Self-employed retirement plans Cincinnati, OH. The flexibility of running your own company in Cincinnati, OH is one of the greatest advantages of working for yourself. That said, this independence often comes with certain challenges, particularly when it comes to building your retirement fund, as you don't have the benefit of employer-sponsored retirement plans. Only 13% of self-employed individuals have a workplace retirement plan, but many should consider looking into other possibilities. In addition to having a more comfortable retirement, seeking advice from a financial advisor in Cincinnati, OH to set up your self-employed retirement plan delivers significant tax advantages that enable your business to grow and succeed.
Few Cincinnati, OH investment consulting and retirement planning firms truly grasp the challenges faced by small business owners quite like Correct Capital. Our founder's father was a small business owner himself (read more of our story here), and our firm are deeply experienced in assisting business owners in their retirement planning needs. We know that your professional and personal aspirations go far beyond basic numbers, and we strive to offer tailored solutions that reflect your objectives. Read on to discover about your self-employed retirement plan options in Cincinnati, OH, or call Correct Capital at 877-930-401k or contact us online to speak with a small business financial advisor in Cincinnati, OH today.
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 provide immediate benefits today. From flexible contributions to significant tax savings, partnering with a financial advisor in Cincinnati, OH enables you to create your retirement plan to suit your specific needs.
Flexibility That Fits Your Income
If your income changes over time, a plan like a SEP IRA or Solo 401(k) provides the flexibility to tailor how much you save:
- Customizable Contributions: Save extra during successful years and scale back when income is lower, ensuring your plan works with your cash flow.
- Roth Options: Choosing a Roth Solo 401(k) lets you settle taxes at the time of contribution, allowing you to withdraw your savings tax-free down the road—an advantageous choice if you believe your tax rate will increase in the future.
Save Money on Taxes
Plans designed for the self-employed provide valuable tax benefits:
- Tax-Deductible Contributions: Contributions to a Solo 401(k) lower your taxable income, allowing you to keep more of your income.
- Tax-Deferred Growth: Your savings grow untaxed until withdrawn, providing your money more time to compound.
- State-Specific Incentives: In some states, you might access state-specific credits as a sole proprietor. These local incentives make these plans even more beneficial.
- 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, cutting down your tax bill even more.
Protect Your Savings With Smart Investments
Planning for a safe retirement goes beyond just how much you save—it’s also determined by your investment strategy:
- Diversified Portfolios: Allocating your investments across varied asset classes like stocks and bonds is a smart way to minimize exposure to risk while helping to grow your savings.
- Emergency Back-Up: Pairing your retirement plan with a dedicated business safety net helps you avoid tapping into your nest egg during challenging periods and facing tax penalties.
Plan for the Future of Your Cincinnati, OH Business
Preparing for retirement enables you to prepare for what’s next with your Cincinnati, OH business:
- Selling Your Business: If you’re planning to sell, accounts such as SEP IRAs or Solo 401(k)s stay in your name and won’t be included in the sale. These plans ensure the financial stability you’ll need later on. Remember that while selling your business results in a capital gain, deposits into these plans are capped at annual limits (e.g., as much as $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’ll owe when you sell your business.
- Succession Planning: For those winding down or handing over their business, your retirement accounts provide the funds you need through the transition. You may also seek advice from a financial advisor who specializes in succession planning and retirement accounts to minimize tax burdens during the sale.
With the proper savings strategy, you manage your financial future, lower your tax bill, and establish a secure foundation for both your retirement and your business goals.
Why Start a Self-Employed Retirement Plan in Cincinnati, OH Now?
There’s no denying that time is one of the most valuable factors when it comes to saving for retirement. Starting early not only lets you accumulate a more substantial retirement fund but also reduces the stress of catching up later in life. This is why it pays to take action 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 primary reason is compound interest—the financial principle where your investments grow, and those returns, subsequently, generate even more returns. The longer your money has to grow, the greater the benefit of this compounding process.
