Self-employed retirement plans Fayetteville, NC. The independence of being your own boss in Fayetteville, NC is one of the best aspects of having a self-directed career. That said, this flexibility often comes with potential drawbacks, especially in terms of planning for retirement, because you don't have the benefit of retirement programs through an employer. Only 13% of self-employed individuals have a workplace retirement plan, although many would be better off exploring their options. In addition to enjoying a financially stable retirement, partnering with a financial advisor in Fayetteville, NC to establish your self-employed retirement plan can provide significant tax advantages that help your business to grow and succeed.
Few Fayetteville, NC investment consulting and retirement planning firms understand the needs of self-employed individuals quite like Correct Capital. The father of our founder was a small business owner himself (learn more about our story here), and our firm have a rich history of helping businesses with their retirement planning needs. We know that your business and retirement aspirations go far beyond just monetary concerns, and we are dedicated to offer personalized solutions aligned with your vision. Continue exploring to find out about your self-employed retirement plan options in Fayetteville, NC, or call Correct Capital at 877-930-401k or contact us online to speak with a self-employed financial advisor in Fayetteville, NC today.
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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 offer tangible benefits today. From flexible contributions to considerable tax savings, working with a financial advisor in Fayetteville, NC enables you to customize your retirement plan to suit 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: Set aside more during high-income years and reduce savings when revenues are down, so your plan aligns with your cash flow.
- Roth Options: Choosing a Roth Solo 401(k) lets you handle taxes upfront, allowing you to withdraw without tax penalties in the future—an advantageous choice if you believe your tax rate is likely to rise in the future.
Save Money on Taxes
Self-employed retirement plans provide powerful tax benefits:
- Tax-Deductible Contributions: Contributions to a SIMPLE IRA shrink your tax liability, so you can keep more of your income.
- Tax-Deferred Growth: You won't pay taxes on investment growth until you withdraw it, giving your money more time to accumulate.
- State-Specific Incentives: In some states, you might access state-specific tax breaks as a sole proprietor. These local incentives make these plans even more beneficial.
- Retirement Savings Contributions Credit (Saver’s Credit): Qualified participants 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
Creating a stable future requires more than how much you save—it’s also linked to the way you invest:
- Diversified Portfolios: Distributing your investments across varied asset classes like stocks and bonds can help mitigate financial risk while helping to grow your savings.
- Emergency Back-Up: Supplementing your retirement savings with a dedicated business safety net ensures you don’t tapping into your nest egg during tough times and facing tax penalties.
Plan for the Future of Your Fayetteville, NC Business
Retirement planning also helps you plan ahead for what’s next with your Fayetteville, NC business:
- Selling Your Business: For those considering a sale, plans like SEP IRAs or Solo 401(k)s stay in your name and don’t transfer with the business. These savings offer the reliable income you’ll need later on. It’s important to note that while selling a business often leads to a capital gain, retirement plan contributions are restricted by contribution limits (e.g., up to $7,000 for IRAs or as much as $70,000 for Solo 401(k)s, including catch-up contributions, based on plan compensation).
- Minimizing Taxes: Using retirement contributions wisely can reduce the taxes you are required to pay when you transfer your business.
- Succession Planning: For those winding down or handing over their business, your retirement savings offer a stable foundation during the change. You can also partner with a financial advisor with expertise in succession and retirement planning to help with taxes during the sale.
With the right retirement plan, you gain control over your financial future, cut down your tax obligations, and create a secure foundation for both your retirement and your business goals.
Why Start a Self-Employed Retirement Plan in Fayetteville, NC Now?
Time is one of the most important factors when it comes to saving for retirement. Getting a head start not only lets you accumulate a bigger financial cushion but also reduces the pressure of saving aggressively in the future. Here’s why it pays to take action now:
The Cost of Waiting
Putting off saving for retirement may cause a significant impact on the total you’ll have when you retire. The primary reason is compound interest—the powerful process 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 effect of compounding.
