Self-employed retirement plans Des Moines, IA. The freedom of being your own boss in Des Moines, IA is one of the best aspects of being self-employed. That said, this flexibility often comes with a lack of security, especially regarding planning for retirement, as 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 could benefit from exploring their options. In addition to enjoying a financially stable retirement, seeking advice from a financial advisor in Des Moines, IA to create your self-employed retirement plan offers significant tax advantages that allow your business to grow and succeed.
Few Des Moines, IA financial advisory and retirement planning firms truly grasp the challenges faced by self-employed individuals as well as Correct Capital. The father of our founder was a small business owner himself (read more of our story here), and our firm have a rich history of assisting business owners in their retirement planning needs. We know that your professional and personal aspirations extend well past simple financial figures, and we strive to create tailored solutions that reflect your objectives. Continue exploring to find out about your self-employed retirement plan options in Des Moines, IA, or reach out to Correct Capital at 877-930-401k or contact us online to consult with a small business financial advisor in Des Moines, IA today.
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 immediate benefits today. Offering flexibility in contributions to significant tax savings, consulting a financial advisor in Des Moines, IA allows you to design your retirement plan to suit your individual circumstances.
Flexibility That Fits Your Income
If your income changes from year to year, a plan like a SEP IRA or Solo 401(k) provides the flexibility to adjust how much you save:
- Customizable Contributions: Save extra during high-income years and reduce savings when your earnings dip, ensuring your plan works with your financial situation.
- Roth Options: Choosing a Roth Solo 401(k) lets you handle taxes upfront, enabling you to withdraw without tax penalties in the future—an advantageous choice if you expect your tax rate is likely to rise in the future.
Save Money on Taxes
Plans designed for the self-employed provide significant tax benefits:
- Tax-Deductible Contributions: Contributions to a SEP IRA shrink your tax liability, allowing you to keep more of your earnings.
- Tax-Deferred Growth: Investments grow tax-free until withdrawal, which gives your money more time to compound.
- State-Specific Incentives: Depending on where you live, you might access additional tax breaks as a business owner. These regional incentives help make these plans even more beneficial.
- Retirement Savings Contributions Credit (Saver’s Credit): Those who meet the requirements can claim a tax credit of up to 50% of the first $2,000 they contribute a retirement plan, further reducing your tax bill even more.
Protect Your Savings With Smart Investments
Planning for a safe retirement isn’t only about how much you save—it’s also about how you invest:
- Diversified Portfolios: Spreading your investments across varied stocks, bonds, and other assets is a smart way to reduce risk while continuing to build your savings.
- Emergency Back-Up: Supplementing your retirement savings with a financial buffer for your business ensures you don’t using your retirement funds during tough times and incurring penalties.
Plan for the Future of Your Des Moines, IA Business
Retirement planning also helps you plan ahead for what’s next with your Des Moines, IA business:
- Selling Your Business: If you’re planning to sell, accounts such as SEP IRAs or Solo 401(k)s remain yours and don’t transfer with the business. These savings offer the financial stability you’ll need in the future. Remember that while the sale of a business usually creates a capital gain, contributions to retirement accounts are restricted by contribution limits (e.g., as much as $7,000 for IRAs or as much as $70,000 for Solo 401(k)s, including catch-up contributions, depending on plan details).
- Minimizing Taxes: Strategically planning your contributions helps lower the taxes you are required to pay when you sell your business.
- Succession Planning: For those winding down or handing over their business, your nest egg ensure a stable foundation through the transition. You might want to partner with a financial advisor with expertise in succession and retirement planning to reduce taxes on the sale.
With the right retirement plan, 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 Des Moines, IA Now?
There’s no denying that time is one of the most important assets in retirement planning. Beginning sooner rather than later not only helps you grow a bigger financial cushion but also lowers the stress of saving aggressively in the future. Here’s why it pays to take action now:
The Cost of Waiting
Putting off saving for retirement may cause a significant 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, then, accumulate even more returns. The more time your money has to grow, the larger the impact of compounding.
Example: Two individuals, Alex and Taylor are both self-employed individuals. Both of them want 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 saves $7,500 annually to catch up.
By age 65, using a projected 7% annual return:
- Alex puts in $180,000 and accumulates $691,184.39*.
- Taylor invests $195,500 but accumulates just $474,367.78*.
How Early Contributions Grow
Even modest contributions invested steadily may result in impressive 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 average annual return of 7%, you’ll grow to approximately $497,303.29* by age 65.
- Starting at age 35: Contributing the same $200 per month leaves you with only $235,412.97* by age 65—a gap of over $260,000, simply due to a 10-year delay.
Starting sooner, the less you need to save each year to reach your retirement goals.
*These calculations represent 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. These examples are for illustrative purposes only and cannot predict actual future outcomes. Outcomes may change due to elements like market conditions, fees, and individual circumstances. We recommend consulting a financial advisor for custom recommendations.
Take Control of Your Financial Future
As a self-employed person in Des Moines, IA, it can be tempting to focus more on reinvesting in your business rather than saving for retirement. However, beginning a plan now enables you to:
- Take advantage of growth that is tax-deferred or withdrawals without taxes later on.
- Enjoy flexible contributions that adapt to your earnings.
- Create a safety net that ensures stability, no matter how your business evolves.
Starting early, the less you’ll need to worry about catching up later in life. Saving for retirement now means managing your financial future and giving yourself the ability to focus on your dreams—both for your retirement years and your Des Moines, IA business.
