Self-employed retirement plans Des Moines, IA. The freedom of owning your own business in Des Moines, IA is one of the best aspects of being self-employed. That said, this independence sometimes brings with certain challenges, especially regarding retirement savings, because you don't have the option of retirement programs through an employer. Only 13% of self-employed individuals have a workplace retirement plan, yet countless should consider understanding their retirement options. In addition to enjoying a financially stable retirement, working with a financial advisor in Des Moines, IA to create your self-employed retirement plan delivers significant tax advantages that allow both you and your business to thrive.
Few Des Moines, IA investment consulting and retirement planning firms understand the needs of entrepreneurs better than Correct Capital. Our company’s founder grew up with a father who was a small business owner himself (learn more about our story here), and Correct Capital take pride in assisting business owners in their retirement planning needs. We know that your business and retirement aspirations aren’t limited to basic numbers, and we are dedicated to create personalized solutions aligned with your vision. Keep reading to learn more 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 talk to a self-employed 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 are essential for preparing you for the future, they also deliver immediate benefits today. From flexible contributions to significant tax savings, consulting a financial advisor in Des Moines, IA helps you customize your retirement plan to suit your specific needs.
Flexibility That Fits Your Income
For those with fluctuating income from year to year, a plan like a SEP IRA or Solo 401(k) offers the flexibility to tailor how much you save:
- Customizable Contributions: Save extra during high-income years and scale back when revenues are down, so that your plan fits your cash flow.
- Roth Options: A Roth Solo 401(k) lets you settle taxes at the time of contribution, so you can withdraw your savings tax-free down the road—a wise move if you expect your tax rate will increase in the future.
Save Money on Taxes
Retirement plans for self-employed individuals deliver significant tax benefits:
- Tax-Deductible Contributions: Contributions to a SEP IRA lower your taxable income, helping you keep more of your hard-earned money.
- Tax-Deferred Growth: Investments grow tax-free until withdrawal, which gives your money more time to grow.
- State-Specific Incentives: Depending on where you live, you may be eligible for additional credits as a business owner. These regional incentives help make these plans even more advantageous.
- Retirement Savings Contributions Credit (Saver’s Credit): Those who meet the requirements 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
Creating a stable future requires more than how much you save—it’s also about how you invest:
- Diversified Portfolios: Spreading your investments across varied stocks, bonds, and alternatives can help reduce risk while still growing your retirement fund.
- Emergency Back-Up: Supplementing your retirement savings with a business emergency fund prevents you from tapping into your nest egg during financial hardships and risking extra costs.
Plan for the Future of Your Des Moines, IA Business
A thoughtful retirement strategy enables you to plan ahead for what’s next with your Des Moines, IA business:
- Selling Your Business: When selling your business, accounts such as SEP IRAs or Solo 401(k)s remain your personal assets and don’t transfer with the business. These plans offer the steady income you’ll need later on. Remember that while selling a business often leads to a capital gain, retirement plan contributions 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 minimizes the taxes you’ll owe when you transfer your business.
- Succession Planning: Whether you’re transferring ownership, your retirement savings provide a stable foundation as you make this shift. You can also partner with a financial advisor experienced in both succession and retirement strategies to reduce taxes during the sale.
With the proper savings strategy, you can take control of 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?
Time remains one of the most important factors in retirement planning. Beginning sooner rather than later not only allows you to build a bigger financial cushion but also minimizes the pressure of saving aggressively in the future. The following are reasons why it pays to take action now:
The Cost of Waiting
Delaying your retirement savings can have a significant impact on the total you’ll have when you retire. The biggest reason is compound interest—the powerful process where your investments earn returns, and those returns, subsequently, earn even more returns. The longer your money has to grow, the larger the effect of this growth.
Example: Taylor and Alex 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 puts away $7,500 annually to make up for lost time.
By age 65, assuming 7% annual return:
- Alex puts in $180,000 and achieves a total of $691,184.39*.
- Taylor contributes $195,500 but only ends up with $474,367.78*.
How Early Contributions Grow
Small, consistent savings contributed over time can lead to significant growth. Consider this example showing the effect of consistent growth:
- Starting at age 25: If you invest $200 per month in a retirement plan with an projected 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 shortfall of over $260,000, all because of a 10-year delay.
The earlier you begin, the less you need to save each year to meet your retirement goals.
*These calculations 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. The scenarios provided are for illustrative purposes only and are not a promise of future results. Actual results may vary based on elements like market conditions, fees, and your unique situation. We recommend consulting a financial advisor for personalized advice.
Take Control of Your Financial Future
For self-employed individuals in Des Moines, IA, it might seem easier to focus more on reinvesting in your business rather than saving for retirement. That said, initiating a plan now gives you the chance to:
- Benefit from growth that is tax-deferred or penalty-free withdrawals in the future.
- Take advantage of adjustable savings that align with your earnings.
- Build a financial cushion that ensures stability, no matter how your business changes.
Getting started now, the less you’ll need to worry about catching up later in life. Building your retirement savings today means managing your financial future and creating for yourself the freedom to focus on your dreams—both for your future retirement and your Des Moines, IA business.
