Self-employed retirement plans Garden Grove, CA. The freedom of owning your own business in Garden Grove, CA is one of the best aspects of working for yourself. That said, this freedom can come with certain challenges, especially in terms of retirement savings, since you don't have access to employer-sponsored retirement plans. Only 13% of self-employed individuals have a workplace retirement plan, although many could benefit from exploring their options. In addition to enjoying a more comfortable retirement, seeking advice from a financial advisor in Garden Grove, CA to set up your self-employed retirement plan can provide significant tax advantages that allow your business to grow and succeed.
Few Garden Grove, CA wealth management and retirement planning firms understand the needs of self-employed individuals better than Correct Capital. The father of our founder was a small business owner himself (learn more about our story here), and Correct Capital take pride in supporting entrepreneurs with their retirement planning needs. We recognize that your professional and personal aspirations extend well past simple financial figures, and we are dedicated to offer tailored solutions aligned with your vision. Continue exploring to find out about your self-employed retirement plan options in Garden Grove, CA, or reach out to Correct Capital at 877-930-401k or contact us online to consult with a entrepreneurial financial advisor in Garden Grove, CA today.
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Why Garden Grove, CA Self-Employed Individuals Should Have a Retirement Plan
Retirement plans for self-employed individuals are essential for preparing you for the future, they also provide immediate benefits today. With customizable contribution options to considerable tax savings, partnering with a financial advisor in Garden Grove, CA allows you to create your retirement plan to align with your unique financial situation.
Flexibility That Fits Your Income
If your income changes 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 reduce savings when revenues are down, so your plan fits your cash flow.
- Roth Options: Opting for a Roth Solo 401(k) lets you handle taxes upfront, allowing you to withdraw tax-free later—a wise move if you anticipate your tax rate is likely to rise in the future.
Save Money on Taxes
Self-employed retirement plans deliver significant tax benefits:
- Tax-Deductible Contributions: Contributions to a SEP IRA lower your taxable income, helping you keep more of your earnings.
- Tax-Deferred Growth: Investments grow tax-free until withdrawal, giving your money more time to compound.
- State-Specific Incentives: Based on your location, you may be eligible for additional tax breaks as a business owner. These local incentives help make these plans even more beneficial.
- Retirement Savings Contributions Credit (Saver’s Credit): Qualified participants can apply for a credit of up to 50% of the first $2,000 put into a retirement plan, cutting down your tax bill even more.
Protect Your Savings With Smart Investments
Building a secure 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 other assets is a smart way to minimize exposure to risk while helping to grow your retirement fund.
- Emergency Back-Up: Combining your retirement strategy and a business emergency fund helps you avoid tapping into your nest egg during financial hardships and incurring penalties.
Plan for the Future of Your Garden Grove, CA Business
Retirement planning enables you to think through what’s next with your Garden Grove, CA business:
- Selling Your Business: For those considering a sale, retirement accounts like SEP IRAs and Solo 401(k)s stay in your name and don’t transfer with the business. These plans can provide the financial stability you’ll need during retirement. Keep in mind that while selling your business results in a capital gain, retirement plan contributions are subject to yearly maximums (e.g., as much as $7,000 for IRAs or a maximum of $70,000 for Solo 401(k)s, factoring in catch-up contributions, based on plan compensation).
- Minimizing Taxes: Strategically planning your contributions helps lower the taxes you’ll owe when you transfer your business.
- Succession Planning: For those winding down or handing over their business, your nest egg provide a stable foundation during the change. You may also work with a financial advisor with expertise in succession and retirement planning to reduce taxes associated with the transaction.
With the proper savings strategy, you manage 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 Garden Grove, CA Now?
There’s no denying that time is one of the most important resources when it comes to saving for retirement. Getting a head start not only helps you grow a more substantial retirement fund but also lowers the pressure of saving aggressively in the future. This is why it is beneficial to start now:
The Cost of Waiting
Waiting to start your retirement fund could lead to a significant impact on the total you’ll have when you reach retirement age. The primary reason is compound interest—the financial principle where your investments generate earnings, and those returns, subsequently, accumulate even more returns. The longer your money has to grow, the more significant the benefit of this growth.
