Self-employed retirement plans Cincinnati, OH. The flexibility of running your own company in Cincinnati, OH is one of the best aspects of being self-employed. That said, this flexibility can come with certain challenges, notably regarding retirement savings, because you don't have access to employer-sponsored retirement plans. Only 13% of self-employed individuals have a workplace retirement plan, yet countless could benefit from exploring their options. In addition to having a more comfortable retirement, partnering with a financial advisor in Cincinnati, OH to set up your self-employed retirement plan can provide significant tax advantages that enable both you and your business to thrive.
Few Cincinnati, OH investment consulting and retirement planning firms are as attuned to the requirements of small business owners as well as Correct Capital. Our founder's father was a small business owner himself (check out our story here), and our firm take pride in helping businesses with their retirement planning needs. We understand that your goals for your business and retirement go far beyond simple financial figures, and we are dedicated to create customized solutions that reflect your objectives. Keep reading to learn more about your self-employed retirement plan options in Cincinnati, OH, or reach out to Correct Capital at 877-930-401k or contact us online to speak with a self-employed financial advisor in Cincinnati, OH today.
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Why Cincinnati, OH Self-Employed Individuals Should Have a Retirement Plan
Retirement plans for self-employed individuals are essential for preparing you for the future, they also deliver real benefits today. Offering flexibility in contributions to considerable tax savings, partnering with a financial advisor in Cincinnati, OH allows you to design your retirement plan to align with your individual circumstances.
Flexibility That Fits Your Income
If your income changes from year to year, a plan like a SEP IRA or Solo 401(k) offers the option to adjust how much you save:
- Customizable Contributions: Set aside more during high-income years and reduce savings when revenues are down, so your plan fits your current income.
- Roth Options: A Roth Solo 401(k) lets you settle taxes at the time of contribution, so you can withdraw tax-free later—a smart decision if you anticipate your tax rate is likely to rise in the future.
Save Money on Taxes
Self-employed retirement plans offer valuable tax benefits:
- Tax-Deductible Contributions: Contributions to a SIMPLE IRA lower your taxable income, so you can keep more of your income.
- Tax-Deferred Growth: Your savings grow untaxed until withdrawn, providing your money more time to grow.
- State-Specific Incentives: Depending on where you live, you might access extra credits as a business owner. These state-level incentives can 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 put into 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 about how you invest:
- Diversified Portfolios: Spreading your investments across a mix of stocks, bonds, and other assets can help mitigate financial risk while still growing your nest egg.
- Emergency Back-Up: Pairing your retirement plan with a financial buffer for your business ensures you don’t tapping into your nest egg during financial hardships and incurring penalties.
Plan for the Future of Your Cincinnati, OH Business
Retirement planning also helps you think through what’s next with your Cincinnati, OH business:
- Selling Your Business: If you’re planning to sell, plans like SEP IRAs or Solo 401(k)s stay in your name and are not part of the sale. These accounts offer the steady income you’ll need later on. Keep in mind that while selling your business results in a capital gain, deposits into these plans 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, based on plan compensation).
- Minimizing Taxes: Using retirement contributions wisely minimizes the taxes you are required to pay when you transfer your business.
- Succession Planning: If you’re passing the business on, your nest egg ensure the funds you need as you make this shift. You might want to work with a financial advisor with expertise in succession and retirement planning to help with taxes on the sale.
With the best-fit retirement strategy, you manage your financial future, lower your tax bill, and build a strong framework for both your retirement and your business goals.
Why Start a Self-Employed Retirement Plan in Cincinnati, OH Now?
Time is one of the most crucial factors for building your retirement fund. Starting early not only lets you accumulate a more substantial retirement fund but also minimizes the pressure of catching up later in life. This is why it makes sense to begin today:
The Cost of Waiting
Putting off saving for retirement can have a major impact on the amount you’ll have when you reach retirement age. The primary reason is compound interest—the financial principle where your investments grow, and those returns, then, generate even more returns. The more time your money has to grow, the more significant the effect of this growth.
