Self-employed retirement plans Cleveland, OH. The flexibility of owning your own business in Cleveland, OH is one of the best aspects of working for yourself. However, this flexibility sometimes brings with potential drawbacks, especially when it comes to retirement savings, because you don't have the benefit of employer-sponsored retirement plans. Only 13% of self-employed individuals have a workplace retirement plan, but many would be better off exploring their options. In addition to achieving a more secure retirement, working with a financial advisor in Cleveland, OH to establish your self-employed retirement plan delivers significant tax advantages that help both you and your business to thrive.
Few Cleveland, 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 (learn more about our story here), and Correct Capital are deeply experienced in supporting entrepreneurs with their retirement planning needs. We recognize that your goals for your business and retirement extend well past just monetary concerns, and we are dedicated to offer tailored solutions to meet your unique goals. Read on to discover about your self-employed retirement plan options in Cleveland, OH, or give us a call at Correct Capital at 877-930-401k or contact us online to speak with a self-employed financial advisor in Cleveland, OH today.
Why Cleveland, OH Self-Employed Individuals Should Have a Retirement Plan
Retirement plans for self-employed individuals help prepare you for the future, they also offer real benefits today. Offering flexibility in contributions to substantial tax savings, consulting a financial advisor in Cleveland, OH helps you design your retirement plan to fit your specific needs.
Flexibility That Fits Your Income
When your earnings vary over time, a plan like a SEP IRA or Solo 401(k) gives you the option to adjust how much you save:
- Customizable Contributions: Save extra during profitable years and reduce savings when revenues are down, ensuring your plan works with your current income.
- Roth Options: A Roth Solo 401(k) lets you settle taxes at the time of contribution, so you can withdraw without tax penalties in the future—an advantageous choice if you believe your tax rate to be higher in the future.
Save Money on Taxes
Plans designed for the self-employed deliver powerful tax benefits:
- Tax-Deductible Contributions: Contributions to a Solo 401(k) reduce what you owe in taxes, allowing you to keep more of your hard-earned money.
- Tax-Deferred Growth: Your savings grow untaxed until withdrawn, which gives your money more time to accumulate.
- State-Specific Incentives: Based on your location, you may be eligible for additional credits as a business owner. These regional incentives help make these plans even more advantageous.
- Retirement Savings Contributions Credit (Saver’s Credit): Qualified participants can apply for a credit of up to 50% of the first $2,000 contributed a retirement plan, cutting down 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 linked to the way you invest:
- Diversified Portfolios: Distributing your investments across a mix of stocks, bonds, and alternatives serves to minimize exposure to risk while helping to grow your retirement fund.
- Emergency Back-Up: Combining your retirement strategy and a dedicated business safety net ensures you don’t dipping into savings during financial hardships and risking extra costs.
Plan for the Future of Your Cleveland, OH Business
A thoughtful retirement strategy can assist you prepare for what’s next with your Cleveland, OH business:
- Selling Your Business: If you’re planning to sell, accounts such as SEP IRAs or Solo 401(k)s remain your personal assets and are not part of the sale. These plans can provide the financial stability you’ll need later on. Keep in mind that while selling your business results in a capital gain, contributions to retirement accounts are subject to yearly maximums (e.g., up to $7,000 for IRAs or up to $70,000 for Solo 401(k)s, with catch-up contributions, depending on plan details).
- Minimizing Taxes: Making the most of retirement savings can reduce the taxes you’ll owe when you pass on your business.
- Succession Planning: Whether you’re transferring ownership, your retirement savings offer the funds you need during the change. You might want to partner 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, reduce your tax burden, and build a strong framework for both your retirement and your business goals.
Why Start a Self-Employed Retirement Plan in Cleveland, OH Now?
Time is one of the most valuable factors in retirement planning. Starting early not only lets you accumulate a bigger financial cushion but also reduces the pressure of catching up later in life. Here’s why it is beneficial to start now:
The Cost of Waiting
Waiting to start your retirement fund can have a major impact on the total you’ll have when you reach retirement age. The biggest reason is compound interest—the financial principle where your investments earn returns, and those returns, subsequently, generate even more returns. The longer your money has to grow, the more significant the impact of this compounding process.
