Self-employed retirement plans Durham, NC. The freedom of owning your own business in Durham, NC is one of the greatest advantages of working for yourself. That said, this freedom can come with a lack of security, particularly when it comes to 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, although many could benefit from understanding their retirement options. In addition to having a more secure retirement, partnering with a financial advisor in Durham, NC to set up your self-employed retirement plan delivers significant tax advantages that allow your business to grow and succeed.
Few Durham, NC wealth management and retirement planning firms truly grasp the challenges faced by self-employed individuals better than Correct Capital. The father of our founder was a small business owner himself (learn more about our story here), and Correct Capital have a rich history of assisting business owners in their retirement planning needs. We understand that your goals for your business and retirement go far beyond simple financial figures, and we strive to offer tailored solutions that reflect your objectives. Keep reading to learn more about your self-employed retirement plan options in Durham, NC, or give us a call at Correct Capital at 877-930-401k or contact us online to talk to a self-employed financial advisor in Durham, NC today.
Why Durham, NC Self-Employed Individuals Should Have a Retirement Plan
Retirement plans for self-employed individuals are essential for preparing you for the future, they also offer immediate benefits today. From flexible contributions to substantial tax savings, partnering with a financial advisor in Durham, NC allows you to create your retirement plan to fit your unique financial situation.
Flexibility That Fits Your Income
When your earnings vary annually, a plan like a SEP IRA or Solo 401(k) offers the option to adjust how much you save:
- Customizable Contributions: Save extra during successful years and cut back when income is lower, 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 smart decision if you expect your tax rate to be higher in the future.
Save Money on Taxes
Self-employed retirement plans offer significant tax benefits:
- Tax-Deductible Contributions: Contributions to a SIMPLE IRA shrink your tax liability, helping you keep more of your earnings.
- Tax-Deferred Growth: Your savings grow untaxed until withdrawn, which gives your money more time to accumulate.
- State-Specific Incentives: In some states, you may be eligible for additional credits as a self-employed individual. These state-level incentives make these plans even more valuable.
- Retirement Savings Contributions Credit (Saver’s Credit): Eligible individuals can claim a tax 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 isn’t only about how much you save—it’s also determined by your investment strategy:
- Diversified Portfolios: Allocating your investments across different stocks, bonds, and other assets serves to minimize exposure to risk while still growing your savings.
- Emergency Back-Up: Pairing your retirement plan with a business emergency fund prevents you from using your retirement funds during challenging periods and incurring penalties.
Plan for the Future of Your Durham, NC Business
A thoughtful retirement strategy also helps you think through what’s next with your Durham, NC business:
- Selling Your Business: When selling your business, retirement accounts like SEP IRAs and Solo 401(k)s remain your personal assets and are not part of the sale. These plans can provide the reliable income you’ll need during retirement. It’s important to note that while the sale of a business usually creates a capital gain, contributions to retirement accounts are subject to yearly maximums (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: Using retirement contributions wisely helps lower the taxes you’ll owe when you transfer your business.
- Succession Planning: For those winding down or handing over their business, your retirement accounts provide financial security during the change. You can also partner with a financial advisor with expertise in succession and retirement planning to reduce taxes on the sale.
With the proper savings strategy, you can take control of your financial future, lower your tax bill, and establish a solid base 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 important assets for building your retirement fund. Getting a head start not only helps you grow a more substantial retirement fund but also lowers the financial burden of catching up later in life. This is why it is beneficial to start now:
The Cost of Waiting
Delaying your retirement savings could lead to a substantial impact on the savings you’ll have when you reach retirement age. The main reason is compound interest—the financial principle where your investments earn returns, and those returns, then, earn even more returns. The greater time span your money has to grow, the larger the impact of this growth.
Example: Alex and Taylor are both self-employed professionals. Both of them want to save $500,000 for retirement by age 65:
- Alex initiates savings of $5,000 annually at age 30.
- Taylor waits until age 40 but contributes $7,500 annually to catch up.
By age 65, with an assumption of 7% annual return:
- Alex contributes $180,000 and ends up with $691,184.39*.
- Taylor invests $195,500 but accumulates just $474,367.78*.
How Early Contributions Grow
Regular, modest investments contributed over time may result in substantial growth. Take a look at this scenario showing the effect of compounding:
- 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: Investing the same $200 per month leaves you with only $235,412.97* by age 65—a shortfall of over $260,000, just from a 10-year delay.
The earlier you begin, the less effort required each year to reach your retirement goals.
*The numbers shown in this scenario are estimates derived from NerdWallet’s Compound Interest Calculator, with the assumption of 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 are not a promise of future results. Actual results may vary depending on factors such as market conditions, fees, and personal factors. Always consult a financial advisor for custom recommendations.
Take Control of Your Financial Future
As a self-employed person in Durham, NC, it is often the case that you prioritize reinvesting in your business instead of saving for retirement. However, initiating a plan now allows you to:
- Take advantage of tax-free future growth or tax-free withdrawals in the future.
- Benefit from contribution flexibility that adapt to your cash flow.
- Establish a safety net that provides security, no matter how your business develops.
