Self-employed retirement plans Des Moines, IA. The independence of owning your own business in Des Moines, IA is one of the best aspects of having a self-directed career. Even so, this flexibility can come with a lack of security, especially in terms of retirement savings, since you don't have the benefit of a workplace retirement plan. Only 13% of self-employed individuals have a workplace retirement plan, but many could benefit from exploring their options. In addition to enjoying a financially stable retirement, working with a financial advisor in Des Moines, IA to set up your self-employed retirement plan offers significant tax advantages that help you to move your business forward.
Few Des Moines, IA financial advisory and retirement planning firms truly grasp the challenges faced by small business owners as well as Correct Capital. The father of our founder was a small business owner himself (check out our story here), and we are deeply experienced in assisting business owners in their retirement planning needs. We know that your professional and personal aspirations aren’t limited to basic numbers, and we work tirelessly to offer tailored solutions to meet your unique goals. Continue exploring to find out about your self-employed retirement plan options in Des Moines, IA, or give us a call at Correct Capital at 877-930-401k or contact us online to speak with a self-employed financial advisor in Des Moines, IA today.
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Why Des Moines, IA Self-Employed Individuals Should Have a Retirement Plan
Retirement plans for self-employed individuals help prepare you for the future, they also offer real benefits today. With customizable contribution options to substantial tax savings, consulting a financial advisor in Des Moines, IA enables you to customize your retirement plan to align with your unique financial situation.
Flexibility That Fits Your Income
When your earnings vary over time, a plan like a SEP IRA or Solo 401(k) offers the freedom to modify how much you save:
- Customizable Contributions: Save extra during profitable years and reduce savings when income is lower, so that your plan fits your cash flow.
- Roth Options: A Roth Solo 401(k) lets you handle taxes upfront, enabling you to withdraw your savings tax-free down the road—a wise move if you anticipate your tax rate is likely to rise in the future.
Save Money on Taxes
Self-employed retirement plans deliver valuable tax benefits:
- Tax-Deductible Contributions: Contributions to a Solo 401(k) reduce what you owe in taxes, allowing you to keep more of your hard-earned money.
- Tax-Deferred Growth: Investments grow tax-free until withdrawal, giving your money more time to grow.
- State-Specific Incentives: Based on your location, you could qualify for state-specific tax breaks as a self-employed individual. These local incentives make these plans even more beneficial.
- Retirement Savings Contributions Credit (Saver’s Credit): Eligible individuals can take advantage of a credit of up to 50% of the first $2,000 put into a retirement plan, helping to lower 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 about how you invest:
- Diversified Portfolios: Distributing your investments across a mix of stocks, bonds, and other assets can help mitigate financial risk while continuing to build your retirement fund.
- Emergency Back-Up: Combining your retirement strategy and a financial buffer for your business helps you avoid dipping into savings during tough times and risking extra costs.
Plan for the Future of Your Des Moines, IA Business
Retirement planning can assist you plan ahead for what’s next with your Des Moines, IA business:
- Selling Your Business: If you’re planning to sell, retirement accounts like SEP IRAs and Solo 401(k)s stay in your name and don’t transfer with the business. These plans can provide the steady income you’ll need during retirement. Remember that while selling your business results in a capital gain, retirement plan contributions are subject to yearly maximums (e.g., as much as $7,000 for IRAs or up to $70,000 for Solo 401(k)s, factoring in catch-up contributions, depending on plan details).
- Minimizing Taxes: Making the most of retirement savings helps lower the taxes you’ll owe when you sell your business.
- Succession Planning: If you’re passing the business on, your retirement accounts ensure financial security as you make this shift. You might want to partner with a financial advisor who specializes in succession planning and retirement accounts to reduce taxes associated with the transaction.
With the best-fit retirement strategy, you can take control of your financial future, reduce your tax burden, and create a secure foundation for both your retirement and your business goals.
