Self-employed retirement plans Dayton, OH. The independence of being your own boss in Dayton, OH is one of the best aspects of being self-employed. That said, this flexibility can come with certain challenges, particularly when it comes to planning for retirement, as you don't have the benefit of retirement programs through an employer. Only 13% of self-employed individuals have a workplace retirement plan, although many should consider exploring their options. In addition to enjoying a financially stable retirement, working with a financial advisor in Dayton, OH to set up your self-employed retirement plan can provide significant tax advantages that enable both you and your business to thrive.
Few Dayton, OH financial advisory and retirement planning firms understand the needs of self-employed individuals as well as Correct Capital. Our founder's father was a small business owner himself (read more of our story here), and we take pride in helping businesses with their retirement planning needs. We recognize that your business and retirement aspirations go far beyond simple financial figures, and we are dedicated to provide customized solutions aligned with your vision. Keep reading to learn more about your self-employed retirement plan options in Dayton, OH, or reach out to Correct Capital at 877-930-401k or contact us online to talk to a self-employed financial advisor in Dayton, OH today.
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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 immediate benefits today. From flexible contributions to significant tax savings, consulting a financial advisor in Dayton, OH helps you create your retirement plan to fit your unique financial situation.
Flexibility That Fits Your Income
If your income changes annually, a plan like a SEP IRA or Solo 401(k) provides the option to tailor how much you save:
- Customizable Contributions: Set aside more during profitable years and scale back when your earnings dip, so that your plan works with your current income.
- Roth Options: Opting for a Roth Solo 401(k) lets you handle taxes upfront, enabling you to withdraw tax-free later—an advantageous choice if you believe your tax rate will increase in the future.
Save Money on Taxes
Plans designed for the self-employed provide 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 income.
- Tax-Deferred Growth: Your savings grow untaxed until withdrawn, which gives your money more time to grow.
- State-Specific Incentives: Depending on where you live, you could qualify for extra credits as a sole proprietor. These state-level incentives make these plans even more beneficial.
- Retirement Savings Contributions Credit (Saver’s Credit): Qualified participants can claim a tax credit of up to 50% of the first $2,000 they contribute a retirement plan, helping to lower your tax bill even more.
Protect Your Savings With Smart Investments
Building a secure retirement isn’t only about how much you save—it’s also determined by your investment strategy:
- Diversified Portfolios: Spreading your investments across varied asset classes like stocks and bonds serves to minimize exposure to risk while still growing your savings.
- Emergency Back-Up: Combining your retirement strategy and a dedicated business safety net ensures you don’t using your retirement funds during financial hardships and risking extra costs.
Plan for the Future of Your Dayton, OH Business
A thoughtful retirement strategy enables you to prepare for what’s next with your Dayton, OH business:
- Selling Your Business: When selling your business, accounts such as SEP IRAs or Solo 401(k)s remain your personal assets and are not part of the sale. These accounts ensure the steady income you’ll need in the future. Keep in mind that while selling a business often leads to a capital gain, contributions to retirement accounts are subject to yearly maximums (e.g., as much as $7,000 for IRAs or as much as $70,000 for Solo 401(k)s, including catch-up contributions, based on plan compensation).
- Minimizing Taxes: Strategically planning your contributions can reduce the taxes you are required to pay when you transfer your business.
- Succession Planning: If you’re passing the business on, your retirement accounts ensure financial security during the change. You might want to work with a financial advisor who specializes in succession planning and retirement accounts to minimize tax burdens on the sale.
With the proper savings strategy, you manage your financial future, cut down your tax obligations, and build a strong framework for both your retirement and your business goals.
Why Start a Self-Employed Retirement Plan in Dayton, OH Now?
There’s no denying that time is one of the most important resources for building your retirement fund. Starting early not only allows you to build a larger nest egg but also lowers the pressure of playing catch-up as you get older. Here’s why it makes sense to begin today:
The Cost of Waiting
Waiting to start your retirement fund may cause a substantial impact on the amount you’ll have when you retire. The primary reason is compound interest—the financial principle where your investments generate earnings, and those returns, subsequently, generate even more returns. The greater time span your money has to grow, the larger the benefit of this growth.
