Self-employed retirement plans Durham, NC. The independence of being your own boss in Durham, NC offers many benefits of working for yourself. Even so, this freedom sometimes brings with certain challenges, particularly when it comes to retirement savings, as you don't have the benefit 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 having a financially stable retirement, working with a financial advisor in Durham, NC to set up your self-employed retirement plan can provide significant tax advantages that enable your business to grow and succeed.
Few Durham, NC investment consulting and retirement planning firms are as attuned to the requirements of entrepreneurs better than Correct Capital. Our company’s founder grew up with a father who was a small business owner himself (check out our story here), and we take pride in assisting business owners in their retirement planning needs. We recognize that your professional and personal aspirations extend well past basic numbers, and we are dedicated to offer customized solutions that reflect your objectives. Keep reading to learn more about your self-employed retirement plan options in Durham, NC, or call Correct Capital at 877-930-401k or contact us online to talk to a entrepreneurial financial advisor in Durham, NC today.
Why Durham, NC 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 substantial tax savings, working with a financial advisor in Durham, NC allows you to customize your retirement plan to fit your specific needs.
Flexibility That Fits Your Income
If your income changes over time, a plan like a SEP IRA or Solo 401(k) offers the option to adjust how much you save:
- Customizable Contributions: Set aside more during high-income years and cut back when revenues are down, so that your plan works with your current income.
- Roth Options: Choosing a Roth Solo 401(k) lets you settle taxes at the time of contribution, so you can withdraw tax-free later—a wise move if you believe your tax rate is likely to rise in the future.
Save Money on Taxes
Retirement plans for self-employed individuals offer 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 accumulate.
- State-Specific Incentives: Based on your location, you might access state-specific credits as a sole proprietor. These regional incentives make these plans even more beneficial.
- Retirement Savings Contributions Credit (Saver’s Credit): Qualified participants can apply for a credit of up to 50% of the first $2,000 they contribute a retirement plan, cutting down your tax bill even more.
Protect Your Savings With Smart Investments
Building a secure retirement goes beyond just how much you save—it’s also linked to the way you invest:
- Diversified Portfolios: Spreading your investments across a mix of stocks, bonds, and alternatives is a smart way to minimize exposure to risk while still growing your retirement fund.
- Emergency Back-Up: Supplementing your retirement savings with a financial buffer for your business helps you avoid dipping into savings during challenging periods and facing tax penalties.
Plan for the Future of Your Durham, NC Business
Preparing for retirement also helps you prepare for what’s next with your Durham, NC business:
- Selling Your Business: For those considering a sale, accounts such as SEP IRAs or Solo 401(k)s stay in your name and don’t transfer with the business. These accounts ensure the financial stability you’ll need during retirement. Keep in mind that while the sale of a business usually creates a capital gain, contributions to retirement accounts are subject to yearly maximums (e.g., a maximum of $7,000 for IRAs or a maximum of $70,000 for Solo 401(k)s, factoring in catch-up contributions, based on plan compensation).
- Minimizing Taxes: Strategically planning your contributions helps lower the taxes you are required to pay when you pass on your business.
- Succession Planning: Whether you’re transferring ownership, your nest egg ensure a stable foundation during the change. You can also seek advice from a financial advisor with expertise in succession and retirement planning to minimize tax burdens on the sale.
With the best-fit retirement strategy, you can take control of your financial future, cut down your tax obligations, and establish a strong framework for both your retirement and your business goals.
Why Start a Self-Employed Retirement Plan in Durham, NC Now?
Time is one of the most crucial factors when it comes to saving for retirement. Beginning sooner rather than later not only allows you to build a bigger financial cushion but also reduces the financial burden of catching up later in life. This is why it pays to take action now:
The Cost of Waiting
Waiting to start your retirement fund can have a substantial impact on the amount you’ll have when you stop working. The main reason is compound interest—the concept where your investments earn returns, and those returns, subsequently, accumulate even more returns. The more time your money has to grow, the greater the impact of this growth.
Example: Taylor and Alex are both entrepreneurs. They each aim to save $500,000 for retirement by age 65:
- Alex begins contributing $5,000 annually at age 30.
- Taylor waits until age 40 but puts away $7,500 annually to bridge the gap.
By age 65, using a projected 7% annual return:
- Alex contributes $180,000 and accumulates $691,184.39*.
- Taylor puts in $195,500 but accumulates just $474,367.78*.
How Early Contributions Grow
Regular, modest investments made consistently often create significant growth. Here’s a simple scenario showing the impact 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 grow to approximately $497,303.29* by age 65.
- Starting at age 35: Investing the same $200 per month leaves you with only $235,412.97* by age 65—a difference of over $260,000, just from a 10-year delay.
The earlier you begin, 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, assuming a 7% annual return. The contributions were calculated by multiplying the annual deposit amount by the total number of years contributions were made. The scenarios provided are meant to provide general guidance and cannot predict actual future outcomes. Outcomes may change 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 Durham, NC, it can be tempting to put more emphasis on reinvesting in your business over saving for retirement. That said, starting a plan now allows you to:
- Take advantage of tax-deferred growth or penalty-free withdrawals later on.
- Benefit from flexible contributions that change with your cash flow.
- Create a safety net that provides security, no matter how your business develops.
The sooner you start, 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 allowing yourself the ability to concentrate on your objectives—both for your golden years and your Durham, NC business.