Example: Two individuals, Alex and Taylor are both self-employed professionals. Their shared goal is to save $500,000 for retirement by age 65:
- Alex begins contributing $5,000 annually at age 30.
- Taylor delays savings until age 40 but saves $7,500 annually to catch up.
By age 65, with an assumption of 7% annual return:
- Alex puts in $180,000 and accumulates $691,184.39*.
- Taylor contributes $195,500 but achieves a total of only $474,367.78*.
How Early Contributions Grow
Small, consistent savings made consistently may result in impressive growth. Consider this example showing the effect of compounding:
- 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: Saving the same $200 per month would result in only $235,412.97* by age 65—a difference of over $260,000, just from a 10-year delay.
Starting sooner, the lower your annual savings needs each year to reach your retirement goals.
*These calculations are based on estimates generated with NerdWallet’s Compound Interest Calculator, based on a 7% annual return. These calculations involved multiplying yearly deposits by the years contributed. These examples are for illustrative purposes only and cannot predict actual future outcomes. Your individual results may differ based on variables including market conditions, fees, and your unique situation. Always consult a financial advisor for custom recommendations.
Take Control of Your Financial Future
As a self-employed person in Fayetteville, NC, it can be tempting to focus more on reinvesting in your business rather than saving for retirement. Even so, starting a plan now enables you to:
- Take advantage of growth that is tax-deferred or withdrawals without taxes in the future.
- Take advantage of contribution flexibility that adapt to your earnings.
- Create a long-term safety measure that provides security, no matter how your business changes.
The sooner you start, the less you’ll have to worry about playing catch-up later in life. Building your retirement savings today means taking control of your financial future and allowing yourself the freedom to concentrate on your goals—both for your future retirement and your Fayetteville, NC business.
Types of Self-Employed Retirement Plans
A variety of retirement savings options available for entrepreneurs in Fayetteville, NC, each offering its own benefits and trade-offs. A financial advisor is available to help you evaluate the pros and cons of each option and choose the one best suited for your unique situation. Typically, your self-employed retirement plan options in Fayetteville, NC consist of:
Traditional or Roth IRA
Plan Overview: IRAs, or Individual Retirement Accounts, are long-term savings plans that include distinct tax benefits. In a standard IRA, contributions are typically tax-deductible, and returns grow free of current taxes, but retirement distributions are taxable. In contrast, Roth IRA contributions are made with after-tax income, but qualified withdrawals in retirement, including earnings, are not taxed. In both types of accounts, withdrawals come without penalties if you are at least 59½.
Eligibility: Unlike 401(k)s, which are employer-sponsored, both traditional and Roth IRAs are accessible for individuals with a source of income.
Contribution Limits: For 2025, annual contribution limits for IRAs are set at $7,000, or $8,000 if you're 50 or older.
Simplified Employee Pension Plan (SEP IRA)
Plan Overview: SEP IRAs offers a way to save for retirement that enables those who are self-employed to contribute a percentage of their net earnings. Contributions can only be made by an employer, so, as a sole proprietor, you (the employee) would not be able to contribute above the 25% you (the employer) already contributed. If you have employees, you are obligated to contribute the same amount for them as you do for yourself. You have the flexibility to contribute a set monetary value or a percentage of wages to employee accounts. A SEP IRA may be ideal for entrepreneurs facing fluctuating revenue streams. Unlike other plans, SEP IRAs lack costly startup or administrative fees.
SEPs operate like conventional IRAs, where contributions are made with pre-tax money and money withdrawn is subject to income tax.