Example: Alex and Taylor are both self-employed individuals. They each aim to save $500,000 for retirement by age 65:
- Alex begins contributing $5,000 annually at age 30.
- Taylor delays savings until age 40 but contributes $7,500 annually to catch up.
By age 65, assuming 7% annual return:
- Alex contributes $180,000 and achieves a total of $691,184.39*.
- Taylor invests $195,500 but achieves a total of only $474,367.78*.
How Early Contributions Grow
Even modest contributions 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 average annual return of 7%, you’ll end up with $497,303.29* by age 65.
- Starting at age 35: Saving the same $200 per month yields only $235,412.97* by age 65—a difference of over $260,000, all because of a 10-year delay.
Saving early, the less effort required each year to meet your retirement goals.
*The numbers shown in this scenario represent estimates derived from NerdWallet’s Compound Interest Calculator, with the assumption of a 7% annual return. These calculations involved multiplying yearly deposits by the years contributed. These examples are meant to provide general guidance and cannot predict actual future outcomes. Your individual results may differ depending on variables including market conditions, fees, and individual circumstances. Always consult a financial advisor for custom recommendations.
Take Control of Your Financial Future
If you’re self-employed in Dayton, OH, it might seem easier to prioritize reinvesting in your business instead of saving for retirement. However, beginning a plan now gives you the chance to:
- Benefit from growth that is tax-deferred or withdrawals without taxes down the road.
- Enjoy contribution flexibility that change with your cash flow.
- Establish a safety net that ensures stability, no matter how your business develops.
Getting started now, the less you’ll be required to worry about catching up later in life. Building your retirement savings today means managing your financial future and creating for yourself the ability to focus on your dreams—both for your future retirement and your Dayton, OH business.
Types of Self-Employed Retirement Plans
Multiple retirement savings options open for entrepreneurs in Dayton, OH, each with its own advantages and considerations. A financial advisor is available to help you evaluate the advantages and disadvantages of each plan and determine the one ideal for your needs. In most cases, 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 include distinct tax benefits. In a conventional 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 eligible distributions during retirement, including earnings, are not taxed. In both accounts, withdrawals don’t incur penalties as long as you are at least 59½.
Eligibility: Unlike plans linked to your job, both traditional and Roth IRAs are open to those with a source of income.
Contribution Limits: For 2025, annual contribution limits for IRAs remain $7,000, or $8,000 if you qualify for catch-up contributions.
Simplified Employee Pension Plan (SEP IRA)
Plan Overview: A Simplified Employee Pension (SEP) IRA offers a way to save for retirement that permits self-employed individuals to contribute a percentage of their net earnings. Contributions must come from an employer, so, as a independent business owner, you (the employee) are limited to contributions from the employer role 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. It's your choice whether to contribute a flat-dollar amount or a percentage of wages to employee accounts. SEP IRAs is a good option for companies with cycles of high revenue and low revenue. Compared to other retirement options, SEP IRAs are free of expensive setup or ongoing fees.
SEPs work like traditional IRAs, where you contribute pre-tax dollars and retirement distributions are taxable.
Eligibility: Any employer, including the self-employed can set up 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: The Solo 401(k), sometimes referred to as an Individual 401(k) or one-participant 401(k) plan, is a self-employed retirement plan designed for businesses with no employees or if the only employee is your spouse. Solo 401(k)s function similarly to standard 401(k) plans, and allow you to contribute as both an employee or an employer with pre-tax money. This offers more savings than SEPs or IRAs; however, the additional opportunities often come with more restricted investment choices. In a solo 401(k) plan, you can make either traditional or Roth deferrals, which offer the same tax benefits as their IRA contribution counterparts.
Eligibility: This plan is exclusively for business owners and their spouses may establish and contribute to a solo 401(k).
