Self-employed retirement plans Columbus, OH. The independence of owning your own business in Columbus, OH is one of the best aspects of working for yourself. Even so, this independence can come with a lack of security, notably regarding retirement savings, as you don't have access to retirement programs through an employer. Only 13% of self-employed individuals have a workplace retirement plan, although many would be better off exploring their options. In addition to achieving a more comfortable retirement, working with a financial advisor in Columbus, OH to set up your self-employed retirement plan offers significant tax advantages that help both you and your business to thrive.
Few Columbus, OH investment consulting and retirement planning firms are as attuned to the requirements of self-employed individuals as well as Correct Capital. The father of our founder was a small business owner himself (check out our story here), and Correct Capital have a rich history of helping businesses with their retirement planning needs. We know that your professional and personal aspirations extend well past simple financial figures, and we strive to provide customized solutions aligned with your vision. Continue exploring to find out about your self-employed retirement plan options in Columbus, OH, or call Correct Capital at 877-930-401k or contact us online to talk to a self-employed financial advisor in Columbus, OH today.
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Why Columbus, OH Self-Employed Individuals Should Have a Retirement Plan
Retirement plans for self-employed individuals help prepare you for the future, they also provide tangible benefits today. From flexible contributions to considerable tax savings, consulting a financial advisor in Columbus, OH helps you customize your retirement plan to suit your individual circumstances.
Flexibility That Fits Your Income
For those with fluctuating income annually, a plan like a SEP IRA or Solo 401(k) provides the flexibility to modify how much you save:
- Customizable Contributions: Save extra during successful years and scale back when income is lower, so your plan aligns with your financial situation.
- Roth Options: A Roth Solo 401(k) lets you settle taxes at the time of contribution, so you can withdraw your savings tax-free down the road—a wise move if you anticipate your tax rate to be higher in the future.
Save Money on Taxes
Retirement plans for self-employed individuals deliver powerful tax benefits:
- Tax-Deductible Contributions: Contributions to a SIMPLE IRA shrink your tax liability, allowing you to keep more of your earnings.
- Tax-Deferred Growth: Your savings grow untaxed until withdrawn, giving your money more time to compound.
- State-Specific Incentives: Depending on where you live, you could qualify for additional credits as a sole proprietor. 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, 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 linked to the way you invest:
- Diversified Portfolios: Spreading your investments across different stocks, bonds, and other assets serves to reduce risk while continuing to build your nest egg.
- Emergency Back-Up: Pairing your retirement plan with a dedicated business safety net prevents you from tapping into your nest egg during tough times and risking extra costs.
Plan for the Future of Your Columbus, OH Business
Preparing for retirement can assist you think through what’s next with your Columbus, 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 won’t be included in the sale. These accounts can provide the reliable income you’ll need later on. Keep in mind that while selling your business results in a capital gain, retirement plan contributions are capped at annual limits (e.g., up to $7,000 for IRAs or up to $70,000 for Solo 401(k)s, with catch-up contributions, according to plan rules).
- Minimizing Taxes: Using retirement contributions wisely can reduce the taxes you might face when you sell your business.
- Succession Planning: Whether you’re transferring ownership, your nest egg provide financial security through the transition. You can also partner with a financial advisor experienced in both succession and retirement strategies to reduce taxes associated with the transaction.
With the proper savings strategy, you gain control over your financial future, cut down your tax obligations, and create a strong framework for both your retirement and your business goals.
Why Start a Self-Employed Retirement Plan in Columbus, OH Now?
Time is one of the most crucial resources in retirement planning. Beginning sooner rather than later not only allows you to build a more substantial retirement fund but also minimizes the pressure of playing catch-up as you get older. The following are reasons why it pays to take action now:
The Cost of Waiting
Waiting to start your retirement fund may cause a substantial impact on the savings you’ll have when you reach retirement age. The main reason is compound interest—the concept where your investments generate earnings, and those returns, in turn, accumulate even more returns. The longer your money has to grow, the greater the impact of this growth.
Example: Alex and Taylor are both entrepreneurs. They each aim to save $500,000 for retirement by age 65:
- Alex starts saving $5,000 annually at age 30.
- Taylor delays savings until age 40 but contributes $7,500 annually to bridge the gap.
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
Even modest contributions contributed over time can lead to 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 expected yearly growth rate of 7%, you’ll accumulate $497,303.29* by age 65.
- Starting at age 35: Contributing 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.
The earlier you begin, the lower your annual savings needs each year to reach your retirement goals.
*These calculations are based on estimates calculated using NerdWallet’s Compound Interest Calculator, based on a 7% annual return. Annual deposits were multiplied by the number of years to estimate total contributions. The scenarios provided are meant to provide general guidance and cannot predict actual future outcomes. Your individual results may differ depending on factors such as market conditions, fees, and your unique situation. Be sure to speak with a financial advisor for guidance tailored to your needs.
Take Control of Your Financial Future
For self-employed individuals in Columbus, OH, it might seem easier to prioritize reinvesting in your business rather than saving for retirement. That said, beginning a plan now enables you to:
- Take advantage of tax-deferred growth or withdrawals without taxes down the road.
- Take advantage of contribution flexibility that adapt to your cash flow.
- Build a long-term safety measure that provides security, no matter how your business evolves.
The sooner you start, the less you’ll have to worry about making up for lost time later in life. Saving for retirement now means taking control of your financial future and allowing yourself the opportunity to turn your attention to your goals—both for your future retirement and your Columbus, OH business.
