Self-employed retirement plans Fayetteville, NC. The independence of owning your own business in Fayetteville, NC is one of the best aspects of having a self-directed career. Even so, this freedom sometimes brings with potential drawbacks, particularly in terms of planning for retirement, since 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 looking into other possibilities. In addition to having a more secure retirement, working with a financial advisor in Fayetteville, NC to create your self-employed retirement plan can provide significant tax advantages that enable your business to grow and succeed.
Few Fayetteville, NC wealth management and retirement planning firms truly grasp the challenges faced by self-employed individuals 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 our firm are deeply experienced in supporting entrepreneurs with their retirement planning needs. We recognize that your goals for your business and retirement extend well past basic numbers, and we work tirelessly to create tailored solutions to meet your unique goals. Read on to discover 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 entrepreneurial financial advisor in Fayetteville, NC today.
Why Fayetteville, NC Self-Employed Individuals Should Have a Retirement Plan
Retirement plans for self-employed individuals help prepare you for the future, they also offer real benefits today. With customizable contribution options to significant tax savings, working with a financial advisor in Fayetteville, NC enables you to design 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) gives you the freedom to tailor how much you save:
- Customizable Contributions: Contribute more during profitable years and scale back when income is lower, ensuring your plan fits your cash flow.
- Roth Options: Opting for a Roth Solo 401(k) lets you pay taxes on contributions now, allowing you to withdraw without tax penalties in the future—an advantageous choice if you anticipate your tax rate will increase in the future.
Save Money on Taxes
Self-employed retirement plans deliver significant tax benefits:
- Tax-Deductible Contributions: Contributions to a Solo 401(k) shrink your tax liability, allowing you to keep more of your income.
- Tax-Deferred Growth: Investments grow tax-free until withdrawal, providing your money more time to grow.
- State-Specific Incentives: Based on your location, you could qualify for additional deductions as a business owner. These local 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
Planning for a safe retirement requires more than how much you save—it’s also linked to the way you invest:
- Diversified Portfolios: Allocating your investments across varied stocks, bonds, and other assets can help reduce risk while still growing your nest egg.
- Emergency Back-Up: Supplementing your retirement savings with a financial buffer for your business prevents you from using your retirement funds during financial hardships and risking extra costs.
Plan for the Future of Your Fayetteville, NC Business
A thoughtful retirement strategy can assist you plan ahead for what’s next with your Fayetteville, NC business:
- Selling Your Business: If you’re planning to sell, plans like SEP IRAs or Solo 401(k)s remain your personal assets and won’t be included in the sale. These plans offer the reliable income you’ll need later on. Keep in mind that while selling a business often leads to a capital gain, retirement plan contributions are restricted by contribution limits (e.g., a maximum of $7,000 for IRAs or a maximum of $70,000 for Solo 401(k)s, including catch-up contributions, based on plan compensation).
- Minimizing Taxes: Using retirement contributions wisely helps lower the taxes you’ll owe when you sell your business.
- Succession Planning: Whether you’re transferring ownership, your retirement accounts ensure the funds you need as you make this shift. You might want to seek advice from a financial advisor with expertise in succession and retirement planning to reduce taxes during the sale.
With the proper savings strategy, you gain control over your financial future, reduce your tax burden, and establish a strong framework 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 valuable assets in retirement planning. Starting early not only allows you to build a bigger financial cushion but also lowers the stress of saving aggressively in the future. This is why it pays to take action now:
The Cost of Waiting
Delaying your retirement savings can have a significant impact on the amount you’ll have when you reach retirement age. The main reason is compound interest—the powerful process where your investments earn returns, and those returns, subsequently, accumulate 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 individuals. They each aim to save $500,000 for retirement by age 65:
- Alex starts saving $5,000 annually at age 30.
- Taylor waits until age 40 but puts away $7,500 annually to catch up.
By age 65, assuming 7% annual return:
- Alex contributes $180,000 and ends up with $691,184.39*.
- Taylor contributes $195,500 but only ends up with $474,367.78*.
How Early Contributions Grow
Regular, modest investments made consistently often create significant growth. Take a look at this scenario showing the power of consistent growth:
- Starting at age 25: If you invest $200 per month in a retirement plan with an expected yearly growth rate of 7%, you’ll grow to approximately $497,303.29* by age 65.
- Starting at age 35: Investing the same $200 per month yields only $235,412.97* by age 65—a difference of over $260,000, all because of a 10-year delay.
Saving early, the less effort required each year to meet your retirement goals.
*These calculations represent estimates derived from NerdWallet’s Compound Interest Calculator, based on a 7% annual return. Annual deposits were multiplied by the number of years to estimate total contributions. The scenarios provided are for illustrative purposes only and are not a promise of future results. Outcomes may change depending on variables including market conditions, fees, and personal factors. Always consult a financial advisor for personalized advice.
Take Control of Your Financial Future
If you’re self-employed in Fayetteville, NC, it is often the case that you prioritize reinvesting in your business over saving for retirement. However, starting a plan now allows you to:
- Benefit from growth that is tax-deferred or penalty-free withdrawals down the road.
- Benefit from adjustable savings that adapt to your cash flow.
- Create a long-term safety measure that provides security, no matter how your business evolves.