Example: Alex and Taylor 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 waits until age 40 but saves $7,500 annually to make up for lost time.
By age 65, using a projected 7% annual return:
- Alex puts in $180,000 and ends up with $691,184.39*.
- Taylor contributes $195,500 but accumulates just $474,367.78*.
How Early Contributions Grow
Even modest contributions invested steadily may result in impressive growth. Consider this example showing the impact of consistent growth:
- Starting at age 25: By investing $200 per month in a retirement plan with an expected yearly growth rate of 7%, you’ll accumulate $497,303.29* by age 65.
- Starting at age 35: Saving the same $200 per month would result in only $235,412.97* by age 65—a shortfall of over $260,000, just from a 10-year delay.
Saving early, the lower your annual savings needs each year to reach your retirement goals.
*These calculations represent 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. The scenarios provided are for illustrative purposes only and are not a promise of future results. Your individual results may differ depending on factors such as market conditions, fees, and individual circumstances. Be sure to speak with a financial advisor for custom recommendations.
Take Control of Your Financial Future
For self-employed individuals in Cincinnati, OH, it is often the case that you put more emphasis on reinvesting in your business rather than saving for retirement. Even so, initiating a plan now gives you the chance to:
- Leverage tax-deferred growth or withdrawals without taxes down the road.
- Enjoy adjustable savings that change with your earnings.
- Build a financial cushion that ensures stability, no matter how your business changes.
Starting early, the less you’ll be required to worry about catching up later in life. Saving for retirement now means managing your financial future and allowing yourself the freedom to turn your attention to your objectives—both for your golden years and your Cincinnati, OH business.
Types of Self-Employed Retirement Plans
There are several retirement savings options open for self-employed individuals in Cincinnati, OH, each offering its own benefits and trade-offs. A financial advisor will guide you to learn about the advantages and disadvantages of each option and identify the one ideal for your unique situation. Typically, your self-employed retirement plan options in Cincinnati, OH include:
Traditional or Roth IRA
Plan Overview: IRAs, or Individual Retirement Accounts, are retirement savings vehicles that provide distinct tax benefits. In a conventional IRA, you can usually deduct your contributions from taxable income, and returns grow free of current taxes, but money taken out during retirement are taxable. In contrast, Roth IRA contributions from post-tax earnings, but qualified withdrawals in retirement, including earnings, are not taxed. In both accounts, withdrawals are penalty-free if you are at least 59½.
Eligibility: While many retirement plans, such as 401(k)s, are tied to employment, both traditional and Roth IRAs are open to those with taxable earnings.
Contribution Limits: For 2025, annual contribution limits for IRAs remain $7,000, or $8,000 if you're 50 or older.
Simplified Employee Pension Plan (SEP IRA)
Plan Overview: A Simplified Employee Pension (SEP) IRA offers a way to save for retirement that enables entrepreneurs to contribute a percentage of their net earnings. Contributions are strictly employer contributions an employer, so, as a self-employed individual, you (the employee) are limited to contributions from the employer role above the 25% you (the employer) allocate. If you have employees, you are obligated to contribute the same amount for them as you do for yourself. You have the flexibility to contribute a flat-dollar amount or a percentage of wages to employee accounts. SEP IRAs works well for entrepreneurs facing periods of inconsistent earnings. Compared to other retirement options, SEP IRAs don’t have expensive setup or ongoing fees.
SEPs work like standard IRAs, where the contributions are tax-deferred and money withdrawn is subject to income tax.
Eligibility: Both employers and self-employed individuals can set up 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 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 self-employed retirement plan designed for businesses with no employees or where the only employee is a spouse. This type of plan function similarly to employer-sponsored 401(k) plans, and enable contributions as both an employee or an employer with pre-tax money. This offers more savings than SEPs or IRAs; however, the additional opportunities often come with more constrained investment avenues. 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: Only 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:
- Deferrals as an employee of up to 100% of your self-employment income, up to the annual contribution limit. In 2025, those limits are $23,500, or $31,000 if you're over 50, or $34,750 for those who turn 60-63 in 2025.