Example: Taylor and Alex are both entrepreneurs. Their shared goal is to save $500,000 for retirement by age 65:
- Alex starts saving $5,000 annually at age 30.
- Taylor postpones starting contributions to age 40 but saves $7,500 annually to make up for lost time.
By age 65, assuming 7% annual return:
- Alex invests $180,000 and achieves a total of $691,184.39*.
- Taylor puts in $195,500 but only ends up with $474,367.78*.
How Early Contributions Grow
Regular, modest investments invested steadily may result in impressive growth. Consider this example showing the power of compounding:
- Starting at age 25: By investing $200 per month in a retirement plan with an projected return of 7%, you’ll accumulate $497,303.29* by age 65.
- Starting at age 35: Saving the same $200 per month leaves you with only $235,412.97* by age 65—a difference of over $260,000, just from a 10-year delay.
Starting sooner, the less effort required each year to achieve your retirement goals.
*The numbers shown in this scenario represent estimates calculated using NerdWallet’s Compound Interest Calculator, assuming a 7% annual return. The contributions were calculated by multiplying the annual deposit amount by the total number of years contributions were made. This information is intended as illustrative examples and cannot predict actual future outcomes. Your individual results may differ depending on factors such as market conditions, fees, and your unique situation. We recommend consulting a financial advisor for guidance tailored to your needs.
Take Control of Your Financial Future
If you’re self-employed in Garden Grove, CA, it is often the case that you prioritize reinvesting in your business rather than saving for retirement. Even so, initiating a plan now gives you the chance to:
- Benefit from tax-deferred growth or penalty-free withdrawals down the road.
- Enjoy adjustable savings that align with your income.
- Build a long-term safety measure that offers peace of mind, no matter how your business develops.
The sooner you start, the less you’ll be required to worry about making up for lost time later in life. Taking steps toward your retirement goals today means gaining control over your financial future and giving yourself the opportunity to turn your attention to your goals—both for your retirement years and your Garden Grove, CA business.
Types of Self-Employed Retirement Plans
There are several retirement savings options designed for those working for themselves in Garden Grove, CA, each offering its own advantages and considerations. A financial advisor is available to help you learn about the pros and cons of each choice and identify the one ideal for your needs. In most cases, your self-employed retirement plan options in Garden Grove, CA are:
Traditional or Roth IRA
Plan Overview: Individual Retirement Accounts (IRAs), as explained here, represent retirement savings vehicles that offer distinct tax benefits. In a standard IRA, the money you contribute is often tax-deductible, and returns grow free of current taxes, but money taken out during retirement are taxed as income. In contrast, with Roth IRAs, you contribute using income already taxed, but retirement withdrawals that qualify, including earnings, are exempt from taxes. In both cases, withdrawals are penalty-free as long as you are at least 59½.
Eligibility: Unlike 401(k)s, which are employer-sponsored, traditional and Roth IRAs are available to anyone with a source of 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: SEP IRAs is a retirement plan that allows self-employed individuals to set aside a portion of their self-employment income. Contributions must come from an employer, so, as a sole proprietor, you (the employee) would not be able to contribute 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 have the flexibility to contribute a flat-dollar amount or a percentage of wages to employee accounts. This type of plan is a good option for businesses that experience fluctuating revenue streams. Unlike other plans, SEP IRAs don’t have the high fees associated with starting or maintaining other plans.
SEPs function like conventional 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 establish a SEP.
Contribution Limits: Contribution limits for employees in a SEP IRA must not exceed:
- 25% of compensation, or
- $70,000 for 2025
As a self-employed person, the contribution you can make is based on a special calculation.