Example: Taylor and Alex are both self-employed individuals. Their shared goal is 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 puts away $7,500 annually to catch up.
By age 65, using a projected 7% annual return:
- Alex puts in $180,000 and ends up with $691,184.39*.
- Taylor puts in $195,500 but accumulates just $474,367.78*.
How Early Contributions Grow
Small, consistent savings made consistently often create impressive growth. Consider this example showing the effect of compounding:
- Starting at age 25: If you invest $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 gap of over $260,000, all because of a 10-year delay.
Saving early, the lower your annual savings needs each year to achieve your retirement goals.
*The numbers shown in this scenario represent estimates generated with NerdWallet’s Compound Interest Calculator, assuming a 7% annual return. These calculations involved multiplying yearly deposits by the years contributed. The scenarios provided are intended as illustrative examples and do not guarantee future performance. Outcomes may change based on elements like market conditions, fees, and personal factors. We recommend consulting a financial advisor for personalized advice.
Take Control of Your Financial Future
As a self-employed person in Cincinnati, OH, it might seem easier to focus more on reinvesting in your business over saving for retirement. Even so, initiating a plan now allows you to:
- Leverage tax-deferred growth or penalty-free withdrawals in the future.
- Enjoy adjustable savings that adapt to your cash flow.
- Create a financial cushion 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. Building your retirement savings today means gaining control over your financial future and giving yourself the freedom to focus on your objectives—both for your retirement years and your Cincinnati, OH business.
Types of Self-Employed Retirement Plans
There are several retirement savings options designed for self-employed individuals in Cincinnati, OH, each with its own advantages and considerations. A financial advisor is available to help you understand the advantages and disadvantages of each choice and identify the one ideal for your circumstances. In most cases, your self-employed retirement plan options in Cincinnati, OH are:
Traditional or Roth IRA
Plan Overview: Individual Retirement Accounts (IRAs), as explained here, represent long-term savings plans that provide specific tax advantages. In a traditional IRA, contributions are typically tax-deductible, and returns grow free of current taxes, but money taken out during retirement are subject to income tax. In contrast, with Roth IRAs, you contribute from post-tax earnings, but retirement withdrawals that qualify, including earnings, are exempt from taxes. In both accounts, withdrawals come without penalties if you are at least 59½.
Eligibility: Unlike plans linked to your job, both traditional and Roth IRAs are accessible for individuals with taxable earnings.
Contribution Limits: For 2025, annual contribution limits for IRAs are capped at $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 self-employed individuals to contribute a percentage of their net earnings. Contributions are strictly employer contributions an employer, so, as a sole proprietor, you (the employee) are limited to contributions from the employer role above the 25% you (the employer) already contributed. 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 fixed dollar figure or a percentage of wages to employee accounts. This type of plan works well for companies with fluctuating revenue streams. Unlike other plans, SEP IRAs lack the high fees associated with starting or maintaining other plans.
SEPs work like standard IRAs, where the contributions are tax-deferred and retirement distributions are taxable.
Eligibility: Both employers and self-employed individuals can open a SEP.
Contribution Limits: Contribution limits for employees in a SEP IRA are the lesser of:
- 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 businesses with no employees or when the sole employee is your spouse. This type of plan are similar to standard 401(k) plans, and enable contributions as both an employer and an employee with pre-tax money. This allows for more savings than SEPs or IRAs; however, the extra savings options may be offset by more limited investment options. Using a solo 401(k), you can make either traditional or Roth deferrals, which offer the same tax benefits as their IRA contribution counterparts.
Eligibility: Solo 401(k)s are available solely to business owners and their spouses can set up 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, capped at the annual contribution limit. For 2025, the limits will be $23,500, or $31,000 if you're over 50, or $34,750 for those who turn 60-63 in 2025.