Eligibility: Both employers and self-employed individuals 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
As a self-employed person, the amount eligible to be contributed 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 companies that have no employees or when the sole employee is your spouse. These plans operate much like standard 401(k) plans, and enable contributions as both an employer and an employee with pre-tax money. This provides more savings compared to SEPs or IRAs; however, the additional opportunities often come with more limited investment options. Using a solo 401(k), 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: As a self-employed individual with a solo 401(k) plan, you are allowed to make two types of contributions:
- Employee contributions of up to 100% of your self-employment income, capped at the annual contribution limit. For 2025, the limits will be $23,500, or $31,000 if you are 50 or older, or $34,750 if you attain age 60-63 in 2025.
- Profit-sharing contributions (as an employer) must not surpass 25% of your net earnings from self-employment, which is calculated as net profits less half of your self-employment tax and the deferrals you made.
Your combined contributions must not surpass $70,000, or $77,500 for those aged 50 and older (for 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 provides a pre-established payout to business owners upon retirement. Unlike defined contribution plans mentioned above, this plan is not influenced by market performance, but lets individuals clearly understand exactly how much they'll receive in retirement. This plan is recommended for high-earning entrepreneurs who aim to accumulate a large amount for retirement and are prepared to contribute larger deposits. Contributions are tax deferred, and withdrawals are taxable as income during retirement.
Eligibility: Self-employed professionals operating a solo business or with a small staff of under five can open an individual defined benefit plan, but it's typically recommended for individuals aged 50+ who make $250,000 or more annually. Generally, good candidates for defined benefit plans are:
- Partners or owners who want to invest more than $70,000 (or $77,500 for those aged 50+)
- Companies already contributing 3-4% with plans to contribute more
- Companies that have demonstrated 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 contribution limit requires calculation from an actuary using your income, age, and retirement goals. Contribution limits are adjusted each year.
The Importance of a Financial Advisor in Fayetteville, NC for Your Self-Employed Retirement Plan
Working with a financial advisor in Fayetteville, NC experienced with retirement plans for the self-employed can be an invaluable resource for self-employed individuals. They have the expertise to help navigate the complexities of retirement planning and craft a customized plan that reflects your aspirations. An expert in your area will review your finances, identify your risk preferences, and assist you in selecting the best options about saving and investing for retirement. Part of what we do for you features:
- Assist in selecting a plan that best fits your needs and goals
- Tailor the plan to your needs even further
- Adopt a written plan that complies with IRS regulations
- Set up an asset trust plan
- Help you understand the plan's terms
- Track and fine-tune your plan as needed
- Offer continued financial education and guidance throughout your retirement planning process
- Boost your retirement earnings by making the most of your social security
Self-Employed Retirement Plans in Fayetteville, NC: Correct Capital's Process
Fayetteville, NC business owners who aren’t equipped with the time or understanding to oversee their own retirement planning on their own may end up overwhelmed as they look at their options. With Correct Capital, our Fayetteville, NC financial advisors handle the bulk of your retirement planning for you, to help make 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 a quick, four-step process:
- 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 short conversation lets us learn about your needs with no pressure or extensive time commitment on your part.
- Gather Information: Once we mutually decide to continue, we'll ask for information, including whether you have employees, your current financial situation, and your long-term savings targets. This allows us to put together a custom plan suited specifically for your needs.
- Review Your Plan: When we finalize a plan from the information you provide, we'll sit down with you and review your plan step by step to ensure you understand it and explain its fit to your circumstances.
- Implementation and Monitoring: When we finalize on your plan, we'll put everything in place so you can start saving. Throughout our relationship, we'll have regular meetings and track your progress to make sure it remains aligned with your goals.
Our Fayetteville, NC financial advisors and retirement plan consultants serve as fiduciary advisors, which means they are legally and ethically bound to act in your best interest.
Other financial advisory services we offer in Fayetteville, 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 Fayetteville, NC
Your business isn't "just a business" to you, and your Fayetteville, NC financial advisors need to offer more than simply sound financial advice. With Correct Capital, we take the time to get to know our clients and their businesses to provide customized self-employed retirement plans. All our clients in Fayetteville, NC benefit from our I.O.U. promise: all guidance we provide 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.
