Self-employed retirement plans Grand Rapids, MI. The independence of running your own company in Grand Rapids, MI is one of the greatest advantages of working for yourself. However, this freedom often comes with a lack of security, particularly when it comes to planning for retirement, since you don't have access to employer-sponsored retirement plans. Only 13% of self-employed individuals have a workplace retirement plan, but many could benefit from exploring their options. In addition to achieving a more comfortable retirement, partnering with a financial advisor in Grand Rapids, MI to create your self-employed retirement plan offers significant tax advantages that allow your business to grow and succeed.
Few Grand Rapids, MI wealth management and retirement planning firms truly grasp the challenges faced by small business owners quite like Correct Capital. The father of our founder was a small business owner himself (learn more about our story here), and we take pride in supporting entrepreneurs with their retirement planning needs. We know that your goals for your business and retirement extend well past just monetary concerns, and we work tirelessly to create personalized solutions to meet your unique goals. Keep reading to learn more about your self-employed retirement plan options in Grand Rapids, MI, or reach out to Correct Capital at 877-930-401k or contact us online to talk to a entrepreneurial financial advisor in Grand Rapids, MI today.
Why Grand Rapids, MI Self-Employed Individuals Should Have a Retirement Plan
Retirement plans for self-employed individuals not only prepare you for the future, they also offer tangible benefits today. From flexible contributions to significant tax savings, working with a financial advisor in Grand Rapids, MI helps you customize your retirement plan to align with your unique financial situation.
Flexibility That Fits Your Income
When your earnings vary from year to year, a plan like a SEP IRA or Solo 401(k) provides the freedom to modify how much you save:
- Customizable Contributions: Set aside more during profitable years and scale back when income is lower, ensuring your plan fits your financial situation.
- Roth Options: Choosing a Roth Solo 401(k) lets you settle taxes at the time of contribution, allowing you to withdraw tax-free later—a wise move if you expect your tax rate will increase in the future.
Save Money on Taxes
Self-employed retirement plans provide powerful tax benefits:
- Tax-Deductible Contributions: Contributions to a SEP IRA lower your taxable income, helping you keep more of your income.
- Tax-Deferred Growth: Investments grow tax-free until withdrawal, which gives your money more time to grow.
- State-Specific Incentives: In some states, you may be eligible for state-specific credits as a business owner. These local incentives help make these plans even more valuable.
- Retirement Savings Contributions Credit (Saver’s Credit): Qualified participants 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
Building a secure retirement goes beyond just how much you save—it’s also about how you invest:
- Diversified Portfolios: Allocating your investments across varied asset classes like stocks and bonds is a smart way to reduce risk while helping to grow your nest egg.
- Emergency Back-Up: Pairing your retirement plan with a dedicated business safety net ensures you don’t using your retirement funds during financial hardships and facing tax penalties.
Plan for the Future of Your Grand Rapids, MI Business
A thoughtful retirement strategy also helps you think through what’s next with your Grand Rapids, MI business:
- Selling Your Business: For those considering a sale, accounts such as SEP IRAs or Solo 401(k)s remain your personal assets and are not part of the sale. These savings can provide the steady income you’ll need in the future. Remember that while selling your business results in a capital gain, contributions to retirement accounts are restricted by contribution limits (e.g., as much as $7,000 for IRAs or as much as $70,000 for Solo 401(k)s, factoring in catch-up contributions, based on plan compensation).
- Minimizing Taxes: Strategically planning your contributions can reduce the taxes you’ll owe when you pass on your business.
- Succession Planning: For those winding down or handing over their business, your nest egg ensure a stable foundation through the transition. You might want to work with a financial advisor experienced in both succession and retirement strategies to minimize tax burdens during the sale.
With the proper savings strategy, you can take control of your financial future, reduce your tax burden, and build a solid base for both your retirement and your business goals.
Why Start a Self-Employed Retirement Plan in Grand Rapids, MI Now?