The sooner you start, the less you’ll be required to worry about making up for lost time later in life. Saving for retirement now means gaining control over your financial future and giving yourself the ability to focus on your objectives—both for your retirement years and your Fayetteville, NC business.
Types of Self-Employed Retirement Plans
A variety of retirement savings options open for self-employed individuals in Fayetteville, NC, each providing its own advantages and considerations. A financial advisor is available to help you understand the pros and cons of each choice and identify the one ideal for your circumstances. Typically, your self-employed retirement plan options in Fayetteville, NC include:
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, contributions are typically tax-deductible, and earnings grow without immediate taxation, but money taken out during retirement are taxable. In contrast, Roth IRA contributions from post-tax earnings, but eligible distributions during retirement, including earnings, are exempt from taxes. In both accounts, withdrawals come without 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 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: A Simplified Employee Pension (SEP) IRA offers a way to save for retirement that enables self-employed individuals to set aside a portion of their self-employment income. Contributions can only be made by an employer, so, as a sole proprietor, 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. You have the flexibility 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. In contrast to some alternatives, SEP IRAs lack costly startup or administrative fees.
SEPs operate like conventional 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 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
If you’re self-employed, the amount eligible to be contributed 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 with no employees or where the only employee is a spouse. These plans function similarly to traditional employer-managed 401(k) plans, and allow you to contribute as both an employee or an employer with pre-tax money. This offers more savings versus SEPs or IRAs; however, the increased savings potential may be offset by more restricted investment choices. With this type of plan, you can make either traditional or Roth deferrals, which share 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 self-employment income, capped at the annual contribution limit. The contribution limits for 2025 include $23,500, or $31,000 if you are 50 or older, or $34,750 for those who turn 60-63 in 2025.
- Contributions as an employer (as an employer) must not surpass 25% of your net self-employment income, which is calculated as net profits less half of your self-employment tax and the elective deferrals you made.
The total contribution cannot exceed $70,000, or $77,500 for those aged 50 and older (in 2025), $81,250 if you attain age 60-63 in 2025.
Individual Defined Benefit Plan
Plan Overview: A defined benefit plan offers a structured retirement solution that guarantees a set amount to entrepreneurs upon retirement. In contrast to the plans discussed earlier, this plan is not influenced by market performance, but allows self-employed individuals to know the precise amount they'll get in retirement. This plan is best suited for wealthier entrepreneurs who want to save a substantial amount for retirement and can commit to making substantial contributions. Contributions grow tax-free until withdrawal, and withdrawals incur taxes as income in retirement.
Eligibility: Entrepreneurs operating a solo business or with a small staff of under five are eligible to open an individual defined benefit plan, but it's typically recommended for individuals aged 50+ who generate a minimum of $250,000 yearly. Typically, good candidates for defined benefit plans are:
- Business owners or partners who aim to deposit more than $70,000 (or $77,500 if over age 50)
- Businesses currently investing 3-4% but are open to increasing contributions
- Businesses with proven consistent profit patterns
- Entrepreneurs over age 40 who wish to accelerate savings or boost savings within a short timeframe
Contribution Limits: The cap on contributions requires calculation from an actuary based on your financial situation, age, and savings targets. Allowable contributions are updated yearly.
The Importance of a Financial Advisor in Fayetteville, NC for Your Self-Employed Retirement Plan
Working with a financial advisor in Fayetteville, NC focused on self-employed retirement strategies is an essential partner for self-employed individuals. They bring the skills needed to guide you through the challenges of retirement planning and develop a customized plan that reflects your aspirations. A financial advisor in Fayetteville, NC will assess where you stand financially, understand your risk tolerance, and guide you in choosing wisely about saving and investing for retirement. A key part of what we do for you features:
- Assist in selecting a plan that best fits your needs and goals
- Further adapt the plan to your specific situation even further
- Create a written plan that complies with IRS regulations
- 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 throughout your retirement planning process
- 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 self-employed retirement plan themselves may end up overwhelmed by their options. Through our team at Correct Capital, our Fayetteville, NC financial advisors handle the lion's share of your savings plan setup for you, and strive to ensure meeting your financial objectives as hassle-free as possible for you. We will guide you in creating 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 will assess if our services align for you and your business. This initial call lets us learn about your needs with no obligation or major time investment on your part.
- Gather Information: Should we agree to proceed, we'll gather information, including how many employees you have (if any), your existing financial picture, and your long-term savings targets. This helps us create a custom plan that aligns with your goals.
- Review Your Plan: Once we've developed a plan from the information you provide, we'll schedule a meeting and review your plan in detail to help you fully grasp it and explain its fit to your circumstances.
- Implementation and Monitoring: After we agree on your plan, we'll set everything up so you can initiate your savings journey. As time goes on, we'll check in and monitor your plan to keep it tailored to your evolving circumstances.
Our Fayetteville, NC financial advisors and retirement plan consultants act 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 Fayetteville, 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 Fayetteville, NC
You don't see your business as "just a business", and your Fayetteville, NC financial advisors should provide more than just good financial guidance. Correct Capital takes pride in, we take the time to get to know our clients and their businesses to provide personalized self-employed retirement plans. To every client in Fayetteville, NC, we provide our I.O.U. promise: all guidance we provide will be independent, objective, and unbiased. To take the first step on your self-employment retirement plan, contact Correct Capital now at 877-930-401k or contact us online.