Types of Self-Employed Retirement Plans
A variety of retirement savings options open for those working for themselves in Des Moines, IA, each with its own benefits and trade-offs. A financial advisor will guide you to learn about the benefits and drawbacks of each option and choose the one ideal for your unique situation. Generally speaking, 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 long-term savings plans that include key tax perks. In a conventional IRA, the money you contribute is often tax-deductible, and returns grow free of current taxes, but withdrawals in retirement are taxable. In contrast, Roth IRAs require contributions using income already taxed, but qualified withdrawals in retirement, including earnings, are tax-free. In both accounts, withdrawals come without penalties provided you are at least 59½.
Eligibility: While many retirement plans, such as 401(k)s, are tied to employment, IRAs, including traditional and Roth options are open to those with an earned income.
Contribution Limits: For 2025, annual contribution limits for IRAs are set at $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 allows self-employed individuals to contribute a percentage of their net earnings. Contributions must come from an employer, so, as a sole proprietor, you (the employee) cannot make additional contributions more than the 25% you (the employer) already contributed. If you have employees, it's required 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. SEP IRAs may be ideal for entrepreneurs facing fluctuating revenue streams. In contrast to some alternatives, SEP IRAs are free of the high fees associated with starting or maintaining other plans.
SEPs operate like traditional IRAs, where contributions are made with pre-tax money and retirement distributions are taxable.
Eligibility: Both employers and self-employed individuals can open a SEP.
Contribution Limits: Contribution limits for employees in a SEP IRA must not exceed:
- 25% of compensation, or
- $70,000 for 2025
If you’re self-employed, 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. These plans are similar to standard 401(k) plans, and enable contributions as both an employee or an employer with pre-tax money. This offers more savings compared to SEPs or IRAs; however, the increased savings potential often come with more constrained investment avenues. Using a solo 401(k), you can make either traditional or Roth deferrals, which have the same tax benefits as their IRA contribution counterparts.
Eligibility: Only business owners and their spouses can set up and contribute to a solo 401(k).
Contribution Limits: For self-employed individuals 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 earned income from self-employment, 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 those who turn 60-63 in 2025.
- Profit-sharing contributions (as an employer) must not surpass 25% of your net self-employment income, which is your net profit minus half of your self-employment tax and the elective deferrals you made.
Total contributions are capped at $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 offers a structured retirement solution that provides a fixed, predetermined benefit to business owners upon retirement. Unlike defined contribution plans mentioned above, a defined benefit plan doesn't fluctuate based on investment returns, but lets individuals clearly understand exactly how much they'll get in retirement. This strategy is recommended for high-earning entrepreneurs who are focused on saving a large amount for retirement and can commit to making larger deposits. Contributions are tax deferred, and withdrawals are taxable as income in retirement.
Eligibility: Entrepreneurs running an owner-only business or with a small staff of under five can open an individual defined benefit plan, but it's typically recommended for those over 50 who generate a minimum of $250,000 yearly. In most cases, good candidates for defined benefit plans are:
- Partners or owners who want to invest more than $70,000 (or $77,500 if over age 50)
- Organizations that already put in 3-4% but are open to increasing contributions
- Organizations that have demonstrated consistent profit patterns
- Business leaders over age 40 who wish to accelerate savings or increase their retirement contributions rapidly
Contribution Limits: The maximum allowable contribution is calculated by an actuary based on your earnings, age, and retirement objectives. Contribution limits are adjusted each year.
The Importance of a Financial Advisor in Des Moines, IA for Your Self-Employed Retirement Plan
Partnering with an advisor in Des Moines, IA focused on self-employed retirement strategies can be an essential partner for self-employed individuals. They offer the knowledge to assist navigate the complexities of retirement planning and develop a personalized approach that matches your objectives. A financial advisor in Des Moines, IA will review your finances, determine how much risk you’re comfortable with, and assist you in choosing wisely about saving and investing for retirement. Part of what we do for you involves:
- Guide you in choosing a plan that suits your unique requirements
- Customize the plan to your specific situation even further
- Create a written plan that complies with IRS regulations
- Organize a trust plan to manage your assets
- Ensure you comprehend the plan's terms
- Monitor and adjust your plan to keep it aligned with your goals
- Offer continued financial education and guidance as you continue on the road to retirement
- Maximize what you receive in retirement by optimizing your social security benefits
Self-Employed Retirement Plans in Des Moines, IA: Correct Capital's Process
Des Moines, IA business owners who aren’t equipped with the time or understanding to oversee their self-employed retirement plan on their own often feel overwhelmed as they look at their available plans. With Correct Capital, our Des Moines, IA financial advisors handle the lion's share of your retirement planning for you, working to make meeting your financial objectives as hassle-free as possible for you. We will guide you in creating your self-employed retirement plan in just four steps:
- Schedule a Call: In just 20 minutes, a member of our advisor team can determine if our services align for you and your business. This brief introduction lets us get a sense of your goals with no obligation or major time investment on your part.
- Gather Information: Once we mutually decide to continue, 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 tailored approach designed just for you.
- Review Your Plan: Once we've developed a plan using the information you provide, we'll sit down with you and review 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 implement the necessary steps so you can start saving. As time goes on, we'll meet with you and review your strategy to make sure it remains aligned with your goals.
Our Des Moines, IA financial advisors and retirement plan consultants are fiduciary advisors, meaning they are required by law and ethical standards to act in your best interest.
Other financial advisory services we offer in Des Moines, IA include:
- Investment Management
- 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
You don't see your business as "just a business", and your Des Moines, IA financial advisors should provide more than just good financial guidance. At Correct Capital, we take the time to get to know our clients and their businesses to create customized self-employed retirement plans. To every client in Des Moines, IA, we provide our I.O.U. promise: all guidance we provide will be independent, objective, and unbiased. To get started on your self-employment retirement plan, call Correct Capital today at 877-930-401k or contact us online.
