Self-employed retirement plans Fresno, CA. The flexibility of running your own company in Fresno, CA offers many benefits of working for yourself. However, this flexibility often comes with certain challenges, particularly in terms of building your retirement fund, because you don't have access to employer-sponsored retirement plans. 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 more secure retirement, partnering with a financial advisor in Fresno, CA to create your self-employed retirement plan can provide significant tax advantages that help your business to grow and succeed.
Few Fresno, CA financial advisory and retirement planning firms understand the needs of small business owners as well as Correct Capital. Our founder's father was a small business owner himself (check out our story here), and Correct Capital take pride in supporting entrepreneurs with their retirement planning needs. We understand that your business and retirement aspirations extend well past basic numbers, and we strive to provide customized solutions that reflect your objectives. Read on to discover about your self-employed retirement plan options in Fresno, CA, or reach out to Correct Capital at 877-930-401k or contact us online to speak with a small business financial advisor in Fresno, CA today.
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Why Fresno, CA Self-Employed Individuals Should Have a Retirement Plan
Retirement plans for self-employed individuals not only prepare you for the future, they also provide real benefits today. Offering flexibility in contributions to substantial tax savings, partnering with a financial advisor in Fresno, CA enables you to create your retirement plan to fit your specific needs.
Flexibility That Fits Your Income
For those with fluctuating income over time, a plan like a SEP IRA or Solo 401(k) provides the freedom to modify how much you save:
- Customizable Contributions: Contribute more during high-income years and cut back when your earnings dip, so that your plan aligns with your cash flow.
- 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—an advantageous choice if you expect your tax rate is likely to rise in the future.
Save Money on Taxes
Self-employed retirement plans offer significant tax benefits:
- Tax-Deductible Contributions: Contributions to a SIMPLE IRA lower your taxable income, allowing you to keep more of your earnings.
- 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: Depending on where you live, you might access additional credits as a sole proprietor. These local incentives help make these plans even more beneficial.
- Retirement Savings Contributions Credit (Saver’s Credit): Eligible individuals can take advantage of a credit of up to 50% of the first $2,000 they contribute a retirement plan, further reducing 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 determined by your investment strategy:
- Diversified Portfolios: Allocating your investments across varied asset classes like stocks and bonds can help minimize exposure to risk while helping to grow your nest egg.
- Emergency Back-Up: Combining your retirement strategy and a dedicated business safety net prevents you from tapping into your nest egg during financial hardships and facing tax penalties.
Plan for the Future of Your Fresno, CA Business
Preparing for retirement can assist you think through what’s next with your Fresno, CA business:
- Selling Your Business: For those considering a sale, plans like SEP IRAs or Solo 401(k)s remain your personal assets and don’t transfer with the business. These accounts can provide the financial stability you’ll need in the future. It’s important to note that while selling a business often leads to a capital gain, deposits into these plans 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, with catch-up contributions, depending on plan details).
- Minimizing Taxes: Making the most of retirement savings can reduce the taxes you are required to pay when you sell your business.
- Succession Planning: If you’re passing the business on, your retirement accounts provide financial security through the transition. You might want to partner with a financial advisor with expertise in succession and retirement planning to help with taxes during the sale.
With the proper savings strategy, you gain control over your financial future, lower your tax bill, and build a secure foundation for both your retirement and your business goals.
Why Start a Self-Employed Retirement Plan in Fresno, CA Now?
There’s no denying that time is one of the most valuable assets in retirement planning. Beginning sooner rather than later not only allows you to build a larger nest egg but also lowers the financial burden of catching up later in life. This is why it pays to take action now:
The Cost of Waiting
Delaying your retirement savings could lead to a substantial impact on the savings you’ll have when you retire. The main reason is compound interest—the powerful process where your investments earn returns, and those returns, subsequently, generate even more returns. The longer your money has to grow, the greater the benefit of this compounding process.
Example: Two individuals, Alex and Taylor are both self-employed individuals. Their shared goal is 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 make up for lost time.
By age 65, using a projected 7% annual return:
- Alex puts in $180,000 and accumulates $691,184.39*.
- Taylor contributes $195,500 but only ends up with $474,367.78*.
How Early Contributions Grow
Small, consistent savings invested steadily can lead to significant growth. Consider this example showing the impact of consistent growth:
- Starting at age 25: By investing $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: Contributing the same $200 per month leaves you with only $235,412.97* by age 65—a shortfall of over $260,000, all because of a 10-year delay.
The earlier you begin, the less you need to save each year to meet 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. The scenarios provided are for illustrative purposes only and do not guarantee future performance. Actual results may vary based on elements like market conditions, fees, and your unique situation. Be sure to speak with a financial advisor for personalized advice.
Take Control of Your Financial Future
If you’re self-employed in Fresno, CA, it is often the case that you prioritize reinvesting in your business instead of saving for retirement. That said, initiating a plan now gives you the chance to:
- Take advantage of tax-deferred growth or withdrawals without taxes later on.
- Benefit from contribution flexibility that adapt to your earnings.
- Build a long-term safety measure that offers peace of mind, no matter how your business develops.
Getting started now, the less you’ll be required to worry about playing catch-up later in life. Taking steps toward your retirement goals today means taking control of your financial future and creating for yourself the ability to turn your attention to your dreams—both for your future retirement and your Fresno, CA business.