Types of Self-Employed Retirement Plans
Multiple retirement savings options open for entrepreneurs in Durham, NC, each with its own pros and cons. A financial advisor is available to help you understand the benefits and drawbacks of each choice and determine the one ideal for your circumstances. Typically, your self-employed retirement plan options in Durham, NC consist of:
Traditional or Roth IRA
Plan Overview: Individual Retirement Accounts (IRAs), as explained here, represent financial tools for retirement that include specific tax advantages. In a conventional IRA, contributions are typically tax-deductible, and investment earnings grow tax-deferred, but retirement distributions are taxed as income. In contrast, Roth IRAs require contributions are made with after-tax income, but eligible distributions during retirement, including earnings, are exempt from taxes. In both accounts, withdrawals are penalty-free provided you are at least 59½.
Eligibility: While many retirement plans, such as 401(k)s, are tied to employment, both traditional and Roth IRAs are accessible for individuals with an earned 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: The Simplified Employee Pension IRA offers a way to save for retirement that enables entrepreneurs to set aside a portion of their self-employment income. Contributions must come from an employer, so, as a independent business owner, you (the employee) would not be able to contribute beyond 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. It's your choice whether to contribute a fixed dollar figure or a percentage of wages to employee accounts. This type of plan may be ideal for businesses that experience fluctuating revenue streams. Unlike other plans, SEP IRAs are free of costly startup or administrative fees.
SEPs work like standard 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 must not exceed:
- 25% of compensation, or
- $70,000 for 2025
As a self-employed person, the allowable contribution 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 intended for businesses with no employees or when the sole employee is your spouse. Solo 401(k)s operate much like standard 401(k) plans, and enable contributions as both an employee or an employer with pre-tax money. This provides more savings versus SEPs or IRAs; however, the increased savings potential can be balanced by more constrained investment avenues. 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: This plan is exclusively for 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 can 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. The contribution limits for 2025 include $23,500, or $31,000 if you're over 50, or $34,750 if you attain age 60-63 in 2025.
- Employer profit-sharing contributions (as an employer) cannot exceed 25% of your adjusted self-employment income, which is calculated as net profits less half of your self-employment tax and the employee contributions you made.
Total contributions are capped at $70,000, or $77,500 for individuals aged 50+ (as of 2025), $81,250 for individuals turning 60-63 in 2025.
Individual Defined Benefit Plan
Plan Overview: The defined benefit plan offers a structured retirement solution that delivers a fixed, predetermined benefit to entrepreneurs upon retirement. As opposed to defined contribution plans, this plan is not influenced by market performance, but lets individuals clearly understand what they'll have in retirement. This strategy is best suited for high-earning professionals who want to save a substantial amount for retirement and are prepared to contribute sizeable contributions. Contributions offer tax-deferred growth, and withdrawals incur taxes as income upon retirement.
Eligibility: Self-employed professionals 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 make $250,000 or more annually. In most cases, good candidates for defined benefit plans are:
- Entrepreneurs who desire to contribute more than $70,000 (or $77,500 if over age 50)
- Companies already contributing 3-4% and are willing to do more
- Businesses with proven consistent profit patterns
- Partners or owners over age 40 who aim to quickly build retirement savings or accelerate the retirement savings
Contribution Limits: The maximum allowable contribution must be determined by an actuary using your financial situation, age, and savings targets. Limits on contributions are adjusted each year.
The Importance of a Financial Advisor in Durham, NC for Your Self-Employed Retirement Plan
A financial advisor in Durham, NC specialized in self-employed retirement plans serves as an invaluable resource for those working for themselves. They offer the knowledge to assist guide you through the challenges of retirement planning and design a customized plan that reflects your aspirations. An expert in your area will evaluate your financial situation, understand your risk tolerance, and assist you in choosing wisely 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
- Further adapt the plan to fit you personally even further
- Formalize a plan in writing in accordance with IRS guidelines
- Set up an asset trust plan
- Help you understand the plan's terms
- Monitor and adjust your plan when necessary
- Deliver continuous support and financial insights as you continue on the road to retirement
- Maximize what you receive in retirement by making the most of your social security
Self-Employed Retirement Plans in Durham, NC: Correct Capital's Process
Self-employed individuals in Durham, NC who aren’t equipped with the time or understanding to oversee their own retirement planning on their own can become overwhelmed as they look at their options. With Correct Capital, our Durham, NC financial advisors handle the lion's share of your retirement planning for you, and strive to ensure meeting your future savings targets as easy as possible for you. We will guide you in creating your self-employed retirement plan in a quick, four-step process:
- Schedule a Call: A quick 20-minute call is all it takes, a member of our advisor team will assess if we're a good fit for you and your business. This short conversation lets us learn about your needs with no pressure or significant effort on your part.
- Gather Information: Should we agree to proceed, we'll ask for information, including whether you have employees, your current financial situation, and your future objectives. This allows us to put together a custom plan suited specifically for your needs.
- Review Your Plan: Once we've developed a plan from the information you provide, we'll schedule a meeting and review your plan thoroughly to ensure you understand it and explain its fit to your circumstances.
- Implementation and Monitoring: After we agree on your plan, we'll put everything in place so you can initiate your savings journey. Throughout our relationship, we'll have regular meetings and review your strategy to keep it tailored to your evolving circumstances.
Our Durham, NC financial advisors and retirement plan consultants serve as fiduciary advisors, who are obligated to they are legally and ethically bound to do what's in your best interest.
Other financial advisory services we offer in Durham, NC 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 Durham, NC
To you, your business is more than "just a business", and your Durham, NC financial advisors must deliver more than just good financial guidance. With Correct Capital, we focus on building a relationship with our clients and their businesses to deliver customized self-employed retirement plans. To every client in Durham, NC, we provide our I.O.U. promise: everything we recommend will be independent, objective, and unbiased. To get started on your self-employment retirement plan, reach out to Correct Capital at 877-930-401k or contact us online.