Starting early, the less you’ll have to worry about making up for lost time later in life. Building your retirement savings today means gaining control over your financial future and giving yourself the opportunity 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 offering its own advantages and considerations. A financial advisor is available to help you understand the benefits and drawbacks of each option and choose the one best suited for your circumstances. 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 financial tools for retirement that include specific tax advantages. In a traditional IRA, the money you contribute is often tax-deductible, and investment earnings grow tax-deferred, but money taken out during retirement are subject to income tax. In contrast, Roth IRAs require contributions are made with after-tax income, but retirement withdrawals that qualify, including earnings, are exempt from taxes. In both accounts, withdrawals don’t incur penalties provided you are at least 59½.
Eligibility: While many retirement plans, such as 401(k)s, are tied to employment, traditional and Roth IRAs are available to anyone 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: SEP IRAs is a retirement plan that permits self-employed individuals to save a percentage of their net business profits. Contributions are strictly employer contributions an employer, so, as a self-employed individual, you (the employee) would not be able to contribute above the 25% you (the employer) allocate. 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. A SEP IRA works well for companies with cycles of high revenue and low revenue. In contrast to some alternatives, SEP IRAs don’t have expensive setup or ongoing fees.
SEPs function like conventional 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
For self-employed individuals, the allowable contribution 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 self-employed retirement plan intended for businesses without employees or where the only employee is a spouse. Solo 401(k)s function similarly to traditional employer-managed 401(k) plans, and enable contributions as both the employer and the employee with pre-tax money. This offers more savings compared to SEPs or IRAs; however, the extra savings options may be offset by more restricted investment choices. In a solo 401(k) plan, you can make either traditional or Roth deferrals, which have 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: For self-employed individuals with a solo 401(k) plan, you can make two types of contributions:
- Employee contributions of up to 100% of your earned income from self-employment, capped at the annual contribution limit. In 2025, those limits are $23,500, or $31,000 if you are 50 or older, or $34,750 if you attain age 60-63 in 2025.
- Contributions as an employer (as an employer) cannot exceed 25% of your net earnings from self-employment, which is defined as net profit minus half of your self-employment tax and the elective deferrals you made.
Your combined contributions must not surpass $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: Defined benefit plans represents a type of retirement plan that delivers a fixed, predetermined benefit 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 what they'll get in retirement. This option is recommended for wealthier self-employed individuals who are focused on saving a significant sum for retirement and can commit to making sizeable contributions. Contributions are tax deferred, and withdrawals are taxed as income in retirement.
Eligibility: Self-employed professionals running an owner-only business or employing fewer than five people can open an individual defined benefit plan, but it's most commonly advised for those over 50 who make $250,000 or more annually. In most cases, good candidates for defined benefit plans are:
- Partners or owners who desire to contribute more than $70,000 (or $77,500 for individuals 50 and older)
- Businesses currently investing 3-4% but are open to increasing contributions
- Businesses with proven consistent profit patterns
- Partners or owners over age 40 who wish to accelerate savings or boost savings within a short timeframe
Contribution Limits: The cap on contributions must be determined by an actuary based on your income, age, and retirement goals. Allowable contributions change annually.
The Importance of a Financial Advisor in Durham, NC for Your Self-Employed Retirement Plan
A financial advisor in Durham, NC experienced with retirement plans for the self-employed can be an important asset for entrepreneurs. They offer the knowledge to assist navigate the complexities of retirement planning and design a personalized approach that aligns with your goals. Your advisor in Durham, NC will assess where you stand financially, determine how much risk you’re comfortable with, and assist you in selecting the best options about saving and investing for retirement. Included in what we do for you involves:
- Guide you in choosing a plan that aligns with your objectives and circumstances
- Tailor the plan to fit you personally even further
- Adopt 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 as needed
- Deliver continuous support and financial insights throughout your retirement planning process
- Boost your retirement earnings by making the most of your social security
Self-Employed Retirement Plans in Durham, NC: Correct Capital's Process
Durham, NC business owners who aren’t equipped with the time or understanding to handle their retirement savings strategy on their own may end up overwhelmed when faced with their options. With Correct Capital, our Durham, NC financial advisors handle the bulk of your retirement planning for you, and strive to ensure meeting your financial objectives as hassle-free as possible for you. We are here to assist you in setting up 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 can help understand if we're suited to your needs for you and your business. This brief introduction allows us to get a sense of your goals with no pressure or extensive time commitment on your part.
- Gather Information: If we both decide to move forward, we'll gather information, including whether you have employees, your current financial situation, and your future objectives. This helps us create a tailored approach designed just for you.
- Review Your Plan: After we put together a plan using the information you provide, we'll sit down with you and go over 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 set everything up so you can initiate your savings journey. Over the course of our partnership, we'll meet with you and monitor your plan to make sure it remains aligned with your goals.
Our Durham, NC financial advisors and retirement plan consultants serve as fiduciary advisors, which means they are committed by law and ethics to act in your best interest.
Other financial advisory services we offer in Durham, NC 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 Durham, NC
You don't see your business as "just a business", and your Durham, NC financial advisors must deliver more than basic financial recommendations. With Correct Capital, we make it a priority to understand 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: all of the advice you get from us will be independent, objective, and unbiased. To begin on your self-employment retirement plan, reach out to Correct Capital at 877-930-401k or contact us online.