Contribution Limits: As a self-employed individual with a solo 401(k) plan, you have the ability to make two types of contributions:
- Elective deferrals (as an employee) of up to 100% of your earned income from self-employment, subject to the annual contribution limit. For 2025, the limits will be $23,500, or $31,000 for those aged 50 and above, or $34,750 for individuals aged 60-63 in 2025.
- Employer profit-sharing contributions (as an employer) are limited to 25% of your adjusted self-employment income, which is defined as 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 (as of 2025), $81,250 for individuals turning 60-63 in 2025.
Individual Defined Benefit Plan
Plan Overview: A defined benefit plan represents a type of retirement plan that guarantees a set amount to business owners upon retirement. As opposed to defined contribution plans, investment returns don’t affect the payout, but lets individuals clearly understand the precise amount they'll receive in retirement. This option is best suited for higher-income self-employed individuals who aim to accumulate a large amount for retirement and are prepared to contribute larger deposits. Contributions are tax deferred, and withdrawals incur taxes as income during retirement.
Eligibility: Any self-employed individual operating a solo business or employing fewer than five people can open an individual defined benefit plan, but it's typically advised for people above age 50 who earn at least $250,000 a year. Typically, good candidates for defined benefit plans include:
- Entrepreneurs who want to invest more than $70,000 (or $77,500 for individuals 50 and older)
- Companies already contributing 3-4% with plans to contribute more
- Businesses that have demonstrated consistent profit patterns
- Partners or owners over age 40 who wish to accelerate savings or increase their retirement contributions rapidly
Contribution Limits: The cap on contributions requires calculation from an actuary based on your earnings, age, and retirement objectives. Limits on contributions change annually.
The Importance of a Financial Advisor in Dayton, OH for Your Self-Employed Retirement Plan
A financial advisor in Dayton, OH specialized in self-employed retirement plans serves as an essential partner for those working for themselves. They bring the skills needed to guide you through the challenges of retirement planning and design a tailored strategy that aligns with your goals. A financial advisor in Dayton, OH will review your finances, determine how much risk you’re comfortable with, and assist you in selecting the best options about saving and investing for retirement. A key part of what we do for you involves:
- Assist in selecting a plan that best fits your needs and goals
- Tailor the plan to your specific situation even further
- Formalize a plan in writing as required by IRS rules
- Set up an asset trust plan
- Ensure you comprehend the plan's terms
- Monitor and adjust your plan when necessary
- Deliver continuous support and financial insights to help you navigate your retirement journey
- Increase your retirement income by making the most of your social security
Self-Employed Retirement Plans in Dayton, OH: Correct Capital's Process
Dayton, OH business owners who lack the time, interest, or knowledge to handle their retirement savings strategy independently can become overwhelmed by their choices. With Correct Capital, our Dayton, OH financial advisors handle the majority of your savings plan setup for you, and strive to ensure meeting your retirement goals as easy as possible for you. We will guide you in creating your self-employed retirement plan in four simple steps:
- Schedule a Call: A quick 20-minute call is all it takes, a member of our advisor team can determine if we're suited to your needs for you and your business. This brief introduction allows us to understand what you're looking for with zero commitment or significant effort on your part.
- Gather Information: Should we agree to proceed, 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 that aligns with your goals.
- Review Your Plan: Once we've developed a plan based on the information you provide, we'll sit down with you and discuss your plan in detail 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 set everything up so you can start saving. As time goes on, we'll have regular meetings and track your progress to ensure it stays suited to your needs.
Our Dayton, OH financial advisors and retirement plan consultants are fiduciary advisors, who are obligated to they are legally and ethically bound to prioritize your needs above all else.
Other financial advisory services we offer in Dayton, 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 Dayton, OH
To you, your business is more than "just a business", and your Dayton, OH financial advisors should provide more than basic financial recommendations. With Correct Capital, we make it a priority to understand our clients and their businesses to deliver customized self-employed retirement plans. All our clients in Dayton, OH benefit from our I.O.U. promise: everything we recommend 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.
