Self-employed retirement plans Durham, NC. The independence of running your own company in Durham, NC offers many benefits of having a self-directed career. Even so, this flexibility sometimes brings with potential drawbacks, especially regarding building your retirement fund, because you don't have access to retirement programs through an employer. Only 13% of self-employed individuals have a workplace retirement plan, but many should consider looking into other possibilities. In addition to having a more comfortable retirement, working with a financial advisor in Durham, NC to establish your self-employed retirement plan delivers significant tax advantages that allow both you and your business to thrive.
Few Durham, NC wealth management and retirement planning firms are as attuned to the requirements of self-employed individuals 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 we are deeply experienced in helping businesses with their retirement planning needs. We know that your goals for your business and retirement go far beyond basic numbers, and we strive to create tailored solutions that reflect your objectives. Read on to discover about your self-employed retirement plan options in Durham, NC, or call Correct Capital at 877-930-401k or contact us online to consult with a entrepreneurial financial advisor in Durham, NC today.
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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 real benefits today. With customizable contribution options to substantial tax savings, working with a financial advisor in Durham, NC helps you customize your retirement plan to align with your specific needs.
Flexibility That Fits Your Income
When your earnings vary from year to year, a plan like a SEP IRA or Solo 401(k) offers the option to tailor how much you save:
- Customizable Contributions: Contribute more during successful years and reduce savings when your earnings dip, so your plan fits your financial situation.
- Roth Options: A Roth Solo 401(k) lets you pay taxes on contributions now, enabling you to withdraw your savings tax-free down the road—a smart decision if you believe your tax rate will increase 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 reduce what you owe in taxes, allowing you to keep more of your hard-earned money.
- Tax-Deferred Growth: You won't pay taxes on investment growth until you withdraw it, providing your money more time to grow.
- State-Specific Incentives: Based on your location, you could qualify for additional tax breaks as a self-employed individual. These regional incentives can make these plans even more advantageous.
- Retirement Savings Contributions Credit (Saver’s Credit): Qualified participants can take advantage of a 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 goes beyond just how much you save—it’s also about how you invest:
- Diversified Portfolios: Spreading your investments across different stocks, bonds, and other assets can help mitigate financial risk while still growing your retirement fund.
- Emergency Back-Up: Pairing your retirement plan with a business emergency fund ensures you don’t tapping into your nest egg during tough times and facing tax penalties.
Plan for the Future of Your Durham, NC Business
A thoughtful retirement strategy can assist you plan ahead for what’s next with your Durham, NC 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 accounts can provide the financial stability you’ll need during retirement. 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., as much as $7,000 for IRAs or as much as $70,000 for Solo 401(k)s, with catch-up contributions, based on plan compensation).
- Minimizing Taxes: Making the most of retirement savings minimizes the taxes you’ll owe when you transfer your business.
- Succession Planning: If you’re passing the business on, your retirement accounts offer the funds you need during the change. You might want to partner with a financial advisor experienced in both succession and retirement strategies to minimize tax burdens on the sale.
With the right retirement plan, you can take control of your financial future, reduce your tax burden, and build a secure foundation for both your retirement and your business goals.
Why Start a Self-Employed Retirement Plan in Durham, NC Now?
Time remains one of the most valuable resources in retirement planning. Beginning sooner rather than later not only lets you accumulate a larger nest egg but also minimizes the pressure of saving aggressively in the future. This is why it makes sense to begin today:
The Cost of Waiting
Waiting to start your retirement fund can have a substantial impact on the total you’ll have when you stop working. The primary reason is compound interest—the financial principle where your investments generate earnings, and those returns, in turn, earn even more returns. The greater time span your money has to grow, the larger the effect of compounding.
Example: Taylor and Alex are both self-employed individuals. They each aim to save $500,000 for retirement by age 65:
- Alex initiates savings of $5,000 annually at age 30.
- Taylor postpones starting contributions to age 40 but contributes $7,500 annually to make up for lost time.
By age 65, using a projected 7% annual return:
- Alex contributes $180,000 and accumulates $691,184.39*.
- Taylor invests $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 impact of compound interest:
- Starting at age 25: If you invest $200 per month in a retirement plan with an projected return of 7%, you’ll end up with $497,303.29* by age 65.
- Starting at age 35: Investing the same $200 per month would result in only $235,412.97* by age 65—a difference of over $260,000, all because of a 10-year delay.
Starting sooner, the less effort required each year to reach your retirement goals.
*The numbers shown in this scenario represent estimates generated with NerdWallet’s Compound Interest Calculator, assuming a 7% annual return. These calculations involved multiplying yearly deposits by the years contributed. These examples are intended as illustrative examples and are not a promise of future results. Actual results may vary due to factors such as market conditions, fees, and personal factors. We recommend consulting a financial advisor for personalized advice.
Take Control of Your Financial Future
For self-employed individuals in Durham, NC, it can be tempting to prioritize reinvesting in your business rather than saving for retirement. Even so, initiating a plan now allows you to:
- Leverage growth that is tax-deferred or penalty-free withdrawals later on.
- Take advantage of contribution flexibility that align with your earnings.
- Build a safety net that offers peace of mind, no matter how your business evolves.
Starting early, the less you’ll be required to worry about playing catch-up later in life. Saving for retirement now means taking control of your financial future and creating for yourself the opportunity to focus on your objectives—both for your golden years and your Durham, NC business.