- Contributions as an employer (as an employer) cannot exceed 25% of your adjusted self-employment income, which is calculated as net profits less half of your self-employment tax and the employee contributions you made.
Your combined contributions must not surpass $70,000, or $77,500 for those aged 50 and older (for 2025), $81,250 for individuals turning 60-63 in 2025.
Individual Defined Benefit Plan
Plan Overview: Defined benefit plans represents a type of retirement plan that delivers a fixed, predetermined benefit to business owners upon retirement. Unlike defined contribution plans mentioned above, this plan is not influenced by market performance, but allows self-employed individuals to know exactly how much they'll have in retirement. This plan is recommended for high-earning entrepreneurs who aim to accumulate a large amount for retirement and are prepared to contribute larger deposits. Contributions are tax deferred, and withdrawals are taxed as income during retirement.
Eligibility: Self-employed professionals operating a solo business or with less than five employees may establish an individual defined benefit plan, but it's typically recommended 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 desire to contribute more than $70,000 (or $77,500 for individuals 50 and older)
- Businesses currently investing 3-4% and are willing to do more
- Organizations that have demonstrated consistent profit patterns
- Entrepreneurs over age 40 who desire to "catch up" or accelerate the retirement savings
Contribution Limits: The cap on contributions must be determined by an actuary determined by your financial situation, age, and savings targets. Limits on contributions are updated yearly.
The Importance of a Financial Advisor in Cincinnati, OH for Your Self-Employed Retirement Plan
Working with a financial advisor in Cincinnati, OH focused on self-employed retirement strategies serves as an important asset for entrepreneurs. They offer the knowledge to assist understand the intricacies of saving for retirement and craft a customized plan that matches your objectives. An expert in your area will assess where you stand financially, understand your risk tolerance, and help you in making informed decisions about saving and investing for retirement. A key part of what we do for you includes:
- Guide you in choosing a plan that aligns with your objectives and circumstances
- Customize the plan to your needs 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
- Track and fine-tune your plan when necessary
- Provide ongoing education and advice as you continue on the road to retirement
- Maximize what you receive in retirement by making the most of your social security
Self-Employed Retirement Plans in Cincinnati, OH: Correct Capital's Process
Cincinnati, OH business owners who aren’t equipped with the time or understanding to oversee their own retirement planning on their own can become overwhelmed when faced with their choices. At Correct Capital, our Cincinnati, OH financial advisors manage the bulk of your retirement strategy for you, to help 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 a quick, four-step process:
- Schedule a Call: It only takes 20 minutes, a member of our advisor team can help understand if our services align for you and your business. This short conversation allows us to understand what you're looking for with no pressure or major time investment on your part.
- Gather Information: If we both decide to move forward, we'll gather information, including whether you have employees, your present financial standing, and your future objectives. This allows us to put together a custom plan that aligns with your goals.
- Review Your Plan: After we put together a plan from the information you provide, we'll schedule a meeting and go over your plan thoroughly to make sure it's clear and understand how it best correlates to your needs.
- Implementation and Monitoring: When we finalize on your plan, we'll put everything in place so you can start saving. Over the course of our partnership, we'll have regular meetings and review your strategy to ensure it stays suited to your needs.
Our Cincinnati, OH financial advisors and retirement plan consultants act as fiduciary advisors, who are obligated to they are committed by law and ethics to do what's in your best interest.
Other financial advisory services we offer in Cincinnati, OH include:
- Investment Management
- 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
Your business isn't "just a business" to you, and your Cincinnati, OH financial advisors need to offer more than simply sound financial advice. Correct Capital takes pride in, we make it a priority to understand our clients and their businesses to deliver personalized self-employed retirement plans. We offer all our Cincinnati, OH clients our I.O.U. promise: all of the advice you get from us will be independent, objective, and unbiased. To get started on your self-employment retirement plan, call Correct Capital today at 877-930-401k or contact us online.
