Self-employed retirement plans Fayetteville, NC. The freedom of owning your own business in Fayetteville, NC is one of the best aspects of being self-employed. However, this freedom sometimes brings with a lack of security, particularly in terms of building your retirement fund, as you don't have access to retirement programs through an employer. Only 13% of self-employed individuals have a workplace retirement plan, although many should consider understanding their retirement options. In addition to enjoying a more secure retirement, working with a financial advisor in Fayetteville, NC to establish your self-employed retirement plan delivers significant tax advantages that help both you and your business to thrive.
Few Fayetteville, NC investment consulting and retirement planning firms understand the needs of self-employed individuals as well as 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 our firm are deeply experienced in supporting entrepreneurs with their retirement planning needs. We understand that your goals for your business and retirement extend well past basic numbers, and we are dedicated to provide personalized solutions to meet your unique goals. Continue exploring to find out about your self-employed retirement plan options in Fayetteville, NC, or reach out to Correct Capital at 877-930-401k or contact us online to consult with a self-employed financial advisor in Fayetteville, NC today.
Why Fayetteville, 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 provide immediate benefits today. From flexible contributions to substantial tax savings, consulting a financial advisor in Fayetteville, NC allows you to customize your retirement plan to suit your unique financial situation.
Flexibility That Fits Your Income
When your earnings vary over time, a plan like a SEP IRA or Solo 401(k) offers the freedom to modify how much you save:
- Customizable Contributions: Save extra during high-income years and reduce savings when income is lower, so that your plan aligns with your current income.
- Roth Options: Choosing a Roth Solo 401(k) lets you pay taxes on contributions now, allowing you to withdraw without tax penalties in the future—a smart decision if you anticipate your tax rate will increase in the future.
Save Money on Taxes
Plans designed for the self-employed offer valuable tax benefits:
- Tax-Deductible Contributions: Contributions to a SIMPLE IRA reduce what you owe in taxes, helping you keep more of your income.
- Tax-Deferred Growth: Your savings grow untaxed until withdrawn, giving your money more time to accumulate.
- State-Specific Incentives: In some states, you could qualify for extra credits as a sole proprietor. These regional incentives make these plans even more advantageous.
- Retirement Savings Contributions Credit (Saver’s Credit): Qualified participants can claim a tax credit of up to 50% of the first $2,000 contributed a retirement plan, helping to lower your tax bill even more.
Protect Your Savings With Smart Investments
Creating a stable future isn’t only about how much you save—it’s also about how you invest:
- Diversified Portfolios: Allocating your investments across different stocks, bonds, and alternatives serves to mitigate financial risk while helping to grow your savings.
- Emergency Back-Up: Combining your retirement strategy and a financial buffer for your business prevents you from dipping into savings during tough times and risking extra costs.
Plan for the Future of Your Fayetteville, NC Business
Preparing for retirement can assist you prepare for what’s next with your Fayetteville, NC business:
- Selling Your Business: For those considering a sale, retirement accounts like SEP IRAs and Solo 401(k)s remain your personal assets and won’t be included in the sale. These accounts can provide the reliable income you’ll need during retirement. Remember that while selling your business results in a capital gain, retirement plan contributions are restricted by contribution limits (e.g., up to $7,000 for IRAs or a maximum of $70,000 for Solo 401(k)s, factoring in catch-up contributions, depending on plan details).
- Minimizing Taxes: Making the most of retirement savings minimizes the taxes you might face when you sell your business.
- Succession Planning: If you’re passing the business on, your nest egg ensure financial security during the change. You may also partner with a financial advisor who specializes in succession planning and retirement accounts to minimize tax burdens on the sale.
With the proper savings strategy, you manage your financial future, lower your tax bill, and establish a strong framework for both your retirement and your business goals.
Why Start a Self-Employed Retirement Plan in Fayetteville, NC Now?
There’s no denying that time is one of the most valuable resources when it comes to saving for retirement. Getting a head start not only allows you to build a more substantial retirement fund but also lowers the financial burden of playing catch-up as you get older. Here’s why it pays to take action now:
The Cost of Waiting
Waiting to start your retirement fund may cause a substantial impact on the amount you’ll have when you retire. The primary reason is compound interest—the concept where your investments generate earnings, and those returns, then, accumulate even more returns. The longer your money has to grow, the more significant the impact of this growth.
Example: Two individuals, Alex and Taylor are both entrepreneurs. Both of them want to save $500,000 for retirement by age 65:
- Alex starts saving $5,000 annually at age 30.
- Taylor waits until age 40 but contributes $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 invests $195,500 but achieves a total of only $474,367.78*.
How Early Contributions Grow
Regular, modest investments invested steadily can lead to impressive growth. Here’s a simple scenario showing the effect of consistent growth:
- Starting at age 25: If you invest $200 per month in a retirement plan with an average annual return of 7%, you’ll accumulate $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.
Saving early, the lower your annual savings needs each year to achieve your retirement goals.
*The figures provided in this example are based on estimates generated with NerdWallet’s Compound Interest Calculator, with the assumption of a 7% annual return. These calculations involved multiplying yearly deposits by the years contributed. This information is meant to provide general guidance and do not guarantee future performance. Actual results may vary due to factors such as market conditions, fees, and individual circumstances. We recommend consulting a financial advisor for guidance tailored to your needs.
Take Control of Your Financial Future
As a self-employed person in Fayetteville, NC, it can be tempting to put more emphasis on reinvesting in your business instead of saving for retirement. However, initiating a plan now enables you to:
- Take advantage of growth that is tax-deferred or withdrawals without taxes in the future.
- Enjoy contribution flexibility that adapt to your income.
