Self-employed retirement plans Fontana, CA. The freedom of being your own boss in Fontana, CA is one of the best aspects of being self-employed. Even so, this independence can come with certain challenges, especially when it comes to planning for retirement, because you don't have the option of a workplace retirement plan. Only 13% of self-employed individuals have a workplace retirement plan, although many should consider exploring their options. In addition to enjoying a more comfortable retirement, partnering with a financial advisor in Fontana, CA to establish your self-employed retirement plan offers significant tax advantages that enable your business to grow and succeed.
Few Fontana, CA financial advisory and retirement planning firms understand the needs of small business owners quite like Correct Capital. Our founder's father was a small business owner himself (read more of 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 work tirelessly to offer personalized solutions to meet your unique goals. Read on to discover about your self-employed retirement plan options in Fontana, CA, or give us a call at Correct Capital at 877-930-401k or contact us online to consult with a small business financial advisor in Fontana, CA today.
Why Fontana, CA Self-Employed Individuals Should Have a Retirement Plan
Retirement plans for self-employed individuals help prepare you for the future, they also provide tangible benefits today. Offering flexibility in contributions to significant tax savings, partnering with a financial advisor in Fontana, CA enables you to customize your retirement plan to align with your specific needs.
Flexibility That Fits Your Income
If your income changes annually, a plan like a SEP IRA or Solo 401(k) provides the flexibility to adjust how much you save:
- Customizable Contributions: Save extra during successful years and scale back when income is lower, so your plan fits your cash flow.
- Roth Options: Choosing a Roth Solo 401(k) lets you handle taxes upfront, allowing you to withdraw tax-free later—a wise move if you believe your tax rate to be higher in the future.
Save Money on Taxes
Retirement plans for self-employed individuals deliver valuable tax benefits:
- Tax-Deductible Contributions: Contributions to a SEP IRA reduce what you owe in taxes, allowing you to keep more of your income.
- Tax-Deferred Growth: You won't pay taxes on investment growth until you withdraw it, providing your money more time to accumulate.
- State-Specific Incentives: Based on your location, you might access state-specific tax breaks as a sole proprietor. These local incentives help make these plans even more valuable.
- Retirement Savings Contributions Credit (Saver’s Credit): Qualified participants can apply for a credit of up to 50% of the first $2,000 they contribute 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 linked to the way you invest:
- Diversified Portfolios: Spreading your investments across varied stocks, bonds, and alternatives can help reduce risk while still growing your savings.
- Emergency Back-Up: Supplementing your retirement savings with a financial buffer for your business helps you avoid tapping into your nest egg during challenging periods and facing tax penalties.
Plan for the Future of Your Fontana, CA Business
A thoughtful retirement strategy also helps you think through what’s next with your Fontana, CA business:
- Selling Your Business: If you’re planning to sell, plans like SEP IRAs or Solo 401(k)s remain yours and are not part of the sale. These accounts ensure the reliable income you’ll need in the future. Keep in mind 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 a maximum of $70,000 for Solo 401(k)s, including catch-up contributions, according to plan rules).
- Minimizing Taxes: Using retirement contributions wisely helps lower the taxes you might face when you pass on your business.
- Succession Planning: For those winding down or handing over their business, your retirement accounts provide a stable foundation during the change. You may also seek advice from a financial advisor with expertise in succession and retirement planning to reduce taxes associated with the transaction.
With the best-fit retirement strategy, you can take control of your financial future, cut down your tax obligations, and establish a strong framework for both your retirement and your business goals.
Why Start a Self-Employed Retirement Plan in Fontana, CA Now?
Time is one of the most crucial factors in retirement planning. Getting a head start not only helps you grow a bigger financial cushion but also minimizes the financial burden of saving aggressively in the future. This is why it is beneficial to start now:
The Cost of Waiting
Delaying your retirement savings may cause a major impact on the amount you’ll have when you retire. The main reason is compound interest—the concept where your investments grow, and those returns, then, earn even more returns. The more time your money has to grow, the greater the impact of compounding.
Example: Two individuals, Alex and Taylor are both entrepreneurs. They each aim to save $500,000 for retirement by age 65:
- Alex begins contributing $5,000 annually at age 30.
- Taylor waits until age 40 but puts away $7,500 annually to bridge the gap.
By age 65, using a projected 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
Even modest contributions invested steadily may result in impressive growth. Consider this example showing the effect of consistent growth:
- Starting at age 25: By investing $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 yields only $235,412.97* by age 65—a gap of over $260,000, just from a 10-year delay.
Saving early, the lower your annual savings needs each year to meet your retirement goals.
*The figures provided in this example represent estimates generated with NerdWallet’s Compound Interest Calculator, with the assumption of a 7% annual return. Annual deposits were multiplied by the number of years to estimate total contributions. These examples are meant to provide general guidance and do not guarantee future performance. Your individual results may differ due to factors such as market conditions, fees, and individual circumstances. Always consult a financial advisor for custom recommendations.
Take Control of Your Financial Future
As a self-employed person in Fontana, CA, it is often the case that you prioritize reinvesting in your business instead of saving for retirement. However, beginning a plan now allows you to:
- Benefit from tax-deferred growth or withdrawals without taxes later on.
- Take advantage of contribution flexibility that align with your cash flow.
- Create a safety net that ensures stability, no matter how your business changes.
