Self-employed retirement plans Colorado Springs, CO. The freedom of being your own boss in Colorado Springs, CO is one of the best aspects of being self-employed. However, this freedom often comes with a lack of security, notably when it comes to building your retirement fund, because you don't have the benefit of retirement programs through an employer. Only 13% of self-employed individuals have a workplace retirement plan, but many would be better off exploring their options. In addition to having a more comfortable retirement, partnering with a financial advisor in Colorado Springs, CO to create your self-employed retirement plan offers significant tax advantages that help both you and your business to thrive.
Few Colorado Springs, CO investment consulting and retirement planning firms truly grasp the challenges faced by self-employed individuals better than Correct Capital. The father of our founder was a small business owner himself (learn more about our story here), and Correct Capital take pride in supporting entrepreneurs with their retirement planning needs. We recognize that your goals for your business and retirement go far beyond simple financial figures, and we are dedicated to provide personalized solutions aligned with your vision. Keep reading to learn more about your self-employed retirement plan options in Colorado Springs, CO, or call Correct Capital at 877-930-401k or contact us online to speak with a entrepreneurial financial advisor in Colorado Springs, CO today.
Why Colorado Springs, CO Self-Employed Individuals Should Have a Retirement Plan
Retirement plans for self-employed individuals help prepare you for the future, they also deliver real benefits today. From flexible contributions to substantial tax savings, working with a financial advisor in Colorado Springs, CO enables you to create your retirement plan to suit your unique financial situation.
Flexibility That Fits Your Income
When your earnings vary annually, a plan like a SEP IRA or Solo 401(k) gives you the freedom to tailor how much you save:
- Customizable Contributions: Save extra during successful years and cut back when income is lower, so your plan aligns with your current income.
- Roth Options: A Roth Solo 401(k) lets you pay taxes on contributions now, allowing you to withdraw without tax penalties in the future—a wise move if you believe your tax rate will increase in the future.
Save Money on Taxes
Self-employed retirement plans provide significant tax benefits:
- Tax-Deductible Contributions: Contributions to a SEP IRA shrink your tax liability, helping you keep more of your earnings.
- Tax-Deferred Growth: Investments grow tax-free until withdrawal, providing your money more time to accumulate.
- State-Specific Incentives: Based on your location, you may be eligible for extra tax breaks as a business owner. These local incentives make these plans even more advantageous.
- 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 contributed a retirement plan, further reducing 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: Distributing your investments across different stocks, bonds, and other assets is a smart way to mitigate financial risk while continuing to build your nest egg.
- Emergency Back-Up: Combining your retirement strategy and a financial buffer for your business ensures you don’t tapping into your nest egg during challenging periods and facing tax penalties.
Plan for the Future of Your Colorado Springs, CO Business
A thoughtful retirement strategy can assist you plan ahead for what’s next with your Colorado Springs, CO business:
- Selling Your Business: If you’re planning to sell, plans like SEP IRAs or Solo 401(k)s remain your personal assets and are not part of the sale. These savings ensure the steady income you’ll need during retirement. Keep in mind 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 up to $70,000 for Solo 401(k)s, including catch-up contributions, based on plan compensation).
- Minimizing Taxes: Making the most of retirement savings helps lower the taxes you might face when you sell your business.
- Succession Planning: If you’re passing the business on, your nest egg offer financial security as you make this shift. You might want to seek advice from 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 gain control over your financial future, cut down your tax obligations, and create a solid base for both your retirement and your business goals.
Why Start a Self-Employed Retirement Plan in Colorado Springs, CO Now?
Time is one of the most crucial factors when it comes to saving for retirement. Beginning sooner rather than later not only lets you accumulate a larger nest egg but also minimizes the pressure of playing catch-up as you get older. Here’s why it is beneficial to start now:
The Cost of Waiting
Putting off saving for retirement may cause a significant impact on the savings you’ll have when you retire. The primary reason is compound interest—the powerful process where your investments generate earnings, and those returns, subsequently, earn even more returns. The greater time span your money has to grow, the larger the effect of compounding.
Example: Taylor and Alex are both self-employed individuals. Both of them want to save $500,000 for retirement by age 65:
- Alex initiates savings of $5,000 annually at age 30.
- Taylor delays savings until age 40 but saves $7,500 annually to make up for lost time.
By age 65, using a projected 7% annual return:
- Alex invests $180,000 and accumulates $691,184.39*.
- Taylor puts in $195,500 but only ends up with $474,367.78*.
How Early Contributions Grow
Regular, modest investments contributed over time often create impressive growth. Here’s a simple scenario showing the power of compound interest:
- Starting at age 25: If you invest $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: Investing the same $200 per month would result in only $235,412.97* by age 65—a difference of over $260,000, just from a 10-year delay.
Starting sooner, the less effort required each year to meet your retirement goals.
*The figures provided in this example are 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. The scenarios provided are meant to provide general guidance and do not guarantee future performance. Your individual results may differ depending on variables including market conditions, fees, and personal factors. We recommend consulting a financial advisor for guidance tailored to your needs.
Take Control of Your Financial Future
For self-employed individuals in Colorado Springs, CO, it might seem easier to focus more on reinvesting in your business over saving for retirement. Even so, starting a plan now enables you to:
- Take advantage of growth that is tax-deferred or withdrawals without taxes in the future.
- Enjoy contribution flexibility that adapt to your earnings.
- Create a long-term safety measure that ensures stability, no matter how your business evolves.
Getting started now, 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 freedom to focus on your goals—both for your retirement years and your Colorado Springs, CO business.
