Self-employed retirement plans Garden Grove, CA. The freedom of owning your own business in Garden Grove, CA is one of the greatest advantages of working for yourself. Even so, this independence can come with certain challenges, notably regarding building your retirement fund, as you don't have access to employer-sponsored retirement plans. Only 13% of self-employed individuals have a workplace retirement plan, yet countless should consider understanding their retirement options. In addition to having a financially stable retirement, partnering with a financial advisor in Garden Grove, CA to establish your self-employed retirement plan can provide significant tax advantages that help both you and your business to thrive.
Few Garden Grove, CA wealth management and retirement planning firms are as attuned to the requirements of self-employed individuals quite like 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 we are deeply experienced in assisting business owners in their retirement planning needs. We recognize that your goals for your business and retirement aren’t limited to just monetary concerns, and we strive to offer tailored solutions aligned with your vision. Keep reading to learn more about your self-employed retirement plan options in Garden Grove, CA, or give us a call at Correct Capital at 877-930-401k or contact us online to speak with a self-employed financial advisor in Garden Grove, CA today.
Why Garden Grove, CA Self-Employed Individuals Should Have a Retirement Plan
Retirement plans for self-employed individuals help prepare you for the future, they also deliver tangible benefits today. From flexible contributions to considerable tax savings, consulting a financial advisor in Garden Grove, CA helps you create your retirement plan to fit your unique financial situation.
Flexibility That Fits Your Income
For those with fluctuating income annually, a plan like a SEP IRA or Solo 401(k) offers the freedom to adjust how much you save:
- Customizable Contributions: Set aside more during profitable years and reduce savings when your earnings dip, so that your plan works with your cash flow.
- Roth Options: Opting for a Roth Solo 401(k) lets you handle taxes upfront, allowing you to withdraw your savings tax-free down the road—a smart decision if you believe your tax rate will increase in the future.
Save Money on Taxes
Plans designed for the self-employed provide powerful tax benefits:
- Tax-Deductible Contributions: Contributions to a SIMPLE IRA shrink your tax liability, so you can keep more of your earnings.
- Tax-Deferred Growth: Investments grow tax-free until withdrawal, which gives your money more time to accumulate.
- State-Specific Incentives: Based on your location, you could qualify for state-specific deductions as a business owner. These state-level 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
Planning for a safe retirement requires more than how much you save—it’s also about how you invest:
- Diversified Portfolios: Distributing your investments across different stocks, bonds, and alternatives is a smart way to minimize exposure to risk while helping to grow your nest egg.
- Emergency Back-Up: Combining your retirement strategy and a dedicated business safety net ensures you don’t dipping into savings during tough times and facing tax penalties.
Plan for the Future of Your Garden Grove, CA Business
Preparing for retirement can assist you plan ahead for what’s next with your Garden Grove, CA business:
- Selling Your Business: If you’re planning to sell, retirement accounts like SEP IRAs and Solo 401(k)s remain yours and won’t be included in the sale. These savings can provide the reliable income you’ll need during retirement. 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., 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: Strategically planning your contributions minimizes the taxes you’ll owe when you sell your business.
- Succession Planning: For those winding down or handing over their business, your nest egg ensure the funds you need through the transition. You might want to work with a financial advisor experienced in both succession and retirement strategies to help with taxes associated with the transaction.
With the right retirement plan, you gain control over 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 Garden Grove, CA Now?
Time remains one of the most important resources when it comes to saving for retirement. Getting a head start not only allows you to build a bigger financial cushion but also lowers the pressure of playing catch-up as you get older. This is why it pays to take action now:
The Cost of Waiting
Waiting to start your retirement fund can have a substantial impact on the amount you’ll have when you reach retirement age. The biggest reason is compound interest—the concept where your investments earn returns, and those returns, then, generate even more returns. The longer your money has to grow, the greater the benefit of compounding.
Example: Alex and Taylor are both self-employed individuals. They each aim to save $500,000 for retirement by age 65:
- Alex initiates savings of $5,000 annually at age 30.
- Taylor postpones starting contributions to age 40 but saves $7,500 annually to bridge the gap.
By age 65, assuming 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 contributed over time may result in significant growth. Take a look at this scenario showing the power of compound interest:
- Starting at age 25: By investing $200 per month in a retirement plan with an expected yearly growth rate of 7%, you’ll accumulate $497,303.29* by age 65.
- Starting at age 35: Investing the same $200 per month would result in only $235,412.97* by age 65—a gap of over $260,000, simply due to a 10-year delay.
Starting sooner, the less effort required each year to reach your retirement goals.
*The figures provided in this example are based on estimates derived from NerdWallet’s Compound Interest Calculator, based on a 7% annual return. These calculations involved multiplying yearly deposits by the years contributed. The scenarios provided are intended as illustrative examples and do not guarantee future performance. Outcomes may change depending on elements like market conditions, fees, and individual circumstances. We recommend consulting a financial advisor for personalized advice.
Take Control of Your Financial Future
As a self-employed person in Garden Grove, CA, it is often the case that you prioritize reinvesting in your business over saving for retirement. Even so, beginning a plan now gives you the chance to:
- Benefit from growth that is tax-deferred or withdrawals without taxes down the road.
- Take advantage of flexible contributions that align with your income.
- Build a financial cushion that provides security, no matter how your business develops.
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 creating for yourself the freedom to concentrate on your dreams—both for your future retirement and your Garden Grove, CA business.