Example: Alex and Taylor are both self-employed professionals. Both of them want 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 contributes $7,500 annually to bridge the gap.
By age 65, assuming 7% annual return:
- Alex invests $180,000 and accumulates $691,184.39*.
- Taylor puts in $195,500 but accumulates just $474,367.78*.
How Early Contributions Grow
Regular, modest investments invested steadily often create significant growth. Take a look at this scenario showing the effect of consistent growth:
- 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: Contributing the same $200 per month would result in 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 meet your retirement goals.
*The figures provided in this example are based on estimates generated with NerdWallet’s Compound Interest Calculator, with the assumption of a 7% annual return. Annual deposits were multiplied by the number of years to estimate total contributions. The scenarios provided are intended as illustrative examples and do not guarantee future performance. Your individual results may differ due to factors such as market conditions, fees, and personal factors. Be sure to speak with a financial advisor for custom recommendations.
Take Control of Your Financial Future
If you’re self-employed in Cleveland, OH, it can be tempting to prioritize reinvesting in your business instead of saving for retirement. However, beginning a plan now allows you to:
- Leverage tax-free future growth or penalty-free withdrawals later on.
- Enjoy contribution flexibility that adapt to your earnings.
- Create a financial cushion that offers peace of mind, no matter how your business evolves.
Getting started now, the less you’ll be required to worry about playing catch-up later in life. Taking steps toward your retirement goals today means managing your financial future and giving yourself the ability to turn your attention to your dreams—both for your future retirement and your Cleveland, OH business.
Types of Self-Employed Retirement Plans
Multiple retirement savings options designed for those working for themselves in Cleveland, OH, each with its own benefits and trade-offs. A financial advisor is available to help you learn about the benefits and drawbacks of each choice and choose the one most suitable for your circumstances. Generally speaking, your self-employed retirement plan options in Cleveland, OH include:
Traditional or Roth IRA
Plan Overview: Individual Retirement Accounts (IRAs), as explained here, represent long-term savings plans that include key tax perks. In a traditional IRA, you can usually deduct your contributions from taxable income, and investment earnings grow tax-deferred, but retirement distributions are subject to income tax. In contrast, Roth IRAs require contributions are made with after-tax income, but eligible distributions during retirement, including earnings, are exempt from taxes. In both accounts, withdrawals are penalty-free as long as you are at least 59½.
Eligibility: Unlike plans linked to your job, traditional and Roth IRAs are open to those with a source of income.
Contribution Limits: For 2025, annual contribution limits for IRAs are capped at $7,000, or $8,000 if you're 50 or older.
Simplified Employee Pension Plan (SEP IRA)
Plan Overview: SEP IRAs serves as a retirement savings option that permits entrepreneurs to contribute a percentage of their net earnings. Contributions must come from an employer, so, as a sole proprietor, you (the employee) cannot make additional contributions more than 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. It's your choice whether to contribute a set monetary value or a percentage of wages to employee accounts. SEP IRAs works well for businesses that experience periods of inconsistent earnings. Unlike other plans, SEP IRAs lack expensive setup or ongoing fees.
SEPs operate like conventional IRAs, where you contribute pre-tax dollars and withdrawals are taxed as income.
Eligibility: Any employer, including the self-employed 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 contribution you can make is based on a special calculation.
Solo 401(k)
Plan Overview: A Solo 401(k) plan, commonly known as an Individual 401(k) or one-participant 401(k) plan, is a retirement savings plan designed 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 the employer and the employee with pre-tax money. This offers more savings than SEPs or IRAs; however, the extra savings options often come with more limited investment options. Using a solo 401(k), you can make either traditional or Roth deferrals, which share 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: If you are self-employed with a solo 401(k) plan, you are allowed to make two types of contributions:
- Employee contributions of up to 100% of your self-employment income, up to the annual contribution limit. For 2025, the limits will be $23,500, or $31,000 if you're over 50, or $34,750 for individuals aged 60-63 in 2025.