- Employer profit-sharing contributions (as an employer) must not surpass 25% of your net earnings from self-employment, which is defined as 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 (as of 2025), $81,250 for those aged 60-63 in 2025.
Individual Defined Benefit Plan
Plan Overview: The defined benefit plan offers a structured retirement solution that provides a pre-established payout to business owners upon retirement. Unlike defined contribution plans mentioned above, a defined benefit plan doesn't fluctuate based on investment returns, but allows self-employed individuals to know what they'll get in retirement. This plan is best suited for higher-income self-employed individuals who are focused on saving a significant sum for retirement and are willing to make sizeable contributions. Contributions are tax deferred, and withdrawals are taxed as income upon retirement.
Eligibility: Self-employed professionals operating a solo business or with a small staff of under five may establish an individual defined benefit plan, but it's generally recommended for those over 50 who earn at least $250,000 a year. Typically, good candidates for defined benefit plans tend to be:
- Partners or owners who desire to contribute more than $70,000 (or $77,500 for individuals 50 and older)
- Companies already contributing 3-4% and are willing to do more
- Businesses showing consistent profit patterns
- Business leaders over age 40 who wish to accelerate savings or increase their retirement contributions rapidly
Contribution Limits: The contribution limit requires calculation from an actuary determined by your income, age, and retirement goals. Contribution limits change annually.
The Importance of a Financial Advisor in Cincinnati, OH for Your Self-Employed Retirement Plan
Partnering with an advisor in Cincinnati, OH specialized in self-employed retirement plans serves as an essential partner for those working for themselves. They bring the skills needed to understand the intricacies of saving for retirement and design a personalized approach that matches your objectives. An expert in your area will review your finances, determine how much risk you’re comfortable with, and help you in choosing wisely about saving and investing for retirement. Included in what we do for you features:
- Help you choose a plan that best fits your needs and goals
- Customize the plan to fit you personally even further
- Adopt a written plan that complies with IRS regulations
- Organize a trust plan to manage your assets
- Help you understand the plan's terms
- Review and modify your plan as needed
- Offer continued financial education and guidance as you continue on the road to retirement
- Boost your retirement earnings by optimizing your social security benefits
Self-Employed Retirement Plans in Cincinnati, OH: Correct Capital's Process
Self-employed individuals in Cincinnati, OH who lack the time, interest, or knowledge to manage their self-employed retirement plan on their own often feel overwhelmed as they look at their available plans. Through our team at Correct Capital, our Cincinnati, OH financial advisors take on the lion's share of your savings plan setup for you, to help make meeting your retirement goals as hassle-free as possible for you. We will guide you in creating 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 we're suited to your needs for you and your business. This initial call allows us to learn about your needs with zero commitment or significant effort on your part.
- Gather Information: Should we agree to proceed, we'll ask for information, including whether you have employees, your existing financial picture, and your retirement goals. This allows us to put together a tailored approach that aligns with your goals.
- Review Your Plan: When we finalize a plan from the information you provide, we'll meet with you and review your plan step by step to help you fully grasp it and explain its fit to your circumstances.
- Implementation and Monitoring: When we finalize on your plan, we'll put everything in place so you can initiate your savings journey. Over the course of our partnership, we'll check in and monitor your plan to make sure it remains aligned with your goals.
Our Cincinnati, OH financial advisors and retirement plan consultants are fiduciary advisors, meaning they are legally and ethically bound to do what's in your best interest.
Other financial advisory services we offer in Cincinnati, OH 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 Cincinnati, OH
To you, your business is more than "just a business", and your Cincinnati, OH financial advisors should provide more than simply sound financial advice. With Correct Capital, we take the time to get to know our clients and their businesses to create personalized self-employed retirement plans. All our clients in Cincinnati, OH benefit from our I.O.U. promise: all guidance we provide will be independent, objective, and unbiased. To take the first step on your self-employment retirement plan, contact Correct Capital now at 877-930-401k or contact us online.