Time remains one of the most valuable 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 stress of catching up later in life. The following are reasons why it makes sense to begin today:
The Cost of Waiting
Waiting to start your retirement fund may cause a significant impact on the total you’ll have when you reach retirement age. The main reason is compound interest—the financial principle where your investments generate earnings, and those returns, subsequently, accumulate even more returns. The greater time span your money has to grow, the greater the benefit of this compounding process.
Example: Taylor and Alex are both self-employed professionals. Their shared goal is to save $500,000 for retirement by age 65:
- Alex starts saving $5,000 annually at age 30.
- Taylor waits until age 40 but contributes $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 invests $195,500 but achieves a total of only $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 impact of compounding:
- 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: 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 are estimates derived from NerdWallet’s Compound Interest Calculator, with the assumption of a 7% annual return. These calculations involved multiplying yearly deposits by the years contributed. This information is intended as illustrative examples and cannot predict actual future outcomes. Outcomes may change based on variables including market conditions, fees, and personal factors. Always consult a financial advisor for custom recommendations.
Take Control of Your Financial Future
If you’re self-employed in Grand Rapids, MI, it is often the case that you put more emphasis on reinvesting in your business instead of saving for retirement. However, beginning a plan now enables you to:
- Benefit from growth that is tax-deferred or withdrawals without taxes later on.
- Take advantage of contribution flexibility that adapt to your cash flow.
- Build a financial cushion that offers peace of mind, no matter how your business changes.
Getting started now, the less you’ll need to worry about catching up later in life. Saving for retirement now means gaining control over your financial future and creating for yourself the freedom to concentrate on your dreams—both for your golden years and your Grand Rapids, MI business.
Types of Self-Employed Retirement Plans
Multiple retirement savings options open for entrepreneurs in Grand Rapids, MI, each with its own advantages and considerations. A financial advisor will guide you to learn about the pros and cons of each choice and choose the one most suitable for your circumstances. Generally speaking, your self-employed retirement plan options in Grand Rapids, MI include:
Traditional or Roth IRA
Plan Overview: Individual Retirement Accounts (IRAs), as explained here, represent long-term savings plans that include key tax perks. In a traditional IRA, you can usually deduct your contributions from taxable income, and investment earnings grow tax-deferred, but withdrawals in retirement are taxed as income. In contrast, Roth IRA contributions using income already taxed, but qualified withdrawals in retirement, including earnings, are tax-free. In both types of accounts, withdrawals are penalty-free provided you are at least 59½.
Eligibility: Unlike plans linked to your job, IRAs, including traditional and Roth options are available to anyone with taxable earnings.
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: The Simplified Employee Pension IRA offers a way to save for retirement that allows those who are self-employed to save a percentage of their net business profits. Contributions can only be made by an employer, so, as a self-employed individual, you (the employee) cannot make additional contributions beyond the 25% you (the employer) have designated. 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 fixed dollar figure or a percentage of wages to employee accounts. A SEP IRA works well for companies with fluctuating revenue streams. Compared to other retirement options, SEP IRAs don’t have expensive setup or ongoing fees.
SEPs work like traditional IRAs, where you contribute pre-tax dollars and money withdrawn is subject to income tax.
Eligibility: Both employers and self-employed individuals can set up 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 allowable contribution is based on a special calculation.
Solo 401(k)
Plan Overview: Solo 401(k)s, commonly known as an Individual 401(k) or one-participant 401(k) plan, is a retirement savings plan designed for companies that have no employees or if the only employee is your spouse. This type of plan are similar to employer-sponsored 401(k) plans, and enable contributions as both an employer and an employee with pre-tax money. This offers more savings than SEPs or IRAs; however, the additional opportunities often come with 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 may establish and contribute to a solo 401(k).