The sooner you start, the less you’ll be required to worry about catching up later in life. Building your retirement savings today means taking control of your financial future and creating for yourself the freedom to turn your attention to your goals—both for your retirement years and your Fontana, CA business.
Types of Self-Employed Retirement Plans
A variety of retirement savings options available for self-employed individuals in Fontana, CA, each with its own pros and cons. A financial advisor will guide you to evaluate the advantages and disadvantages of each option and determine the one ideal for your circumstances. Typically, your self-employed retirement plan options in Fontana, CA are:
Traditional or Roth IRA
Plan Overview: IRAs, or Individual Retirement Accounts, are retirement savings vehicles that offer key tax perks. In a conventional IRA, you can usually deduct your contributions from taxable income, and earnings grow without immediate taxation, but withdrawals in retirement are taxable. In contrast, Roth IRAs require contributions using income already taxed, but retirement withdrawals that qualify, including earnings, are exempt from taxes. In both accounts, withdrawals don’t incur penalties if you are at least 59½.
Eligibility: While many retirement plans, such as 401(k)s, are tied to employment, IRAs, including traditional and Roth options are open to those with an earned income.
Contribution Limits: For 2025, annual contribution limits for IRAs are set at $7,000, or $8,000 for those aged 50+.
Simplified Employee Pension Plan (SEP IRA)
Plan Overview: SEP IRAs offers a way to save for retirement that enables entrepreneurs to set aside a portion of their self-employment income. 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 beyond the 25% you (the employer) already contributed. If you have employees, you must contribute the same amount for them as you do for yourself. It's your choice whether to contribute a flat-dollar amount or a percentage of wages to employee accounts. SEP IRAs is a good option 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 you contribute pre-tax dollars and withdrawals are taxed as income.
Eligibility: Both employers and self-employed individuals can set up 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
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 meant for businesses with no employees or where the only employee is a spouse. These plans function similarly to employer-sponsored 401(k) plans, and allow you to contribute as both an employee or an employer with pre-tax money. This provides more savings compared to SEPs or IRAs; however, the additional opportunities may be offset by more limited investment options. 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: This plan is exclusively for 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:
- Employee contributions of up to 100% of your self-employment income, subject to the annual contribution limit. The contribution limits for 2025 include $23,500, or $31,000 if you're over 50, 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 defined as net profit minus 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 (for 2025), $81,250 if you attain age 60-63 in 2025.
Individual Defined Benefit Plan
Plan Overview: Defined benefit plans represents a type of retirement plan that delivers 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 what they'll receive in retirement. This option is recommended for high-earning entrepreneurs who want to save a significant sum for retirement and can commit to making larger deposits. Contributions are tax deferred, and withdrawals are taxed as income in retirement.
Eligibility: Entrepreneurs running an owner-only business or with less than five employees are eligible to open an individual defined benefit plan, but it's generally advised for those over 50 who make $250,000 or more annually. Typically, good candidates for defined benefit plans tend to be:
- Entrepreneurs 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
- Organizations with proven consistent profit patterns
- Entrepreneurs over age 40 who aim to quickly build retirement savings or accelerate the retirement savings
Contribution Limits: The contribution limit requires calculation from an actuary determined by your earnings, age, and retirement objectives. Allowable contributions are updated yearly.
The Importance of a Financial Advisor in Fontana, CA for Your Self-Employed Retirement Plan
A financial advisor in Fontana, CA focused on self-employed retirement strategies is an essential partner for self-employed individuals. They offer the knowledge to assist navigate the complexities of retirement planning and craft a tailored strategy that aligns with your goals. Your advisor in Fontana, CA will assess where you stand financially, identify your risk preferences, and guide you in selecting the best options about saving and investing for retirement. A key part of what we do for you includes:
- Help you choose a plan that aligns with your objectives and circumstances
- Customize the plan to your needs even further
- Formalize a plan in writing that complies with IRS regulations
- Arrange a trust plan for assets
- Make sure you understand the plan's terms
- Track and fine-tune your plan when necessary
- Provide ongoing education and advice as you continue on the road to retirement
- Maximize what you receive in retirement by optimizing your social security benefits
Self-Employed Retirement Plans in Fontana, CA: Correct Capital's Process
Fontana, CA business owners who lack the time, interest, or knowledge to manage their self-employed retirement plan independently often feel overwhelmed by their available plans. At Correct Capital, our Fontana, CA financial advisors handle the bulk of your retirement planning for you, and strive to ensure meeting your financial objectives 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: It only takes 20 minutes, a member of our advisor team can help understand if we're suited to your needs for you and your business. This initial call helps us get a sense of your goals with no obligation or extensive time commitment 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 allows us to put together a tailored approach that aligns with your goals.
- Review Your Plan: When we finalize a plan from the information you provide, we'll schedule a meeting and review your plan thoroughly to ensure you understand 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 start saving. As time goes on, we'll check in and monitor your plan to ensure it stays suited to your needs.
Our Fontana, CA financial advisors and retirement plan consultants act as fiduciary advisors, which means they are legally and ethically bound to act in your best interest.
Other financial advisory services we offer in Fontana, CA 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 Fontana, CA
To you, your business is more than "just a business", and your Fontana, CA financial advisors should provide more than simply sound financial advice. Correct Capital takes pride in, we focus on building a relationship with our clients and their businesses to deliver tailored self-employed retirement plans. We offer all our Fontana, CA clients 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, contact Correct Capital now at 877-930-401k or contact us online.