Why Start a Self-Employed Retirement Plan in Des Moines, IA Now?
Time remains one of the most crucial factors for building your retirement fund. Beginning sooner rather than later not only allows you to build a larger nest egg but also reduces the stress of playing catch-up as you get older. Here’s why it pays to take action now:
The Cost of Waiting
Putting off saving for retirement can have a major impact on the amount you’ll have when you reach retirement age. The main reason is compound interest—the financial principle where your investments grow, and those returns, in turn, accumulate even more returns. The longer your money has to grow, the larger the benefit of compounding.
Example: Alex and Taylor are both self-employed individuals. Their shared goal is to save $500,000 for retirement by age 65:
- Alex begins contributing $5,000 annually at age 30.
- Taylor postpones starting contributions to age 40 but puts away $7,500 annually to make up for lost time.
By age 65, assuming 7% annual return:
- Alex contributes $180,000 and accumulates $691,184.39*.
- Taylor puts in $195,500 but achieves a total of only $474,367.78*.
How Early Contributions Grow
Regular, modest investments contributed over time can lead to significant growth. Take a look at this scenario showing the impact of compound interest:
- Starting at age 25: Putting aside $200 per month in a retirement plan with an expected yearly growth rate of 7%, you’ll end up with $497,303.29* by age 65.
- Starting at age 35: Contributing the same $200 per month would result in only $235,412.97* by age 65—a gap 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 figures provided in this example represent estimates generated with NerdWallet’s Compound Interest Calculator, based on 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 for illustrative purposes only and do not guarantee future performance. Your individual results may differ depending on factors such as market conditions, fees, and your unique situation. We recommend consulting a financial advisor for personalized advice.
Take Control of Your Financial Future
As a self-employed person in Des Moines, IA, it is often the case that you prioritize reinvesting in your business over saving for retirement. Even so, initiating a plan now gives you the chance to:
- Leverage tax-free future growth or penalty-free withdrawals later on.
- Benefit from adjustable savings that align with your cash flow.
- Establish a safety net that provides security, no matter how your business changes.
Getting started now, the less you’ll need to worry about playing catch-up later in life. Taking steps toward your retirement goals today means gaining control over your financial future and giving yourself the opportunity to turn your attention to your goals—both for your future retirement and your Des Moines, IA business.
Types of Self-Employed Retirement Plans
A variety of retirement savings options available for entrepreneurs in Des Moines, IA, each providing its own pros and cons. A financial advisor will guide you to understand the benefits and drawbacks of each plan and identify the one best suited for your needs. In most cases, your self-employed retirement plan options in Des Moines, IA are:
Traditional or Roth IRA
Plan Overview: Individual Retirement Accounts (IRAs), as explained here, represent financial tools for retirement that provide specific tax advantages. In a standard IRA, you can usually deduct your contributions from taxable income, and returns grow free of current taxes, but retirement distributions are taxed as income. In contrast, with Roth IRAs, you contribute using income already taxed, but qualified withdrawals in retirement, including earnings, are exempt from taxes. In both accounts, withdrawals are penalty-free 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 a source of income.
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: SEP IRAs offers a way to save for retirement that permits entrepreneurs to save a percentage of their net business profits. Contributions must come from an employer, so, as a self-employed individual, you (the employee) are limited to contributions from the employer role beyond the 25% you (the employer) have designated. If you have employees, you must contribute the same amount for them as you do for yourself. It's your choice whether 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. Compared to other retirement options, SEP IRAs don’t have expensive setup or ongoing fees.
SEPs operate like standard IRAs, where you contribute pre-tax dollars and retirement distributions are taxable.
Eligibility: Any employer, including the self-employed can open 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
As a self-employed person, the amount eligible to be contributed is based on a special calculation.