Types of Self-Employed Retirement Plans
There are several retirement savings options available for entrepreneurs in Columbus, OH, each with its own advantages and considerations. A financial advisor can help you evaluate the benefits and drawbacks of each choice and determine the one ideal for your needs. In most cases, your self-employed retirement plan options in Columbus, OH are:
Traditional or Roth IRA
Plan Overview: IRAs, or Individual Retirement Accounts, are retirement savings vehicles that provide key tax perks. In a standard IRA, you can usually deduct your contributions from taxable income, and investment earnings grow tax-deferred, but retirement distributions are taxed as income. In contrast, with Roth IRAs, you contribute using income already taxed, but eligible distributions during retirement, including earnings, are exempt from taxes. In both cases, withdrawals don’t incur penalties provided you are at least 59½.
Eligibility: Unlike plans linked to your job, 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: SEP IRAs is a retirement plan that enables entrepreneurs to save a percentage of their net business profits. Contributions can only be made by an employer, so, as a sole proprietor, you (the employee) are limited to contributions from the employer role more than the 25% you (the employer) have designated. 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 businesses that experience fluctuating revenue streams. Unlike other plans, SEP IRAs don’t have costly startup or administrative fees.
SEPs operate like conventional IRAs, where the contributions are tax-deferred and money withdrawn is subject to income tax.
Eligibility: Any employer, including the self-employed can set up a SEP.
Contribution Limits: Contribution limits for employees in a SEP IRA are capped at the lower 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: Solo 401(k)s, commonly known as an Individual 401(k) or one-participant 401(k) plan, is a self-employed retirement plan meant for companies that have no employees or if the only employee is your spouse. Solo 401(k)s are similar to standard 401(k) plans, and let you make contributions as both the employer and the employee with pre-tax money. This provides more savings compared to SEPs or IRAs; however, the increased savings potential often come with more constrained investment avenues. 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: This plan is exclusively for 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 can make two types of contributions:
- Deferrals as an employee of up to 100% of your self-employed earnings, 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) must not surpass 25% of your net earnings from self-employment, which is calculated as net profits less 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 (for 2025), $81,250 if you attain age 60-63 in 2025.
Individual Defined Benefit Plan
Plan Overview: Defined benefit plans represents a type of retirement plan that guarantees a pre-established payout to entrepreneurs upon retirement. In contrast to the plans discussed earlier, investment returns don’t affect the payout, but lets individuals clearly understand the precise amount they'll have in retirement. This strategy is ideal for wealthier self-employed individuals who are focused on saving a significant sum for retirement and are prepared to contribute larger deposits. Contributions are tax deferred, and withdrawals incur taxes as income during retirement.
Eligibility: Entrepreneurs running an owner-only business or with less than five employees may establish an individual defined benefit plan, but it's generally advised for those over 50 who generate a minimum of $250,000 yearly. Generally, good candidates for defined benefit plans tend to be:
- Partners or owners who aim to deposit more than $70,000 (or $77,500 if over age 50)
- Organizations that already put in 3-4% and are willing to do more
- Organizations showing consistent profit patterns
- Partners or owners over age 40 who desire to "catch up" or increase their retirement contributions rapidly
Contribution Limits: The maximum allowable contribution requires calculation from an actuary determined by your financial situation, age, and savings targets. Allowable contributions are updated yearly.
The Importance of a Financial Advisor in Columbus, OH for Your Self-Employed Retirement Plan
A financial advisor in Columbus, OH focused on self-employed retirement strategies can be an invaluable resource for entrepreneurs. They have the expertise to help understand the intricacies of saving for retirement and develop a tailored strategy that matches your objectives. An expert in your area will evaluate your financial situation, 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 includes:
- Guide you in choosing a plan that best fits your needs and goals
- Customize the plan to your specific situation even further
- Formalize a plan in writing in accordance with IRS guidelines
- Organize a trust plan to manage your assets
- Ensure you comprehend the plan's terms
- Review and modify your plan as needed
- Provide ongoing education and advice to help you navigate your retirement journey
- Boost your retirement earnings by making the most of your social security
Self-Employed Retirement Plans in Columbus, OH: Correct Capital's Process
Entrepreneurs in Columbus, OH who aren’t equipped with the time or understanding to manage their retirement savings strategy independently often feel overwhelmed by their available plans. With Correct Capital, our Columbus, OH financial advisors manage the lion's share of your retirement planning for you, working to make meeting your financial objectives as straightforward as possible for you. We are here to assist you in setting up your self-employed retirement plan in just four steps:
- Schedule a Call: A quick 20-minute call is all it takes, a member of our advisor team can help understand if we're a good fit 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: If we both decide to move forward, we'll request information, including whether you have employees, your present financial standing, and your long-term savings targets. This helps us create a personalized strategy designed just for you.
- Review Your Plan: Once we've developed a plan from the information you provide, we'll sit down with you and go over your plan in detail to make sure it's clear and explain its fit to your circumstances.
- Implementation and Monitoring: After we agree on your plan, we'll set everything up so you can initiate your savings journey. As time goes on, we'll have regular meetings and monitor your plan to make sure it remains aligned with your goals.
Our Columbus, OH financial advisors and retirement plan consultants serve as fiduciary advisors, meaning they are legally and ethically bound to prioritize your needs above all else.
Other financial advisory services we offer in Columbus, 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 Columbus, OH
Your business isn't "just a business" to you, and your Columbus, OH financial advisors need to offer more than just good financial guidance. Correct Capital takes pride in, we focus on building a relationship with our clients and their businesses to deliver customized self-employed retirement plans. All our clients in Columbus, OH benefit from our I.O.U. promise: all guidance we provide will be independent, objective, and unbiased. To begin on your self-employment retirement plan, reach out to Correct Capital at 877-930-401k or contact us online.
