Self-employed retirement plans Dayton, OH. The independence of running your own company in Dayton, OH offers many benefits of having a self-directed career. That said, this freedom sometimes brings with certain challenges, especially regarding retirement savings, since you don't have the option of retirement programs through an employer. 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 secure retirement, working with a financial advisor in Dayton, OH to establish your self-employed retirement plan offers significant tax advantages that allow you to move your business forward.
Few Dayton, OH investment consulting and retirement planning firms are as attuned to the requirements of small business owners as well as Correct Capital. Our founder's father was a small business owner himself (check out our story here), and we take pride in supporting entrepreneurs with their retirement planning needs. We recognize that your professional and personal aspirations aren’t limited to basic numbers, and we strive to provide personalized solutions aligned with your vision. Keep reading to learn more about your self-employed retirement plan options in Dayton, OH, or give us a call at Correct Capital at 877-930-401k or contact us online to consult with a entrepreneurial financial advisor in Dayton, OH today.
Why Dayton, 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 tangible benefits today. With customizable contribution options to substantial tax savings, partnering with a financial advisor in Dayton, OH helps you create your retirement plan to fit your specific needs.
Flexibility That Fits Your Income
For those with fluctuating income 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 cut back when income is lower, ensuring your plan aligns 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 expect your tax rate will increase in the future.
Save Money on Taxes
Retirement plans for self-employed individuals offer valuable tax benefits:
- Tax-Deductible Contributions: Contributions to a Solo 401(k) reduce what you owe in taxes, helping you keep more of your hard-earned money.
- Tax-Deferred Growth: Your savings grow untaxed until withdrawn, giving your money more time to grow.
- State-Specific Incentives: Based on your location, you could qualify for state-specific credits as a self-employed individual. These state-level incentives make these plans even more valuable.
- Retirement Savings Contributions Credit (Saver’s Credit): Eligible individuals can apply for a credit of up to 50% of the first $2,000 put into a retirement plan, further reducing 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: Allocating your investments across different stocks, bonds, and alternatives is a smart way to reduce risk while still growing your savings.
- Emergency Back-Up: Pairing your retirement plan with a business emergency fund ensures you don’t dipping into savings during financial hardships and risking extra costs.
Plan for the Future of Your Dayton, OH Business
Preparing for retirement can assist you prepare for what’s next with your Dayton, OH business:
- Selling Your Business: For those considering a sale, accounts such as SEP IRAs or Solo 401(k)s remain your personal assets and won’t be included in the sale. These savings ensure the reliable income you’ll need during retirement. It’s important to note that while selling a business often leads to a capital gain, deposits into these plans are restricted by contribution limits (e.g., a maximum of $7,000 for IRAs or as much as $70,000 for Solo 401(k)s, factoring in catch-up contributions, based on plan compensation).
- Minimizing Taxes: Strategically planning your contributions helps lower the taxes you are required to pay when you transfer your business.
- Succession Planning: If you’re passing the business on, your retirement savings ensure financial security during the change. You can also work with a financial advisor experienced in both succession and retirement strategies to minimize tax burdens associated with the transaction.
With the right retirement plan, you manage your financial future, reduce your tax burden, and build a secure foundation for both your retirement and your business goals.
Why Start a Self-Employed Retirement Plan in Dayton, OH Now?
Time remains one of the most crucial factors in retirement planning. Getting a head start not only helps you grow 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
Delaying your retirement savings could lead to a major impact on the amount you’ll have when you reach retirement age. The biggest reason is compound interest—the powerful process where your investments grow, and those returns, subsequently, accumulate even more returns. The greater time span your money has to grow, the larger the benefit of this growth.
Example: Taylor and Alex are both self-employed individuals. 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 puts away $7,500 annually to bridge the gap.
By age 65, using a projected 7% annual return:
- Alex invests $180,000 and accumulates $691,184.39*.
- Taylor invests $195,500 but achieves a total of only $474,367.78*.
How Early Contributions Grow
Regular, modest investments invested steadily often create significant growth. Here’s a simple scenario showing the power of compounding:
- 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: Contributing the same $200 per month yields only $235,412.97* by age 65—a shortfall of over $260,000, simply due to a 10-year delay.
Saving early, the less you need to save each year to achieve your retirement goals.
*The numbers shown in this scenario represent estimates generated with 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 are not a promise of future results. Outcomes may change depending on factors such as market conditions, fees, and personal factors. Always consult a financial advisor for personalized advice.
Take Control of Your Financial Future
As a self-employed person in Dayton, OH, it can be tempting to put more emphasis on reinvesting in your business over saving for retirement. However, beginning a plan now allows you to:
- Benefit from tax-deferred growth or withdrawals without taxes in the future.
- Benefit from adjustable savings that change with your income.
- Build a long-term safety measure that provides security, no matter how your business changes.
The sooner you start, the less you’ll need to worry about playing catch-up later in life. Building your retirement savings today means taking control of your financial future and creating for yourself the freedom to turn your attention to your dreams—both for your golden years and your Dayton, OH business.