Solo 401(k)
Plan Overview: A Solo 401(k) plan, 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 when the sole employee is your spouse. This type of plan operate much like standard 401(k) plans, and let you make contributions as both an employee or an employer with pre-tax money. This offers more savings than SEPs or IRAs; however, the extra savings options can be balanced by more limited investment options. Using a solo 401(k), you can make either traditional or Roth deferrals, which share the same tax benefits as their IRA contribution counterparts.
Eligibility: This plan is exclusively for business owners and their spouses can set up 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:
- Elective deferrals (as an employee) of up to 100% of your self-employment income, 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.
- Employer profit-sharing contributions (as an employer) must not surpass 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.
The total contribution cannot exceed $70,000, or $77,500 for individuals aged 50+ (for 2025), $81,250 if you attain age 60-63 in 2025.
Individual Defined Benefit Plan
Plan Overview: Defined benefit plans offers a structured retirement solution that provides a pre-established payout to business owners upon retirement. Unlike defined contribution plans mentioned above, this plan is not influenced by market performance, but allows self-employed individuals to know the precise amount they'll receive in retirement. This plan is best suited for high-earning entrepreneurs who aim to accumulate a significant sum for retirement and can commit to making larger deposits. Contributions offer tax-deferred growth, and withdrawals incur taxes as income during retirement.
Eligibility: Self-employed professionals operating a solo business or with a small staff of under five can open an individual defined benefit plan, but it's most commonly advised for people above age 50 who make $250,000 or more annually. Generally, good candidates for defined benefit plans include:
- Entrepreneurs who desire to contribute more than $70,000 (or $77,500 for individuals 50 and older)
- Businesses currently investing 3-4% with plans to contribute more
- Companies with proven consistent profit patterns
- Partners or owners over age 40 who aim to quickly build retirement savings 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. Allowable contributions are adjusted each year.
The Importance of a Financial Advisor in Des Moines, IA for Your Self-Employed Retirement Plan
Working with a financial advisor in Des Moines, IA focused on self-employed retirement strategies is an essential partner for self-employed individuals. They bring the skills needed to understand the intricacies of saving for retirement and craft a customized plan that reflects your aspirations. Your advisor in Des Moines, IA will evaluate your financial situation, identify your risk preferences, and assist you in choosing wisely about saving and investing for retirement. A key part of what we do for you features:
- Assist in selecting a plan that suits your unique requirements
- Customize the plan to your specific situation even further
- Formalize a plan in writing as required by IRS rules
- Set up an asset trust plan
- Help you understand the plan's terms
- Track and fine-tune your plan to keep it aligned with your goals
- Deliver continuous support and financial insights as you continue on the road to retirement
- Increase your retirement income by making the most of your social security
Self-Employed Retirement Plans in Des Moines, IA: Correct Capital's Process
Entrepreneurs in Des Moines, IA who lack the time, interest, or knowledge to handle their self-employed retirement plan independently may end up overwhelmed as they look at their available plans. With Correct Capital, our Des Moines, IA financial advisors handle the bulk of your retirement strategy for you, to help make 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 will assess if our services align 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 your employee count, your current financial situation, and your long-term savings targets. This allows us to put together a personalized strategy designed just for you.
- Review Your Plan: Once we've developed a plan based on the information you provide, we'll schedule a meeting and discuss your plan in detail to help you fully grasp it and show how it aligns with your goals.
- Implementation and Monitoring: Once we've agreed on your plan, we'll implement the necessary steps so you can initiate your savings journey. Over the course of our partnership, we'll meet with you and monitor your plan to ensure it stays suited to your needs.
Our Des Moines, IA financial advisors and retirement plan consultants are fiduciary advisors, which means they are committed by law and ethics to act in your best interest.
Other financial advisory services we offer in Des Moines, IA 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 Des Moines, IA
To you, your business is more than "just a business", and your Des Moines, IA financial advisors need to offer more than just good financial guidance. With Correct Capital, we focus on building a relationship with our clients and their businesses to provide customized self-employed retirement plans. To every client in Des Moines, IA, 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.