Solo 401(k)
Plan Overview: A Solo 401(k) plan, also called an Individual 401(k) or one-participant 401(k) plan, is a savings option for the self-employed designed for companies that have no employees or where the only employee is a spouse. This type of plan function similarly to standard 401(k) plans, and enable contributions as both the employer and the employee with pre-tax money. This allows for more savings than SEPs or IRAs; however, the increased savings potential often come with more constrained investment avenues. In a solo 401(k) 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 have the ability to 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 are 50 or older, or $34,750 if you attain age 60-63 in 2025.
- Employer profit-sharing contributions (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.
Your combined contributions must not surpass $70,000, or $77,500 if you're over age 50 (for 2025), $81,250 for those aged 60-63 in 2025.
Individual Defined Benefit Plan
Plan Overview: Defined benefit plans is a retirement option that guarantees a fixed, predetermined benefit to business owners upon retirement. In contrast to the plans discussed earlier, investment returns don’t affect the payout, but enables participants to determine what they'll get in retirement. This option is best suited for higher-income professionals who are focused on saving a significant sum for retirement and are willing to make larger deposits. Contributions grow tax-free until withdrawal, and withdrawals are taxable as income in retirement.
Eligibility: Any self-employed individual managing a one-person company or with less than five employees are eligible to open an individual defined benefit plan, but it's generally suggested for those over 50 who make $250,000 or more annually. Generally, good candidates for defined benefit plans tend to be:
- Business owners or partners who desire to contribute more than $70,000 (or $77,500 for those aged 50+)
- Businesses currently investing 3-4% and are willing to do more
- Businesses with proven consistent profit patterns
- Business leaders over age 40 who aim to quickly build retirement savings or boost savings within a short timeframe
Contribution Limits: The maximum allowable contribution is calculated by an actuary using your financial situation, age, and savings targets. Contribution limits are adjusted each year.
The Importance of a Financial Advisor in Garden Grove, CA for Your Self-Employed Retirement Plan
A financial advisor in Garden Grove, CA focused on self-employed retirement strategies is an invaluable resource for self-employed individuals. They have the expertise to help understand the intricacies of saving for retirement and design a customized plan that matches your objectives. A financial advisor in Garden Grove, CA will review your finances, understand your risk tolerance, and help you in making informed decisions about saving and investing for retirement. Part of what we do for you includes:
- Assist in selecting a plan that aligns with your objectives and circumstances
- Customize the plan to your needs even further
- Formalize a plan in writing as required by IRS rules
- Arrange a trust plan for assets
- Help you understand the plan's terms
- Track and fine-tune your plan when necessary
- Deliver continuous support and financial insights throughout your retirement planning process
- Maximize what you receive in retirement by maximizing your social security benefits
Self-Employed Retirement Plans in Garden Grove, CA: Correct Capital's Process
Entrepreneurs in Garden Grove, CA who don’t have the time or expertise to oversee their self-employed retirement plan independently may end up overwhelmed by their available plans. With Correct Capital, our Garden Grove, CA financial advisors take on the majority of your retirement strategy for you, working to make meeting your future savings targets 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: A quick 20-minute call is all it takes, a member of our advisor team can determine if our services align for you and your business. This brief introduction allows us to understand what you're looking for with zero commitment or extensive time commitment on your part.
- Gather Information: Once we mutually decide to continue, we'll request information, including your employee count, your current financial situation, and your long-term savings targets. This enables us to craft a personalized strategy that aligns with your goals.
- Review Your Plan: Once we've developed a plan based on the information you provide, we'll meet with you and go over your plan in detail to help you fully grasp 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 begin contributing. As time goes on, we'll check in and review your strategy to make sure it remains aligned with your goals.
Our Garden Grove, CA financial advisors and retirement plan consultants are fiduciary advisors, meaning 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:
- 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
Your business isn't "just a business" to you, and your Garden Grove, CA financial advisors should provide more than basic financial recommendations. With Correct Capital, we make it a priority to understand our clients and their businesses to provide tailored self-employed retirement plans. To every client in Garden Grove, CA, we provide our I.O.U. promise: everything we recommend will be independent, objective, and unbiased. To take the first step on your self-employment retirement plan, reach out to Correct Capital at 877-930-401k or contact us online.