Types of Self-Employed Retirement Plans
A variety of retirement savings options designed for those working for themselves in Garden Grove, CA, each offering its own benefits and trade-offs. A financial advisor will guide you to learn about the pros and cons of each option and determine the one best suited for your circumstances. Generally speaking, your self-employed retirement plan options in Garden Grove, CA include:
Traditional or Roth IRA
Plan Overview: Individual Retirement Accounts (IRAs), as explained here, represent long-term savings plans that provide key tax perks. In a traditional IRA, contributions are typically tax-deductible, and earnings grow without immediate taxation, but withdrawals in retirement are subject to income tax. In contrast, with Roth IRAs, you contribute from post-tax earnings, but retirement withdrawals that qualify, including earnings, are exempt from taxes. In both cases, 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, 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're 50 or older.
Simplified Employee Pension Plan (SEP IRA)
Plan Overview: A Simplified Employee Pension (SEP) IRA serves as a retirement savings option that enables entrepreneurs to save a percentage of their net business profits. Contributions can only be made by an employer, so, as a sole proprietor, you (the employee) cannot make additional contributions beyond 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 fixed dollar figure or a percentage of wages to employee accounts. SEP IRAs works well for businesses that experience cycles of high revenue and low revenue. Unlike other plans, SEP IRAs don’t have expensive setup or ongoing fees.
SEPs operate like traditional IRAs, where contributions are made with pre-tax money and withdrawals are taxed as income.
Eligibility: Employers of any type, including self-employed individuals can establish 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 amount eligible to be contributed 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 self-employed retirement plan meant for businesses with no employees or when the sole employee is your spouse. This type of plan operate much like traditional employer-managed 401(k) plans, and enable contributions as both an employer and an employee with pre-tax money. This allows for more savings compared to SEPs or IRAs; however, the additional opportunities may be offset by more constrained investment avenues. With this type of plan, you can make either traditional or Roth deferrals, which have 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: As a self-employed individual with a solo 401(k) plan, you are allowed to make two types of contributions:
- Elective deferrals (as an employee) of up to 100% of your earned income from self-employment, capped at the annual contribution limit. In 2025, those limits are $23,500, or $31,000 for those aged 50 and above, or $34,750 for those who turn 60-63 in 2025.
- Profit-sharing contributions (as an employer) are limited to 25% of your adjusted self-employment income, which is your 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 individuals aged 50+ (as of 2025), $81,250 for individuals turning 60-63 in 2025.
Individual Defined Benefit Plan
Plan Overview: Defined benefit plans is a retirement option that provides a set amount to self-employed individuals upon retirement. In contrast to the plans discussed earlier, a defined benefit plan doesn't fluctuate based on investment returns, but allows self-employed individuals to know exactly how much they'll get in retirement. This option is ideal for wealthier professionals who aim to accumulate a substantial amount for retirement and are willing to make sizeable contributions. Contributions are tax deferred, and withdrawals are taxed as income during retirement.
Eligibility: Entrepreneurs managing a one-person company or with less than five employees are eligible to open an individual defined benefit plan, but it's generally advised for people above age 50 who generate a minimum of $250,000 yearly. 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 if over age 50)
- Companies already contributing 3-4% and are willing to do more
- Organizations showing consistent profit patterns
- Entrepreneurs over age 40 who desire to "catch up" or boost savings within a short timeframe
Contribution Limits: The cap on contributions is calculated by an actuary using your financial situation, age, and savings targets. Allowable contributions change annually.
The Importance of a Financial Advisor in Garden Grove, CA for Your Self-Employed Retirement Plan
Partnering with an advisor in Garden Grove, CA focused on self-employed retirement strategies is an essential partner for entrepreneurs. They offer the knowledge to assist guide you through the challenges of retirement planning and develop a customized plan that aligns with your goals. A financial advisor in Garden Grove, CA will review your finances, understand your risk tolerance, and guide you in choosing wisely about saving and investing for retirement. Included in what we do for you includes:
- Assist in selecting a plan that suits your unique requirements
- Tailor the plan to your specific situation even further
- Adopt a written plan as required by IRS rules
- Organize a trust plan to manage your assets
- Help you understand the plan's terms
- Review and modify your plan to keep it aligned with your goals
- Offer continued financial education and guidance to help you navigate your retirement journey
- Boost your retirement earnings by maximizing your social security benefits
Self-Employed Retirement Plans in Garden Grove, CA: Correct Capital's Process
Self-employed individuals in Garden Grove, CA who don’t have the time or expertise to oversee their retirement savings strategy on their own may end up overwhelmed when faced with their options. Through our team at Correct Capital, our Garden Grove, CA financial advisors manage the majority of your retirement strategy for you, working to make meeting your retirement goals as easy as possible for you. We will guide you in creating 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 will assess if we're suited to your needs for you and your business. This short conversation allows us to learn about your needs with zero commitment or extensive time commitment on your part.
- Gather Information: Should we agree to proceed, we'll gather information, including your employee count, your current financial situation, and your retirement goals. This helps us create a personalized strategy that aligns with your goals.
- Review Your Plan: After we put together a plan using the information you provide, we'll sit down with you and review your plan thoroughly to ensure you understand it and understand how it best correlates to your needs.
- Implementation and Monitoring: Once we've agreed on your plan, we'll put everything in place so you can begin contributing. Throughout our relationship, we'll have regular meetings and review your strategy to make sure it remains aligned with your goals.
Our Garden Grove, CA financial advisors and retirement plan consultants serve as fiduciary advisors, who are obligated to they are required by law and ethical standards to prioritize your needs above all else.
Other financial advisory services we offer in Garden Grove, 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 Garden Grove, CA
To you, your business is more than "just a business", and your Garden Grove, CA financial advisors should provide more than basic financial recommendations. Correct Capital takes pride in, we take the time to get to know our clients and their businesses to create tailored self-employed retirement plans. All our clients in Garden Grove, CA benefit from our I.O.U. promise: everything we recommend 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.