- Establish a safety net that offers peace of mind, no matter how your business evolves.
The sooner you start, the less you’ll be required to worry about catching up later in life. Building your retirement savings today means gaining control over your financial future and creating for yourself the freedom to focus on your goals—both for your golden years and your Fayetteville, NC business.
Types of Self-Employed Retirement Plans
There are several retirement savings options designed for entrepreneurs in Fayetteville, NC, each with its own benefits and trade-offs. A financial advisor can help you evaluate the advantages and disadvantages of each plan and determine the one best suited for your unique situation. Generally speaking, your self-employed retirement plan options in Fayetteville, NC include:
Traditional or Roth IRA
Plan Overview: IRAs, or Individual Retirement Accounts, are financial tools for retirement that offer specific tax advantages. In a standard 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 eligible distributions during retirement, including earnings, are tax-free. In both accounts, withdrawals are penalty-free if you are at least 59½.
Eligibility: Unlike plans linked to your job, traditional and Roth IRAs are open to those with a source of 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 contribute a percentage of their net earnings. Contributions can only be made by an employer, so, as a self-employed individual, you (the employee) are limited to contributions from the employer role 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. It's your choice whether to contribute a set monetary value 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 lack expensive setup or ongoing fees.
SEPs function like standard IRAs, where contributions are made with pre-tax money and retirement distributions are taxable.
Eligibility: Any employer, including the self-employed 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 amount eligible to be contributed is based on a special calculation.
Solo 401(k)
Plan Overview: The Solo 401(k), also called an Individual 401(k) or one-participant 401(k) plan, is a self-employed retirement plan meant for businesses without employees or if the only employee is your spouse. These plans are similar to traditional employer-managed 401(k) plans, and let you make contributions as both an employer and an employee with pre-tax money. This allows for more savings than SEPs or IRAs; however, the extra savings options can be balanced by more limited investment options. 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 are eligible to open 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 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 if you attain age 60-63 in 2025.
- Employer profit-sharing contributions (as an employer) are limited to 25% of your net earnings from self-employment, 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 for individuals aged 50+ (for 2025), $81,250 if you attain age 60-63 in 2025.
Individual Defined Benefit Plan
Plan Overview: The defined benefit plan represents a type of retirement plan that guarantees a set amount to self-employed individuals upon retirement. In contrast to the plans discussed earlier, this plan is not influenced by market performance, but lets individuals clearly understand the precise amount they'll get in retirement. This option is ideal for wealthier entrepreneurs who aim to accumulate a large amount for retirement and are willing to make larger deposits. Contributions are tax deferred, and withdrawals incur taxes as income in retirement.
Eligibility: Self-employed professionals operating a solo business or with a small staff of under five may establish an individual defined benefit plan, but it's generally advised for people above age 50 who earn at least $250,000 a year. In most cases, good candidates for defined benefit plans tend to be:
- Partners or owners who desire to contribute more than $70,000 (or $77,500 for those aged 50+)
- Companies already contributing 3-4% but are open to increasing contributions
- Organizations that have demonstrated consistent profit patterns
- Business leaders over age 40 who aim to quickly build retirement savings or accelerate the retirement savings
Contribution Limits: The maximum allowable contribution requires calculation from an actuary using your earnings, age, and retirement objectives. Allowable contributions change annually.
The Importance of a Financial Advisor in Fayetteville, NC for Your Self-Employed Retirement Plan
A financial advisor in Fayetteville, NC experienced with retirement plans for the self-employed can be an essential partner for self-employed individuals. They bring the skills needed to understand the intricacies of saving for retirement and develop a personalized approach that matches your objectives. Your advisor in Fayetteville, NC will assess where you stand financially, determine how much risk you’re comfortable with, and assist you in choosing wisely about saving and investing for retirement. Included in what we do for you involves:
- Help you choose a plan that suits your unique requirements
- 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
- Track and fine-tune your plan to keep it aligned with your goals
- Offer continued financial education and guidance as you continue on the road to retirement
- Increase your retirement income by optimizing your social security benefits
Self-Employed Retirement Plans in Fayetteville, NC: Correct Capital's Process
Self-employed individuals in Fayetteville, NC who don’t have the time or expertise to handle their own retirement planning on their own can become overwhelmed when faced with their options. At Correct Capital, our Fayetteville, NC financial advisors take on the majority of your retirement strategy for you, to help make meeting your future savings targets as straightforward 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: In just 20 minutes, a member of our advisor team can determine if our services align for you and your business. This initial call lets us understand what you're looking for with no obligation or significant effort on your part.
- Gather Information: If we both decide to move forward, we'll request information, including how many employees you have (if any), your current financial situation, and your retirement goals. This enables us to craft a custom plan designed just for you.
- Review Your Plan: After we put together a plan based on the information you provide, we'll meet with you and review your plan thoroughly to make sure it's clear and understand how it best correlates to your needs.
- Implementation and Monitoring: After we agree on your plan, we'll put everything in place so you can begin contributing. Over the course of our partnership, we'll have regular meetings and track your progress to keep it tailored to your evolving circumstances.
Our Fayetteville, NC financial advisors and retirement plan consultants serve as fiduciary advisors, meaning they are committed by law and ethics to do what's in your best interest.
Other financial advisory services we offer in Fayetteville, 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 Fayetteville, NC
Your business isn't "just a business" to you, and your Fayetteville, NC financial advisors must deliver more than basic financial recommendations. With Correct Capital, we take the time to get to know our clients and their businesses to provide customized self-employed retirement plans. We offer all our Fayetteville, NC clients our I.O.U. promise: everything we recommend 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.
