Self-employed retirement plans Cleveland, OH. The flexibility of running your own company in Cleveland, OH is one of the best aspects of being self-employed. However, this independence often comes with certain challenges, especially when it comes to retirement savings, since you don't have the option of employer-sponsored retirement plans. Only 13% of self-employed individuals have a workplace retirement plan, but many could benefit from looking into other possibilities. In addition to achieving a more secure retirement, seeking advice from a financial advisor in Cleveland, OH to set up your self-employed retirement plan offers significant tax advantages that allow you to move your business forward.
Few Cleveland, OH investment consulting and retirement planning firms understand the needs of small business owners quite like Correct Capital. Our founder's father was a small business owner himself (read more of our story here), and Correct Capital are deeply experienced in assisting business owners in their retirement planning needs. We understand that your business and retirement aspirations extend well past just monetary concerns, and we work tirelessly to provide personalized solutions to meet your unique goals. Keep reading to learn more about your self-employed retirement plan options in Cleveland, OH, or reach out to Correct Capital at 877-930-401k or contact us online to consult with a small business financial advisor in Cleveland, OH today.
Why Cleveland, 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 immediate benefits today. Offering flexibility in contributions to substantial tax savings, partnering with a financial advisor in Cleveland, OH enables 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) gives you the flexibility to tailor how much you save:
- Customizable Contributions: Contribute more during high-income years and cut back when your earnings dip, ensuring your plan fits your financial situation.
- Roth Options: A Roth Solo 401(k) lets you handle taxes upfront, enabling you to withdraw your savings tax-free down the road—a wise move if you believe your tax rate to be higher in the future.
Save Money on Taxes
Plans designed for the self-employed offer powerful tax benefits:
- Tax-Deductible Contributions: Contributions to a SEP IRA lower your taxable income, so you can keep more of your earnings.
- Tax-Deferred Growth: Investments grow tax-free until withdrawal, giving your money more time to accumulate.
- State-Specific Incentives: Depending on where you live, you may be eligible for state-specific deductions as a sole proprietor. These local incentives can make these plans even more beneficial.
- Retirement Savings Contributions Credit (Saver’s Credit): Eligible individuals can take advantage of 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
Creating a stable future requires more than how much you save—it’s also determined by your investment strategy:
- Diversified Portfolios: Distributing your investments across different stocks, bonds, and alternatives serves to minimize exposure to risk while still growing your nest egg.
- Emergency Back-Up: Combining your retirement strategy and a business emergency fund prevents you from using your retirement funds during tough times and risking extra costs.
Plan for the Future of Your Cleveland, OH Business
Retirement planning can assist you plan ahead 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 won’t be included in the sale. These accounts ensure the financial stability you’ll need in the future. It’s important to note that while the sale of a business usually creates a capital gain, contributions to retirement accounts are subject to yearly maximums (e.g., up to $7,000 for IRAs or as much as $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 transfer your business.
- Succession Planning: For those winding down or handing over their business, your nest egg ensure a stable foundation as you make this shift. You might want to partner with a financial advisor who specializes in succession planning and retirement accounts to help with taxes on the sale.
With the best-fit retirement strategy, you can take control of your financial future, lower your tax bill, and build a solid base for both your retirement and your business goals.
Why Start a Self-Employed Retirement Plan in Cleveland, OH Now?
There’s no denying that time is one of the most important resources in retirement planning. Getting a head start not only lets you accumulate a larger nest egg but also lowers the financial burden of catching up later in life. The following are reasons why it pays to take action now:
The Cost of Waiting
Putting off saving for retirement can have a substantial 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, then, generate even more returns. The greater time span your money has to grow, the greater the effect of compounding.
Example: Taylor and Alex are both self-employed professionals. Their shared goal is to save $500,000 for retirement by age 65:
- Alex starts saving $5,000 annually at age 30.
- Taylor waits until age 40 but contributes $7,500 annually to catch up.
By age 65, with an assumption of 7% annual return:
- Alex contributes $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 impressive growth. Consider this example showing the power of compounding:
- Starting at age 25: By investing $200 per month in a retirement plan with an projected return of 7%, you’ll end up with $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 gap of over $260,000, simply due to a 10-year delay.
The earlier you begin, the lower your annual savings needs each year to reach your retirement goals.
*The numbers shown in this scenario 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 meant to provide general guidance and are not a promise of future results. Your individual results may differ depending on variables including market conditions, fees, and individual circumstances. Be sure to speak with a financial advisor for personalized advice.
Take Control of Your Financial Future
If you’re self-employed in Cleveland, OH, it might seem easier to focus more on reinvesting in your business over saving for retirement. However, starting a plan now gives you the chance to:
- Benefit from tax-deferred growth or penalty-free withdrawals later on.
- Take advantage of flexible contributions that adapt to your income.
- Establish a safety net that provides security, no matter how your business evolves.
Starting early, the less you’ll have to worry about making up for lost time later in life. Taking steps toward your retirement goals today means gaining control over your financial future and allowing yourself the opportunity to turn your attention to your goals—both for your future retirement and your Cleveland, OH business.
Types of Self-Employed Retirement Plans
Multiple retirement savings options open for those working for themselves in Cleveland, OH, each providing its own advantages and considerations. A financial advisor is available to help you learn about the benefits and drawbacks of each choice and choose the one best suited for your circumstances. Typically, your self-employed retirement plan options in Cleveland, OH include:
Traditional or Roth IRA
Plan Overview: IRAs, or Individual Retirement Accounts, are retirement savings vehicles that include key tax perks. In a traditional IRA, you can usually deduct your contributions from taxable income, and earnings grow without immediate taxation, but retirement distributions are taxed as income. In contrast, Roth IRAs require contributions from post-tax earnings, but qualified withdrawals in retirement, including earnings, are exempt from taxes. In both cases, withdrawals are penalty-free as long as you are at least 59½.