- Contributions as an employer (as an employer) are limited to 25% of your net self-employment income, which is defined as net profit minus half of your self-employment tax and the elective deferrals you made.
Total contributions are capped at $70,000, or $77,500 if you're over age 50 (for 2025), $81,250 if you attain age 60-63 in 2025.
Individual Defined Benefit Plan
Plan Overview: Defined benefit plans offers a structured retirement solution that provides a fixed, predetermined benefit to business owners upon retirement. Unlike defined contribution plans mentioned above, this plan is not influenced by market performance, but enables participants to determine exactly how much they'll have in retirement. This strategy is recommended for high-earning entrepreneurs who want to save a substantial amount for retirement and are willing to make substantial contributions. Contributions are tax deferred, and withdrawals are taxed as income upon retirement.
Eligibility: Self-employed professionals operating a solo business or with less than five employees are eligible to open an individual defined benefit plan, but it's most commonly advised for those over 50 who generate a minimum of $250,000 yearly. Generally, good candidates for defined benefit plans are:
- Partners or owners who want to invest more than $70,000 (or $77,500 for individuals 50 and older)
- Companies already contributing 3-4% and are willing to do more
- Companies that have demonstrated consistent profit patterns
- Entrepreneurs over age 40 who wish to accelerate savings or accelerate the retirement savings
Contribution Limits: The maximum allowable contribution is calculated by an actuary determined by your financial situation, age, and savings targets. Allowable contributions are adjusted each year.
The Importance of a Financial Advisor in Cleveland, OH for Your Self-Employed Retirement Plan
Partnering with an advisor in Cleveland, OH specialized in self-employed retirement plans can be an invaluable resource for entrepreneurs. They offer the knowledge to assist guide you through the challenges of retirement planning and develop a personalized approach that matches your objectives. A financial advisor in Cleveland, OH will assess where you stand financially, identify your risk preferences, and guide you in choosing wisely about saving and investing for retirement. A key part of what we do for you features:
- 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 that complies with IRS regulations
- Arrange a trust plan for assets
- Make sure you understand the plan's terms
- Review and modify your plan as needed
- Provide ongoing education and advice as you continue on the road to retirement
- Increase your retirement income by making the most of your social security
Self-Employed Retirement Plans in Cleveland, OH: Correct Capital's Process
Cleveland, OH business owners who lack the time, interest, or knowledge to oversee their retirement savings strategy themselves may end up overwhelmed by their choices. With Correct Capital, our Cleveland, OH financial advisors handle the bulk of your retirement strategy for you, and strive to ensure meeting your financial objectives as hassle-free as possible for you. We can help you get set up 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 a good fit for you and your business. This initial call helps us learn about your needs with no obligation or extensive time commitment on your part.
- Gather Information: If we both decide to move forward, we'll gather information, including your employee count, your present financial standing, and your long-term savings targets. This enables us to craft a tailored approach suited specifically for your needs.
- Review Your Plan: When we finalize a plan using the information you provide, we'll sit down with you and review your plan thoroughly to help you fully grasp it and explain its fit to your circumstances.
- Implementation and Monitoring: When we finalize on your plan, we'll implement the necessary steps so you can initiate your savings journey. Over the course of our partnership, we'll check in and monitor your plan to ensure it stays suited to your needs.
Our Cleveland, OH financial advisors and retirement plan consultants serve as 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 Cleveland, OH include:
- Roth Conversion
- 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 Cleveland, OH
You don't see your business as "just a business", and your Cleveland, OH financial advisors must deliver more than just good financial guidance. At Correct Capital, we focus on building a relationship with our clients and their businesses to provide personalized self-employed retirement plans. To every client in Cleveland, OH, we provide our I.O.U. promise: all guidance we provide 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.
