a financial advisor with expertise in succession and retirement planning to minimize tax burdens on the sale.
With the proper savings strategy, you gain control over your financial future, reduce your tax burden, and build a secure foundation for both your retirement and your business goals.
Why Start a Self-Employed Retirement Plan in Chula Vista, CA Now?
There’s no denying that time is one of the most crucial resources for building your retirement fund. Beginning sooner rather than later not only helps you grow a more substantial retirement fund but also minimizes the financial burden of playing catch-up as you get older. This is why it is beneficial to start now:
The Cost of Waiting
Putting off saving for retirement may cause a significant impact on the total you’ll have when you reach retirement age. The main reason is compound interest—the concept where your investments grow, and those returns, in turn, earn even more returns. The more time your money has to grow, the more significant the benefit of this compounding process.
Example: Alex and Taylor are both self-employed individuals. They each aim to save $500,000 for retirement by age 65:
- Alex begins contributing $5,000 annually at age 30.
- Taylor delays savings until age 40 but saves $7,500 annually to bridge the gap.
By age 65, using a projected 7% annual return:
- Alex contributes $180,000 and accumulates $691,184.39*.
- Taylor invests $195,500 but achieves a total of only $474,367.78*.
How Early Contributions Grow
Regular, modest investments invested steadily often create significant growth. Here’s a simple scenario showing the effect of compound interest:
- Starting at age 25: Putting aside $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: Saving 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 you need to save each year to reach your retirement goals.
*The figures provided in this example represent estimates derived from NerdWallet’s Compound Interest Calculator, with the assumption of 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 intended as illustrative examples and do not guarantee future performance. Actual results may vary due to elements like market conditions, fees, and individual circumstances. We recommend consulting a financial advisor for personalized advice.
Take Control of Your Financial Future
As a self-employed person in Chula Vista, CA, it is often the case that you prioritize reinvesting in your business instead of saving for retirement. However, starting a plan now allows you to:
- Take advantage of growth that is tax-deferred or withdrawals without taxes later on.
- Enjoy flexible contributions that align with your income.
- Establish a long-term safety measure that offers peace of mind, no matter how your business develops.
Starting early, the less you’ll have to worry about catching up later in life. Saving for retirement now means taking control of your financial future and giving yourself the ability to concentrate on your goals—both for your future retirement and your Chula Vista, CA business.
Types of Self-Employed Retirement Plans
There are several retirement savings options designed for those working for themselves in Chula Vista, CA, each offering its own advantages and considerations. A financial advisor is available to help you learn about the advantages and disadvantages of each plan and identify the one best suited for your unique situation. Typically, your self-employed retirement plan options in Chula Vista, CA include:
Traditional or Roth IRA
Plan Overview: Individual Retirement Accounts (IRAs), as explained here, represent financial tools for retirement that include specific tax advantages. 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, with Roth IRAs, you contribute from post-tax earnings, but qualified withdrawals in retirement, including earnings, are exempt from taxes. In both cases, 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 accessible for individuals with taxable earnings.
Contribution Limits: For 2025, annual contribution limits for IRAs are capped at $7,000, or $8,000 for those aged 50+.
Simplified Employee Pension Plan (SEP IRA)
Plan Overview: SEP IRAs is a retirement plan that permits self-employed individuals to set aside a portion of their self-employment income. Contributions are strictly employer contributions an employer, so, as a sole proprietor, you (the employee) cannot make additional contributions more than the 25% you (the employer) have designated. 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 set monetary value or a percentage of wages to employee accounts. SEP IRAs works well for entrepreneurs facing cycles of high revenue and low revenue. Compared to other retirement options, SEP IRAs are free of 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: 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
If you’re self-employed, the amount eligible to be contributed is based on a special calculation.
Solo 401(k)
Plan Overview: Solo 401(k)s, sometimes referred to 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 where the only employee is a spouse. These plans function similarly to traditional employer-managed 401(k) plans, and enable contributions as both an employee or an employer with pre-tax money. This provides more savings compared to SEPs or IRAs; however, the extra savings options often come with 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: Solo 401(k)s are available solely to 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:
- Elective deferrals (as an employee) of up to 100% of your earned income from self-employment, capped at 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.
- Contributions as an employer (as an employer) must not surpass 25% of your net self-employment income, which is calculated as net profits less half of your self-employment tax and the elective deferrals you made.
Total contributions are capped at $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: Defined benefit plans is a retirement option that provides a set amount to entrepreneurs upon retirement. As opposed to defined contribution plans, investment returns don’t affect the payout, but enables participants to determine what they'll have in retirement. This plan is ideal for high-earning professionals who want to save a significant sum for retirement and are prepared to contribute substantial contributions. Contributions are tax deferred, and withdrawals are taxed as income in retirement.
Eligibility: Self-employed professionals running an owner-only business or with less than five employees are eligible to open an individual defined benefit plan, but it's generally advised for people above age 50 who make $250,000 or more annually. In most cases, good candidates for defined benefit plans include:
- Business owners or partners who aim to deposit more than $70,000 (or $77,500 for those aged 50+)
- Businesses currently investing 3-4% with plans to contribute more
- Businesses showing consistent profit patterns
- Business leaders over age 40 who desire to "catch up" or increase their retirement contributions rapidly
Contribution Limits: The contribution limit is calculated by an actuary using your earnings, age, and retirement objectives. Limits on contributions change annually.
The Importance of a Financial Advisor in Chula Vista, CA for Your Self-Employed Retirement Plan
Partnering with an advisor in Chula Vista, CA specialized in self-employed retirement plans is an important asset for entrepreneurs. They bring the skills needed to navigate the complexities of retirement planning and develop a personalized approach that reflects your aspirations. An expert in your area will assess where you stand financially, understand your risk tolerance, and assist you in choosing wisely about saving and investing for retirement. A key part of what we do for you includes:
- Assist in selecting a plan that aligns with your objectives and circumstances
- Tailor the plan to fit you personally even further
- Create a written plan as required by IRS rules
- Arrange a trust plan for assets
- Make sure you understand the plan's terms
- Monitor and adjust your plan as needed
- Provide ongoing education and advice as you continue on the road to retirement
- Boost your retirement earnings by making the most of your social security
Self-Employed Retirement Plans in Chula Vista, CA: Correct Capital's Process
Chula Vista, CA business owners who don’t have the time or expertise to manage their own retirement planning on their own often feel overwhelmed when faced with their options. At Correct Capital, our Chula Vista, CA financial advisors take on the bulk of your savings plan setup for you, working to make meeting your future savings targets as straightforward as possible for you. We can help you get set up your self-employed retirement plan in just four steps:
- Schedule a Call: It only takes 20 minutes, a member of our advisor team can determine if we're suited to your needs for you and your business. This short conversation helps 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 request information, including how many employees you have (if any), your current financial situation, and your future objectives. This enables us to craft a tailored approach suited specifically for your needs.
- Review Your Plan: Once we've developed a plan from the information you provide, we'll meet with you and go over your plan in detail 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 put everything in place so you can start saving. As time goes on, we'll have regular meetings and review your strategy to make sure it remains aligned with your goals.
Our Chula Vista, CA financial advisors and retirement plan consultants are fiduciary advisors, who are obligated to they are committed by law and ethics to prioritize your needs above all else.
Other financial advisory services we offer in Chula Vista, CA 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 Chula Vista, CA
Your business isn't "just a business" to you, and your Chula Vista, CA financial advisors need to offer more than basic financial recommendations. At Correct Capital, we focus on building a relationship with our clients and their businesses to provide personalized self-employed retirement plans. We offer all our Chula Vista, CA clients 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.