Types of Self-Employed Retirement Plans
Multiple retirement savings options designed for entrepreneurs in Fresno, CA, each providing its own advantages and considerations. A financial advisor will guide you to evaluate the advantages and disadvantages of each plan and determine the one most suitable for your unique situation. Typically, your self-employed retirement plan options in Fresno, CA include:
Traditional or Roth IRA
Plan Overview: Individual Retirement Accounts (IRAs), as explained here, represent long-term savings plans that include specific tax advantages. In a conventional IRA, contributions are typically tax-deductible, and investment earnings grow tax-deferred, but money taken out during retirement are taxable. In contrast, Roth IRA contributions using income already taxed, but eligible distributions during retirement, including earnings, are exempt from taxes. In both accounts, withdrawals are penalty-free 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 open to those with taxable earnings.
Contribution Limits: For 2025, annual contribution limits for IRAs are set at $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 is a retirement plan 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 above the 25% you (the employer) allocate. If you have employees, you must contribute the same amount for them as you do for yourself. You may choose to contribute a set monetary value or a percentage of wages to employee accounts. A SEP IRA may be ideal for entrepreneurs facing periods of inconsistent earnings. Compared to other retirement options, SEP IRAs don’t have costly startup or administrative fees.
SEPs work like traditional IRAs, where contributions are made with pre-tax money and money withdrawn is subject to income tax.
Eligibility: Any employer, including the self-employed 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
For self-employed individuals, the allowable contribution is based on a special calculation.
Solo 401(k)
Plan Overview: A Solo 401(k) plan, sometimes referred to as an Individual 401(k) or one-participant 401(k) plan, is a savings option for the self-employed meant for companies that have no employees or where the only employee is a spouse. Solo 401(k)s operate much like traditional employer-managed 401(k) plans, and allow you to contribute as both an employer and an employee with pre-tax money. This offers more savings compared to SEPs or IRAs; however, the extra savings options may be offset by more constrained investment avenues. Using a solo 401(k), 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 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 can make two types of contributions:
- Employee contributions of up to 100% of your self-employed earnings, capped at the annual contribution limit. For 2025, the limits will be $23,500, or $31,000 for those aged 50 and above, or $34,750 for individuals aged 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 elective deferrals you made.
Your combined contributions must not surpass $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 represents a type of retirement plan that delivers a set amount to business owners upon retirement. Unlike defined contribution plans mentioned above, a defined benefit plan doesn't fluctuate based on investment returns, but enables participants to determine the precise amount they'll have in retirement. This plan is ideal for wealthier professionals who aim to accumulate a substantial amount for retirement and are willing to make substantial contributions. Contributions grow tax-free until withdrawal, and withdrawals are taxable as income in retirement.
Eligibility: Entrepreneurs operating a solo business or with less than five employees may establish an individual defined benefit plan, but it's typically recommended for individuals aged 50+ who earn at least $250,000 a year. In most cases, good candidates for defined benefit plans are:
- Business owners or partners who aim to deposit more than $70,000 (or $77,500 for those aged 50+)
- Companies already contributing 3-4% but are open to increasing contributions
- Organizations with proven consistent profit patterns
- Business leaders over age 40 who aim to quickly build retirement savings or increase their retirement contributions rapidly
Contribution Limits: The maximum allowable contribution is calculated by an actuary determined by your earnings, age, and retirement objectives. Limits on contributions change annually.
The Importance of a Financial Advisor in Fresno, CA for Your Self-Employed Retirement Plan
A financial advisor in Fresno, CA focused on self-employed retirement strategies can be an essential partner for self-employed individuals. They bring the skills needed to navigate the complexities of retirement planning and develop a customized plan that aligns with your goals. Your advisor in Fresno, CA will evaluate your financial situation, identify your risk preferences, and guide you in choosing wisely about saving and investing for retirement. Part of what we do for you involves:
- Guide you in choosing a plan that suits your unique requirements
- Customize the plan to fit you personally even further
- Adopt a written plan as required by IRS rules
- Arrange a trust plan for assets
- Make sure you understand the plan's terms
- Monitor and adjust your plan to keep it aligned with your goals
- Offer continued financial education and guidance throughout your retirement planning process
- Maximize what you receive in retirement by making the most of your social security
Self-Employed Retirement Plans in Fresno, CA: Correct Capital's Process
Fresno, CA business owners who aren’t equipped with the time or understanding to manage their self-employed retirement plan independently often feel overwhelmed as they look at their available plans. At Correct Capital, our Fresno, CA financial advisors manage the majority of your retirement planning for you, working to make meeting your retirement goals 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: 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 get a sense of your goals with zero commitment 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 retirement goals. This allows us to put together a tailored approach designed just for you.
- Review Your Plan: After we put together a plan based on the information you provide, we'll sit down with you and go over your plan thoroughly to help you fully grasp it and understand how it best correlates to your needs.
- Implementation and Monitoring: When we finalize on your plan, we'll put everything in place so you can initiate your savings journey. Throughout our relationship, we'll meet with you and track your progress to make sure it remains aligned with your goals.
Our Fresno, CA financial advisors and retirement plan consultants are fiduciary advisors, who are obligated to they are required by law and ethical standards to do what's in your best interest.
Other financial advisory services we offer in Fresno, CA include:
- Independent Financial Advisor
- Roth Conversion
- 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 Fresno, CA
You don't see your business as "just a business", and your Fresno, CA 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 Fresno, CA benefit from 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.