Eligibility: Unlike 401(k)s, which are employer-sponsored, both traditional and Roth IRAs are accessible for individuals with an earned income.
Contribution Limits: For 2025, annual contribution limits for IRAs are set 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 enables entrepreneurs 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) allocate. If you have employees, you must contribute the same amount for them as you do for yourself. You have the flexibility to contribute a set monetary value or a percentage of wages to employee accounts. SEP IRAs is a good option for companies with periods of inconsistent earnings. In contrast to some alternatives, SEP IRAs are free of expensive setup or ongoing fees.
SEPs function like traditional IRAs, where the contributions are tax-deferred and money withdrawn is subject to income tax.
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: A Solo 401(k) plan, commonly known as an Individual 401(k) or one-participant 401(k) plan, is a retirement savings plan intended for businesses without employees or when the sole employee is your spouse. This type of plan are similar to standard 401(k) plans, and allow you to contribute as both an employee or an employer with pre-tax money. This provides more savings versus SEPs or IRAs; however, the increased savings potential may be offset by more limited investment options. 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: If you are self-employed with a solo 401(k) plan, you are allowed to make two types of contributions:
- Deferrals as an employee of up to 100% of your self-employed earnings, capped at the annual contribution limit. In 2025, those limits are $23,500, or $31,000 if you are 50 or older, or $34,750 if you attain age 60-63 in 2025.
- Profit-sharing contributions (as an employer) cannot exceed 25% of your net earnings from self-employment, which is your net profit minus half of your self-employment tax and the deferrals you made.
The total contribution cannot exceed $70,000, or $77,500 for individuals aged 50+ (in 2025), $81,250 for those aged 60-63 in 2025.
Individual Defined Benefit Plan
Plan Overview: The defined benefit plan is a retirement option that guarantees a pre-established payout to entrepreneurs upon retirement. As opposed to defined contribution plans, a defined benefit plan doesn't fluctuate based on investment returns, but enables participants to determine the precise amount they'll get in retirement. This plan is ideal for higher-income entrepreneurs who are focused on saving a substantial amount for retirement and are willing to make substantial contributions. Contributions are tax deferred, and withdrawals incur taxes as income upon retirement.
Eligibility: Self-employed professionals operating a solo business or employing fewer than five people are eligible to open an individual defined benefit plan, but it's most commonly advised for people above age 50 who make $250,000 or more annually. In most cases, good candidates for defined benefit plans are:
- Entrepreneurs who aim to deposit more than $70,000 (or $77,500 if over age 50)
- Businesses currently investing 3-4% with plans to contribute more
- Organizations showing consistent profit patterns
- Business leaders over age 40 who wish to accelerate savings or increase their retirement contributions rapidly
Contribution Limits: The cap on contributions must be determined by an actuary based on your income, age, and retirement goals. Allowable contributions are adjusted each year.
The Importance of a Financial Advisor in Cleveland, OH for Your Self-Employed Retirement Plan
A financial advisor in Cleveland, OH focused on self-employed retirement strategies serves as an essential partner for those working for themselves. They offer the knowledge to assist understand the intricacies of saving for retirement and craft a personalized approach that reflects your aspirations. An expert in your area will assess where you stand financially, determine how much risk you’re comfortable with, and guide you in making informed decisions about saving and investing for retirement. Included in what we do for you features:
- Help you choose a plan that aligns with your objectives and circumstances
- Tailor the plan to your specific situation even further
- Adopt a written plan in accordance with IRS guidelines
- Set up an asset trust plan
- Help you understand the plan's terms
- Track and fine-tune your plan when necessary
- Deliver continuous support and financial insights as you continue on the road to retirement
- Maximize what you receive in retirement by optimizing your social security benefits
Self-Employed Retirement Plans in Cleveland, OH: Correct Capital's Process
Entrepreneurs in Cleveland, OH who aren’t equipped with the time or understanding to handle their self-employed retirement plan themselves often feel overwhelmed by their available plans. At Correct Capital, our Cleveland, OH financial advisors manage the bulk of your savings plan setup for you, to help make meeting your future savings targets as hassle-free as possible for you. We are here to assist you in setting up your self-employed retirement plan in a quick, four-step process:
- Schedule a Call: In just 20 minutes, a member of our advisor team will assess if our services align for you and your business. This initial call helps us learn about your needs with no obligation or major time investment on your part.
- Gather Information: Once we mutually decide to continue, we'll ask for information, including how many employees you have (if any), your present financial standing, and your long-term savings targets. This enables us to craft a tailored approach designed just for you.
- 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 initiate your savings journey. As time goes on, we'll check in and monitor your plan to keep it tailored to your evolving circumstances.
Our Cleveland, OH financial advisors and retirement plan consultants act as fiduciary advisors, meaning they are required by law and ethical standards to act in your best interest.
Other financial advisory services we offer in Cleveland, OH 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 Cleveland, OH
To you, your business is more than "just a business", and your Cleveland, OH financial advisors should provide more than just good financial guidance. At Correct Capital, we focus on building a relationship with our clients and their businesses to create tailored self-employed retirement plans. All our clients in Cleveland, OH benefit from 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.