Types of Self-Employed Retirement Plans
There are several retirement savings options open for entrepreneurs in Durham, NC, each providing its own benefits and trade-offs. A financial advisor is available to help you evaluate the benefits and drawbacks of each choice and identify the one best suited for your needs. Generally speaking, your self-employed retirement plan options in Durham, NC consist of:
Traditional or Roth IRA
Plan Overview: IRAs, or Individual Retirement Accounts, are long-term savings plans that offer key tax perks. In a standard IRA, you can usually deduct your contributions from taxable income, and returns grow free of current taxes, but money taken out during retirement are taxable. In contrast, Roth IRA contributions from post-tax earnings, but retirement withdrawals that qualify, including earnings, are exempt from taxes. In both accounts, withdrawals are penalty-free 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 taxable earnings.
Contribution Limits: For 2025, annual contribution limits for IRAs are set at $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 is a retirement plan that enables entrepreneurs to contribute a percentage of their net earnings. Contributions can only be made by an employer, so, as a sole proprietor, 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. 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 cycles of high revenue and low revenue. Compared to other retirement options, SEP IRAs don’t have costly startup or administrative fees.
SEPs operate like standard IRAs, where contributions are made with pre-tax money and withdrawals are taxed as income.
Eligibility: Both employers and self-employed individuals 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
For self-employed individuals, 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 retirement savings plan designed for businesses with no employees or if the only employee is your spouse. This type of plan operate much like traditional employer-managed 401(k) plans, and enable contributions as both an employee or an employer with pre-tax money. This allows for more savings compared to SEPs or IRAs; however, the increased savings potential may be offset by more constrained investment avenues. In a solo 401(k) plan, you can make either traditional or Roth deferrals, which offer the same tax benefits as their IRA contribution counterparts.
Eligibility: Solo 401(k)s are available solely to business owners and their spouses may establish and contribute to a solo 401(k).
Contribution Limits: If you are self-employed with a solo 401(k) plan, you can make two types of contributions:
- Deferrals as an employee of up to 100% of your self-employment income, up to the annual contribution limit. In 2025, those limits are $23,500, or $31,000 if you're over 50, or $34,750 for individuals aged 60-63 in 2025.
- Contributions as an employer (as an employer) cannot exceed 25% of your adjusted self-employment income, which is defined as net profit minus half of your self-employment tax and the deferrals you made.
The total contribution cannot exceed $70,000, or $77,500 if you're over age 50 (in 2025), $81,250 for those aged 60-63 in 2025.
Individual Defined Benefit Plan
Plan Overview: A defined benefit plan represents a type of retirement plan that delivers a set amount to business owners upon retirement. As opposed to defined contribution plans, investment returns don’t affect the payout, but lets individuals clearly understand the precise amount they'll get in retirement. This plan is best suited for higher-income self-employed individuals who aim to accumulate a substantial amount for retirement and are prepared to contribute sizeable contributions. Contributions are tax deferred, and withdrawals are taxable as income in retirement.
Eligibility: Any self-employed individual running an owner-only business or employing fewer than five people are eligible to open an individual defined benefit plan, but it's most commonly suggested for those over 50 who generate a minimum of $250,000 yearly. Generally, good candidates for defined benefit plans tend to be:
- Business owners or partners who aim to deposit more than $70,000 (or $77,500 for individuals 50 and older)
- Organizations that already put in 3-4% and are willing to do more
- Organizations that have demonstrated consistent profit patterns
- Entrepreneurs over age 40 who desire to "catch up" or increase their retirement contributions rapidly
Contribution Limits: The cap on contributions must be determined by an actuary using your financial situation, age, and savings targets. Limits on contributions change annually.
The Importance of a Financial Advisor in Durham, NC for Your Self-Employed Retirement Plan
Partnering with an advisor in Durham, NC specialized in self-employed retirement plans serves as an invaluable resource for entrepreneurs. They have the expertise to help guide you through the challenges of retirement planning and craft a personalized approach that matches your objectives. A financial advisor in Durham, NC will assess where you stand financially, understand your risk tolerance, and guide you in choosing wisely about saving and investing for retirement. Included in what we do for you involves:
- Guide you in choosing a plan that best fits your needs and goals
- Customize the plan to your specific situation even further
- Adopt a written plan as required by IRS rules
- Arrange a trust plan for assets
- Make sure you understand the plan's terms
- Track and fine-tune your plan to keep it aligned with your goals
- Offer continued financial education and guidance to help you navigate your retirement journey
- Increase your retirement income by making the most of your social security
Self-Employed Retirement Plans in Durham, NC: Correct Capital's Process
Entrepreneurs in Durham, NC who aren’t equipped with the time or understanding to handle their retirement savings strategy independently may end up overwhelmed as they look at their choices. At Correct Capital, our Durham, NC financial advisors manage the bulk of your retirement planning for you, working to make meeting your retirement goals as straightforward as possible for you. We can help you get set up your self-employed retirement plan in four simple steps:
- Schedule a Call: It only takes 20 minutes, a member of our advisor team can determine if our services align for you and your business. This initial call allows us to understand what you're looking for with zero commitment or extensive time commitment on your part.
- Gather Information: Should we agree to proceed, we'll request information, including how many employees you have (if any), your present financial standing, and your retirement goals. This allows us to put together a tailored approach suited specifically for your needs.
- Review Your Plan: Once we've developed a plan using the information you provide, we'll meet with you and review your plan thoroughly to make sure it's clear and show how it aligns with your goals.
- Implementation and Monitoring: When we finalize 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 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:
- 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
Your business isn't "just a business" to you, and your Durham, NC financial advisors need to offer more than simply sound financial advice. At Correct Capital, we focus on building a relationship with our clients and their businesses to deliver tailored self-employed retirement plans. To every client in Durham, NC, 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, reach out to Correct Capital at 877-930-401k or contact us online.