Contribution Limits: As a self-employed individual with a solo 401(k) plan, you have the ability to make two types of contributions:
- Employee contributions of up to 100% of your earned income from self-employment, subject to the annual contribution limit. In 2025, those limits are $23,500, or $31,000 for those aged 50 and above, or $34,750 for individuals aged 60-63 in 2025.
- Employer profit-sharing contributions (as an employer) must not surpass 25% of your adjusted self-employment income, which is defined as net profit minus half of your self-employment tax and the employee contributions you made.
The total contribution cannot exceed $70,000, or $77,500 for individuals aged 50+ (for 2025), $81,250 for individuals turning 60-63 in 2025.
Individual Defined Benefit Plan
Plan Overview: The defined benefit plan is a retirement option that guarantees a pre-established payout 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 receive in retirement. This strategy is best suited for wealthier entrepreneurs who aim to accumulate a significant sum for retirement and can commit to making sizeable contributions. Contributions grow tax-free until withdrawal, and withdrawals incur taxes as income upon retirement.
Eligibility: Entrepreneurs managing a one-person company or employing fewer than five people may establish an individual defined benefit plan, but it's most commonly advised for those over 50 who generate a minimum of $250,000 yearly. In most cases, good candidates for defined benefit plans are:
- Business owners or partners who want to invest more than $70,000 (or $77,500 for individuals 50 and older)
- Companies already contributing 3-4% but are open to increasing contributions
- Businesses showing consistent profit patterns
- Partners or owners over age 40 who wish to accelerate savings or boost savings within a short timeframe
Contribution Limits: The contribution limit must be determined by an actuary determined by your income, age, and retirement goals. Limits on contributions change annually.
The Importance of a Financial Advisor in Grand Rapids, MI for Your Self-Employed Retirement Plan
Partnering with an advisor in Grand Rapids, MI experienced with retirement plans for the self-employed can be an invaluable resource for entrepreneurs. They offer the knowledge to assist understand the intricacies of saving for retirement and craft a customized plan that aligns with your goals. A financial advisor in Grand Rapids, MI will assess where you stand financially, identify your risk preferences, and assist you in choosing wisely about saving and investing for retirement. A key part of what we do for you features:
- Help you choose a plan that suits your unique requirements
- Further adapt the plan to fit you personally even further
- Formalize a plan in writing as required by IRS rules
- Set up an asset trust plan
- Make sure you understand the plan's terms
- Monitor and adjust your plan when necessary
- Deliver continuous support and financial insights throughout your retirement planning process
- Maximize what you receive in retirement by optimizing your social security benefits
Self-Employed Retirement Plans in Grand Rapids, MI: Correct Capital's Process
Grand Rapids, MI business owners who aren’t equipped with the time or understanding to oversee their self-employed retirement plan independently may end up overwhelmed as they look at their choices. Through our team at Correct Capital, our Grand Rapids, MI financial advisors manage the bulk of your retirement strategy for you, working to make meeting your future savings targets as easy as possible for you. We can help you get set 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 we're suited to your needs for you and your business. This initial call allows us to understand what you're looking for with zero commitment or extensive time commitment on your part.
- Gather Information: If we both decide to move forward, we'll request information, including your employee count, your existing financial picture, and your retirement goals. This enables us to craft a personalized strategy suited specifically for your needs.
- Review Your Plan: After we put together a plan based on the information you provide, we'll schedule a meeting and discuss your plan step by step to ensure you understand it and show how it aligns with your goals.
- 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 track your progress to ensure it stays suited to your needs.
Our Grand Rapids, MI financial advisors and retirement plan consultants serve as fiduciary advisors, who are obligated to they are legally and ethically bound to do what's in your best interest.
Other financial advisory services we offer in Grand Rapids, MI 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 Grand Rapids, MI
You don't see your business as "just a business", and your Grand Rapids, MI financial advisors need to offer 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. All our clients in Grand Rapids, MI benefit from 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, contact Correct Capital now at 877-930-401k or contact us online.