Types of Self-Employed Retirement Plans
Multiple retirement savings options open for those working for themselves in Colorado Springs, CO, each providing its own benefits and trade-offs. A financial advisor will guide you to understand the pros and cons of each option and choose the one best suited for your unique situation. Typically, your self-employed retirement plan options in Colorado Springs, CO include:
Traditional or Roth IRA
Plan Overview: IRAs, or Individual Retirement Accounts, are long-term savings plans that provide specific tax advantages. In a standard IRA, contributions are typically tax-deductible, and earnings grow without immediate taxation, but retirement distributions are subject to income tax. In contrast, Roth IRA contributions from post-tax earnings, but retirement withdrawals that qualify, including earnings, are not taxed. In both cases, withdrawals come without penalties as long as you are at least 59½.
Eligibility: Unlike 401(k)s, which are employer-sponsored, 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 for those aged 50+.
Simplified Employee Pension Plan (SEP IRA)
Plan Overview: A Simplified Employee Pension (SEP) IRA serves as a retirement savings option that allows those who are self-employed to set aside a portion of their self-employment income. Contributions are strictly employer contributions an employer, so, as a independent business owner, you (the employee) cannot make additional contributions beyond 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 set monetary value or a percentage of wages to employee accounts. This type of plan may be ideal for entrepreneurs facing cycles of high revenue and low revenue. In contrast to some alternatives, SEP IRAs don’t have costly startup or administrative fees.
SEPs work like standard IRAs, where contributions are made with pre-tax money and withdrawals are taxed as income.
Eligibility: Both employers and 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
As a self-employed person, the allowable contribution is based on a special calculation.
Solo 401(k)
Plan Overview: The Solo 401(k), commonly known as an Individual 401(k) or one-participant 401(k) plan, is a self-employed retirement plan intended for companies that have no employees or where the only employee is a spouse. These plans function similarly to employer-sponsored 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 additional opportunities often come with more restricted investment choices. 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: For self-employed individuals with a solo 401(k) plan, you can make two types of contributions:
- Elective deferrals (as an employee) of up to 100% of your self-employment income, subject 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) are limited to 25% of your net earnings from self-employment, which is your net profit minus half of your self-employment tax and the employee contributions you made.
The total contribution cannot exceed $70,000, or $77,500 if you're over age 50 (as of 2025), $81,250 if you attain age 60-63 in 2025.
Individual Defined Benefit Plan
Plan Overview: The defined benefit plan offers a structured retirement solution that delivers a fixed, predetermined benefit to entrepreneurs upon retirement. As opposed to defined contribution plans, this plan is not influenced by market performance, but enables participants to determine the precise amount they'll get in retirement. This strategy is ideal for high-earning entrepreneurs who aim to accumulate a significant sum for retirement and can commit to making sizeable contributions. Contributions offer tax-deferred growth, and withdrawals incur taxes as income in retirement.
Eligibility: Entrepreneurs running an owner-only business or with less than five employees can open an individual defined benefit plan, but it's typically recommended for those over 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 individuals 50 and older)
- Businesses currently investing 3-4% but are open to increasing contributions
- Organizations showing consistent profit patterns
- Entrepreneurs over age 40 who aim to quickly build retirement savings or increase their retirement contributions rapidly
Contribution Limits: The maximum allowable contribution is calculated by an actuary determined by your earnings, age, and retirement objectives. Limits on contributions change annually.
The Importance of a Financial Advisor in Colorado Springs, CO for Your Self-Employed Retirement Plan
Working with a financial advisor in Colorado Springs, CO specialized in self-employed retirement plans can be an important asset for self-employed individuals. They have the expertise to help navigate the complexities of retirement planning and design 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 assist you in making informed decisions about saving and investing for retirement. Included in what we do for you involves:
- Help you choose a plan that best fits your needs and goals
- Further adapt the plan to fit you personally even further
- Formalize a plan in writing as required by IRS rules
- Organize a trust plan to manage your assets
- Ensure you comprehend the plan's terms
- Monitor and adjust your plan to keep it aligned with your goals
- Deliver continuous support and financial insights to help you navigate your retirement journey
- Maximize what you receive in retirement by making the most of your social security
Self-Employed Retirement Plans in Colorado Springs, CO: Correct Capital's Process
Entrepreneurs in Colorado Springs, CO who lack the time, interest, or knowledge to handle their own retirement planning independently may end up overwhelmed by their options. At Correct Capital, our Colorado Springs, CO financial advisors take on the bulk of your savings plan setup for you, and strive to ensure meeting your financial objectives as easy 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: It only takes 20 minutes, a member of our advisor team can help understand if we're suited to your needs for you and your business. This brief introduction allows us to get a sense of your goals with no obligation or significant effort on your part.
- Gather Information: Should we agree to proceed, we'll request information, including whether you have employees, your present financial standing, and your future objectives. This helps us create a personalized strategy suited specifically for your needs.
- Review Your Plan: After we put together a plan based on the information you provide, we'll meet with you and go over your plan step by step to ensure you understand 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. Throughout our relationship, we'll check in and review your strategy to ensure it stays suited to your needs.
Our Colorado Springs, CO financial advisors and retirement plan consultants serve as fiduciary advisors, who are obligated to they are legally and ethically bound to act in your best interest.
Other financial advisory services we offer in Colorado Springs, CO include:
- Independent Financial Advisor
- 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 Colorado Springs, CO
You don't see your business as "just a business", and your Colorado Springs, CO financial advisors should provide more than basic financial recommendations. Correct Capital takes pride in, we make it a priority to understand our clients and their businesses to deliver personalized self-employed retirement plans. To every client in Colorado Springs, CO, we provide 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, call Correct Capital today at 877-930-401k or contact us online.