Types of Self-Employed Retirement Plans
There are several retirement savings options open for those working for themselves in Dayton, OH, each with its own pros and cons. A financial advisor is available to help you understand the benefits and drawbacks of each choice and determine the one most suitable for your needs. Typically, your self-employed retirement plan options in Dayton, OH are:
Traditional or Roth IRA
Plan Overview: Individual Retirement Accounts (IRAs), as explained here, represent retirement savings vehicles that offer distinct tax benefits. In a traditional IRA, the money you contribute is often tax-deductible, and returns grow free of current taxes, but money taken out during retirement are subject to income tax. In contrast, with Roth IRAs, you contribute from post-tax earnings, but qualified withdrawals in retirement, including earnings, are exempt from taxes. In both cases, withdrawals come without penalties 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 available to anyone with a source of income.
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 self-employed individuals 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 more than 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. It's your choice whether to contribute a flat-dollar amount or a percentage of wages to employee accounts. A SEP IRA may be ideal for companies with fluctuating revenue streams. Unlike other plans, SEP IRAs lack expensive setup or ongoing fees.
SEPs work like conventional IRAs, where the contributions are tax-deferred and retirement distributions are taxable.
Eligibility: Employers of any type, including self-employed individuals 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: A Solo 401(k) plan, sometimes referred to as an Individual 401(k) or one-participant 401(k) plan, is a savings option for the self-employed meant for businesses without employees or if the only employee is your spouse. This type of plan operate much like standard 401(k) plans, and enable contributions as both the employer and the employee with pre-tax money. This provides more savings compared to SEPs or IRAs; however, the extra savings options may be offset by more limited investment options. In a solo 401(k) 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: As a self-employed individual 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. The contribution limits for 2025 include $23,500, or $31,000 for those aged 50 and above, or $34,750 for individuals aged 60-63 in 2025.
- Contributions as an employer (as an employer) are limited to 25% of your adjusted self-employment income, which is your net profit minus half of your self-employment tax and the deferrals you made.
Your combined contributions must not surpass $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: The defined benefit plan is a retirement option that delivers 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 allows self-employed individuals to know what they'll receive in retirement. This strategy is ideal for higher-income entrepreneurs who want to save a substantial amount for retirement and can commit to making sizeable contributions. Contributions are tax deferred, and withdrawals are taxable as income upon retirement.
Eligibility: Self-employed professionals operating a solo business or employing fewer than five people can open an individual defined benefit plan, but it's generally suggested for those over 50 who generate a minimum of $250,000 yearly. Generally, good candidates for defined benefit plans include:
- Entrepreneurs who want to invest more than $70,000 (or $77,500 if over age 50)
- Organizations that already put in 3-4% with plans to contribute more
- Organizations that have demonstrated 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 based on your income, age, and retirement goals. Contribution limits change annually.
The Importance of a Financial Advisor in Dayton, OH for Your Self-Employed Retirement Plan
Working with a financial advisor in Dayton, OH focused on self-employed retirement strategies serves as an invaluable resource for self-employed individuals. They bring the skills needed to guide you through the challenges of retirement planning and craft a personalized approach that reflects your aspirations. Your advisor in Dayton, OH will evaluate your financial situation, identify your risk preferences, and guide you in making informed decisions about saving and investing for retirement. Part of what we do for you includes:
- Guide you in choosing a plan that aligns with your objectives and circumstances
- Further adapt the plan to your needs even further
- Adopt a written plan as required by IRS rules
- Arrange a trust plan for assets
- Ensure you comprehend the plan's terms
- Monitor and adjust your plan as needed
- Offer continued financial education and guidance as you continue on the road to retirement
- Boost your retirement earnings by maximizing your social security benefits
Self-Employed Retirement Plans in Dayton, OH: Correct Capital's Process
Self-employed individuals in Dayton, OH who aren’t equipped with the time or understanding to oversee their own retirement planning independently may end up overwhelmed when faced with their choices. With Correct Capital, our Dayton, OH financial advisors take on the majority of your retirement strategy for you, to help 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 a quick, four-step process:
- Schedule a Call: It only takes 20 minutes, a member of our advisor team can determine if we're suited to your needs for you and your business. This short conversation helps us get a sense of your goals with zero commitment or significant effort on your part.
- Gather Information: Should we agree to proceed, we'll request information, including whether you have employees, your existing financial picture, and your long-term savings targets. This helps us create a custom plan designed just for you.
- Review Your Plan: After we put together a plan based on the information you provide, we'll sit down with you and discuss your plan step by step to help you fully grasp it and explain its fit to your circumstances.
- Implementation and Monitoring: After we agree 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 make sure it remains aligned with your goals.
Our Dayton, OH financial advisors and retirement plan consultants serve as fiduciary advisors, who are obligated to they are required by law and ethical standards to act in your best interest.
Other financial advisory services we offer in Dayton, OH include:
- Comprehensive Financial Planning
- Retirement Income Planning
- Investment Planning
- Retirement Financial Planning
- Investment Management
- 401(k) Audit
- High-Net-Worth Wealth Management
- Retirement Planner
Call Correct Capital for Your Self-Employed Retirement Plan in Dayton, OH
To you, your business is more than "just a business", and your Dayton, OH financial advisors must deliver more than simply sound financial advice. With Correct Capital, we focus on building a relationship with our clients and their businesses to create customized self-employed retirement plans. To every client in Dayton, OH, we provide our I.O.U. promise: all guidance we provide 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.
