Self-employed retirement plans Denver, CO. The freedom of being your own boss in Denver, CO offers many benefits of being self-employed. That said, this independence sometimes brings with a lack of security, notably regarding retirement savings, since you don't have the option of a workplace retirement plan. Only 13% of self-employed individuals have a workplace retirement plan, yet countless should consider understanding their retirement options. In addition to having a more secure retirement, partnering with a financial advisor in Denver, CO to establish your self-employed retirement plan delivers significant tax advantages that help your business to grow and succeed.
Few Denver, CO wealth management 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 (check out our story here), and we have a rich history of helping businesses with their retirement planning needs. We recognize that your business and retirement aspirations extend well past basic numbers, and we strive to create tailored solutions to meet your unique goals. Read on to discover about your self-employed retirement plan options in Denver, CO, or give us a call at Correct Capital at 877-930-401k or contact us online to consult with a small business financial advisor in Denver, CO today.
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Why Denver, CO Self-Employed Individuals Should Have a Retirement Plan
Retirement plans for self-employed individuals not only prepare you for the future, they also offer tangible benefits today. Offering flexibility in contributions to considerable tax savings, partnering with a financial advisor in Denver, CO enables you to 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) gives you the freedom to adjust how much you save:
- Customizable Contributions: Contribute more during high-income years and scale back when your earnings dip, so that your plan fits your cash flow.
- Roth Options: A Roth Solo 401(k) lets you settle taxes at the time of contribution, allowing you to withdraw tax-free later—a wise move if you expect your tax rate will increase in the future.
Save Money on Taxes
Plans designed for the self-employed offer valuable tax benefits:
- Tax-Deductible Contributions: Contributions to a SIMPLE IRA reduce what you owe in taxes, allowing you to keep more of your earnings.
- Tax-Deferred Growth: Investments grow tax-free until withdrawal, giving your money more time to grow.
- State-Specific Incentives: In some states, you could qualify for extra credits as a self-employed individual. These local incentives can make these plans even more beneficial.
- Retirement Savings Contributions Credit (Saver’s Credit): Qualified participants can take advantage of a credit of up to 50% of the first $2,000 contributed a retirement plan, cutting down your tax bill even more.
Protect Your Savings With Smart Investments
Planning for a safe retirement requires more than how much you save—it’s also about how you invest:
- Diversified Portfolios: Spreading your investments across different stocks, bonds, and alternatives serves to mitigate financial risk while still growing your retirement fund.
- Emergency Back-Up: Combining your retirement strategy and a business emergency fund helps you avoid using your retirement funds during tough times and incurring penalties.
Plan for the Future of Your Denver, CO Business
A thoughtful retirement strategy enables you to think through what’s next with your Denver, CO business:
- Selling Your Business: When selling your business, plans like SEP IRAs or Solo 401(k)s remain your personal assets and won’t be included in the sale. These plans ensure the steady income you’ll need later on. Keep in mind that while the sale of a business usually creates a capital gain, deposits into these plans are capped at annual limits (e.g., a maximum of $7,000 for IRAs or up to $70,000 for Solo 401(k)s, including catch-up contributions, based on plan compensation).
- Minimizing Taxes: Using retirement contributions wisely can reduce the taxes you are required to pay when you pass on your business.
- Succession Planning: For those winding down or handing over their business, your retirement savings offer the funds you need as you make this shift. You might want to work with a financial advisor who specializes in succession planning and retirement accounts to minimize tax burdens during the sale.
With the right retirement plan, you manage your financial future, cut down your tax obligations, and establish a solid base for both your retirement and your business goals.
Why Start a Self-Employed Retirement Plan in Denver, CO Now?
There’s no denying that time is one of the most valuable resources for building your retirement fund. Getting a head start not only helps you grow a larger nest egg but also minimizes the stress of playing catch-up as you get older. This is why it is beneficial to start now:
The Cost of Waiting
Delaying your retirement savings could lead to a major impact on the total you’ll have when you retire. The primary reason is compound interest—the financial principle where your investments earn returns, and those returns, subsequently, earn even more returns. The greater time span your money has to grow, the larger the effect of compounding.
Example: Two individuals, Alex and Taylor are both self-employed professionals. 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 saves $7,500 annually to make up for lost time.
By age 65, with an assumption of 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 made consistently may result in impressive growth. Take a look at this scenario showing the impact of consistent growth:
- Starting at age 25: If you invest $200 per month in a retirement plan with an average annual return 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 difference of over $260,000, simply due to a 10-year delay.
Saving early, the lower your annual savings needs each year to meet your retirement goals.
*These calculations are estimates derived from NerdWallet’s Compound Interest Calculator, assuming a 7% annual return. The contributions were calculated by multiplying the annual deposit amount by the total number of years contributions were made. This information is meant to provide general guidance and do not guarantee future performance. Your individual results may differ based on elements like market conditions, fees, and personal factors. Be sure to speak with a financial advisor for custom recommendations.
Take Control of Your Financial Future
As a self-employed person in Denver, CO, it can be tempting to put more emphasis on reinvesting in your business rather than saving for retirement. That said, starting a plan now enables you to:
- Benefit from growth that is tax-deferred or penalty-free withdrawals later on.
- Take advantage of adjustable savings that align with your earnings.
- Create a financial cushion that provides security, no matter how your business evolves.
Getting started now, the less you’ll have to worry about catching up later in life. Saving for retirement now means managing your financial future and creating for yourself the ability to concentrate on your objectives—both for your retirement years and your Denver, CO business.