Types of Self-Employed Retirement Plans
Multiple retirement savings options open for self-employed individuals in Des Moines, IA, each offering its own benefits and trade-offs. A financial advisor is available to help you evaluate the benefits and drawbacks of each option and determine the one most suitable for your unique situation. Generally speaking, your self-employed retirement plan options in Des Moines, IA consist of:
Traditional or Roth IRA
Plan Overview: IRAs, or Individual Retirement Accounts, are retirement savings vehicles that offer specific tax advantages. In a standard IRA, contributions are typically tax-deductible, and investment earnings grow tax-deferred, but money taken out during retirement are taxed as income. In contrast, with Roth IRAs, you contribute are made with after-tax income, but retirement withdrawals that qualify, including earnings, are not taxed. In both accounts, withdrawals are penalty-free as long as 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 accessible for individuals with taxable earnings.
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 those who are self-employed to set aside a portion of their self-employment income. Contributions can only be made by an employer, so, as a sole proprietor, you (the employee) cannot make additional contributions 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. You may choose to contribute a flat-dollar amount or a percentage of wages to employee accounts. This type of plan may be ideal for entrepreneurs facing periods of inconsistent earnings. Compared to other retirement options, SEP IRAs lack the high fees associated with starting or maintaining other plans.
SEPs work like traditional IRAs, where you contribute pre-tax dollars and retirement distributions are taxable.
Eligibility: Any employer, including the self-employed can establish 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: Solo 401(k)s, also called an Individual 401(k) or one-participant 401(k) plan, is a retirement savings plan meant for businesses with no employees or when the sole employee is your spouse. Solo 401(k)s are similar to employer-sponsored 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 increased savings potential may be offset 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: Solo 401(k)s are available solely to business owners and their spouses can set up and contribute to a solo 401(k).
Contribution Limits: If you are self-employed with a solo 401(k) plan, you are allowed to make two types of contributions:
- Employee contributions of up to 100% of your earned income from self-employment, subject 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 if you attain age 60-63 in 2025.
- Contributions as an employer (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 employee contributions you made.
The total contribution cannot exceed $70,000, or $77,500 if you're over age 50 (as of 2025), $81,250 if you attain age 60-63 in 2025.
Individual Defined Benefit Plan
Plan Overview: A defined benefit plan represents a type of retirement plan that provides a set amount to business owners upon retirement. In contrast to the plans discussed earlier, 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 plan is ideal for wealthier entrepreneurs who aim to accumulate a significant sum for retirement and are prepared to contribute larger deposits. Contributions grow tax-free until withdrawal, and withdrawals incur taxes as income upon retirement.
Eligibility: Self-employed professionals managing a one-person company or employing fewer than five people can open an individual defined benefit plan, but it's most commonly suggested for those over 50 who make $250,000 or more annually. Typically, good candidates for defined benefit plans include:
- Entrepreneurs who want to invest more than $70,000 (or $77,500 if over age 50)
- Businesses currently investing 3-4% but are open to increasing contributions
- Businesses showing 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 maximum allowable contribution must be determined by an actuary based on your income, age, and retirement goals. Allowable contributions are updated yearly.
The Importance of a Financial Advisor in Des Moines, IA for Your Self-Employed Retirement Plan
Partnering with an advisor in Des Moines, IA specialized in self-employed retirement plans is an important asset for those working for themselves. They bring the skills needed to navigate the complexities of retirement planning and craft a tailored strategy that reflects your aspirations. An expert in your area will assess where you stand financially, determine how much risk you’re comfortable with, and assist you in making informed decisions about saving and investing for retirement. A key part of what we do for you features:
- Assist in selecting a plan that best fits your needs and goals
- Further adapt the plan to fit you personally even further
- Create a written plan that complies with IRS regulations
- Set up an asset trust plan
- Help you understand the plan's terms
- Review and modify your plan when necessary
- Offer continued financial education and guidance throughout your retirement planning process
- Boost your retirement earnings by maximizing your social security benefits
Self-Employed Retirement Plans in Des Moines, IA: Correct Capital's Process
Self-employed individuals in Des Moines, IA who don’t have the time or expertise to handle their retirement savings strategy on their own may end up overwhelmed when faced with their options. At Correct Capital, our Des Moines, IA financial advisors manage the majority of your savings plan setup 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 help understand if we're suited to your needs for you and your business. This short conversation allows us to understand what you're looking for with no pressure or significant effort on your part.
- Gather Information: Once we mutually decide to continue, we'll ask for information, including your employee count, your current financial situation, and your future objectives. This enables us to craft a tailored approach suited specifically for your needs.
- Review Your Plan: After we put together a plan based on the information you provide, we'll sit down with you and review your plan in detail to make sure it's clear and show how it aligns with your goals.
- Implementation and Monitoring: Once we've agreed on your plan, we'll put everything in place so you can initiate your savings journey. Over the course of our partnership, we'll meet with you and review your strategy to keep it tailored to your evolving circumstances.
Our Des Moines, IA financial advisors and retirement plan consultants act as fiduciary advisors, meaning they are required by law and ethical standards to do what's in your best interest.
Other financial advisory services we offer in Des Moines, IA include:
- Financial Planning for Business Owners
- Comprehensive Financial Planning
- Retirement Income Planning
- Investment Planning
- Retirement Financial Planning
- Independent Financial Advisor
- Roth Conversion
- Investment Management
- 401(k) Audit
- High-Net-Worth Wealth Management
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 basic financial recommendations. Correct Capital takes pride in, we take the time to get to know our clients and their businesses to provide personalized self-employed retirement plans. We offer all our Des Moines, IA clients our I.O.U. promise: all guidance we provide will be independent, objective, and unbiased. To begin on your self-employment retirement plan, call Correct Capital today at 877-930-401k or contact us online.