Types of Self-Employed Retirement Plans
A variety of retirement savings options available for self-employed individuals in Denver, CO, each providing its own benefits and trade-offs. A financial advisor will guide you to evaluate the pros and cons of each option and choose the one ideal for your circumstances. Generally speaking, your self-employed retirement plan options in Denver, CO consist of:
Traditional or Roth IRA
Plan Overview: IRAs, or Individual Retirement Accounts, are retirement savings vehicles that offer key tax perks. In a conventional IRA, contributions are typically tax-deductible, and earnings grow without immediate taxation, but withdrawals in retirement are taxable. In contrast, Roth IRA contributions from post-tax earnings, but retirement withdrawals that qualify, including earnings, are not taxed. In both types of accounts, withdrawals come without penalties provided you are at least 59½.
Eligibility: Unlike 401(k)s, which are employer-sponsored, both traditional and Roth IRAs are available to anyone with an earned income.
Contribution Limits: For 2025, annual contribution limits for IRAs are capped at $7,000, or $8,000 if you qualify for catch-up contributions.
Simplified Employee Pension Plan (SEP IRA)
Plan Overview: SEP IRAs serves as a retirement savings option that permits self-employed individuals to contribute a percentage of their net earnings. Contributions can only be made by an employer, so, as a self-employed individual, you (the employee) cannot make additional contributions above the 25% you (the employer) already contributed. If you have employees, you are obligated to contribute the same amount for them as you do for yourself. You may choose to contribute a flat-dollar amount or a percentage of wages to employee accounts. A SEP IRA works well for companies with fluctuating revenue streams. Unlike other plans, SEP IRAs don’t have costly startup or administrative fees.
SEPs work 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 are the lesser of:
- 25% of compensation, or
- $70,000 for 2025
As a self-employed person, 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 savings option for the self-employed intended for companies that have no employees or if the only employee is your spouse. These plans are similar to employer-sponsored 401(k) plans, and enable contributions as both an employer and an employee with pre-tax money. This offers more savings compared to SEPs or IRAs; however, the extra savings options may be offset by more restricted investment choices. With this type of plan, 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 may establish 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:
- 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 if you are 50 or older, or $34,750 for individuals aged 60-63 in 2025.
- Profit-sharing contributions (as an employer) are limited to 25% of your adjusted self-employment income, which is calculated as net profits less half of your self-employment tax and the deferrals you made.
Your combined contributions must not surpass $70,000, or $77,500 for individuals aged 50+ (in 2025), $81,250 if you attain age 60-63 in 2025.
Individual Defined Benefit Plan
Plan Overview: A defined benefit plan is a retirement option that provides a fixed, predetermined benefit to self-employed individuals upon retirement. In contrast to the plans discussed earlier, this plan is not influenced by market performance, but lets individuals clearly understand what they'll receive in retirement. This strategy is ideal for higher-income self-employed individuals who aim to accumulate a substantial amount for retirement and are prepared to contribute substantial contributions. Contributions offer tax-deferred growth, and withdrawals incur taxes as income during retirement.
Eligibility: Any self-employed individual managing a one-person company or with less than five employees may establish an individual defined benefit plan, but it's generally suggested for those over 50 who generate a minimum of $250,000 yearly. In most cases, good candidates for defined benefit plans include:
- Partners or owners who desire to contribute more than $70,000 (or $77,500 if over age 50)
- Companies already contributing 3-4% with plans to contribute more
- Organizations showing consistent profit patterns
- Entrepreneurs over age 40 who desire to "catch up" or increase their retirement contributions rapidly
Contribution Limits: The contribution limit must be determined by an actuary based on your income, age, and retirement goals. Limits on contributions change annually.
The Importance of a Financial Advisor in Denver, CO for Your Self-Employed Retirement Plan
Partnering with an advisor in Denver, CO specialized in self-employed retirement plans can be an important asset for self-employed individuals. They offer the knowledge to assist guide you through the challenges of retirement planning and design a customized plan that reflects your aspirations. A financial advisor in Denver, CO will review your finances, understand your risk tolerance, and assist you in making informed decisions about saving and investing for retirement. A key 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 in accordance with IRS guidelines
- Set up an asset trust plan
- Make sure you understand the plan's terms
- Monitor and adjust your plan when necessary
- Offer continued financial education and guidance as you continue on the road to retirement
- Increase your retirement income by maximizing your social security benefits
Self-Employed Retirement Plans in Denver, CO: Correct Capital's Process
Denver, CO business owners who aren’t equipped with the time or understanding to manage their own retirement planning independently can become overwhelmed as they look at their options. At Correct Capital, our Denver, CO financial advisors handle the lion's share of your retirement strategy for you, to help make meeting your retirement goals as easy as possible for you. We are here to assist you in setting up your self-employed retirement plan in four simple steps:
- Schedule a Call: In just 20 minutes, a member of our advisor team can help understand if we're suited to your needs for you and your business. This initial call 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 gather information, including how many employees you have (if any), your existing financial picture, and your long-term savings targets. This allows us to put together a custom plan that aligns with your goals.
- 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 step by step to make sure it's clear 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 check in and monitor your plan to make sure it remains aligned with your goals.
Our Denver, CO financial advisors and retirement plan consultants serve as fiduciary advisors, who are obligated to they are committed by law and ethics to act in your best interest.
Other financial advisory services we offer in Denver, CO 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 Denver, CO
Your business isn't "just a business" to you, and your Denver, CO financial advisors need to offer more than basic financial recommendations. With Correct Capital, we focus on building a relationship with our clients and their businesses to deliver tailored self-employed retirement plans. All our clients in Denver, CO 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, contact Correct Capital now at 877-930-401k or contact us online.
