Self-employed retirement plans Grand Rapids, MI. The independence of running your own company in Grand Rapids, MI is one of the best aspects of having a self-directed career. That said, this independence sometimes brings with a lack of security, especially when it comes to building your retirement fund, because you don't have access to retirement programs through an employer. Only 13% of self-employed individuals have a workplace retirement plan, yet countless could benefit from looking into other possibilities. In addition to having a more comfortable retirement, partnering with a financial advisor in Grand Rapids, MI to establish your self-employed retirement plan delivers significant tax advantages that allow both you and your business to thrive.
Few Grand Rapids, MI investment consulting 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 (read more of our story here), and our firm are deeply experienced in supporting entrepreneurs with their retirement planning needs. We recognize that your business and retirement aspirations go far beyond just monetary concerns, and we are dedicated to offer customized solutions to meet your unique goals. Read on to discover about your self-employed retirement plan options in Grand Rapids, MI, or call Correct Capital at 877-930-401k or contact us online to speak with a small business financial advisor in Grand Rapids, MI today.
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Why Grand Rapids, MI Self-Employed Individuals Should Have a Retirement Plan
Retirement plans for self-employed individuals help prepare you for the future, they also offer real benefits today. With customizable contribution options to substantial tax savings, working with a financial advisor in Grand Rapids, MI allows you to customize your retirement plan to align with your unique financial situation.
Flexibility That Fits Your Income
When your earnings vary annually, a plan like a SEP IRA or Solo 401(k) provides the option to adjust how much you save:
- Customizable Contributions: Set aside more during successful years and scale back when income is lower, so your plan fits your current income.
- Roth Options: A Roth Solo 401(k) lets you pay taxes on contributions now, allowing you to withdraw your savings tax-free down the road—a smart decision if you anticipate your tax rate to be higher in the future.
Save Money on Taxes
Retirement plans for self-employed individuals deliver powerful tax benefits:
- Tax-Deductible Contributions: Contributions to a SIMPLE IRA reduce what you owe in taxes, allowing you to keep more of your income.
- Tax-Deferred Growth: Investments grow tax-free until withdrawal, giving your money more time to compound.
- State-Specific Incentives: Based on your location, you could qualify for additional credits as a sole proprietor. These state-level incentives make these plans even more advantageous.
- Retirement Savings Contributions Credit (Saver’s Credit): Eligible individuals can claim a tax credit of up to 50% of the first $2,000 contributed a retirement plan, helping to lower 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: Spreading your investments across different asset classes like stocks and bonds can help reduce risk while still growing your nest egg.
- Emergency Back-Up: Pairing your retirement plan with a business emergency fund prevents you from tapping into your nest egg during financial hardships and facing tax penalties.
Plan for the Future of Your Grand Rapids, MI Business
Preparing for retirement also helps you plan ahead for what’s next with your Grand Rapids, MI business:
- Selling Your Business: When selling your business, accounts such as SEP IRAs or Solo 401(k)s remain your personal assets and are not part of the sale. These accounts ensure the financial stability you’ll need later on. Remember that while selling your business results in a capital gain, contributions to retirement accounts are capped at annual limits (e.g., up to $7,000 for IRAs or up to $70,000 for Solo 401(k)s, with catch-up contributions, based on plan compensation).
- Minimizing Taxes: Making the most of retirement savings helps lower the taxes you are required to pay when you transfer your business.
- Succession Planning: Whether you’re transferring ownership, your retirement savings provide a stable foundation as you make this shift. You may also seek advice from a financial advisor experienced in both succession and retirement strategies to minimize tax burdens during the sale.
With the right retirement plan, you gain control over your financial future, cut down your tax obligations, and establish a secure foundation for both your retirement and your business goals.
Why Start a Self-Employed Retirement Plan in Grand Rapids, MI Now?
Time is one of the most valuable factors when it comes to saving for retirement. Getting a head start not only allows you to build a more substantial retirement fund but also lowers the pressure of playing catch-up as you get older. The following are reasons why it makes sense to begin today:
The Cost of Waiting
Waiting to start your retirement fund can have a significant impact on the total you’ll have when you stop working. The primary reason is compound interest—the financial principle where your investments grow, and those returns, subsequently, accumulate even more returns. The more time your money has to grow, the larger the impact of this growth.
Example: Alex and Taylor are both self-employed individuals. 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 saves $7,500 annually to catch up.
By age 65, with an assumption of 7% annual return:
- Alex contributes $180,000 and achieves a total of $691,184.39*.
- Taylor puts in $195,500 but achieves a total of only $474,367.78*.
How Early Contributions Grow
Regular, modest investments contributed over time may result in significant growth. Take a look at this scenario showing the effect of consistent growth:
- Starting at age 25: By investing $200 per month in a retirement plan with an average annual return of 7%, you’ll grow to approximately $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 effort required each year to achieve your retirement goals.
*These calculations 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 meant to provide general guidance and cannot predict actual future outcomes. Your individual results may differ based on variables including market conditions, fees, and your unique situation. Always consult a financial advisor for personalized advice.
Take Control of Your Financial Future
As a self-employed person in Grand Rapids, MI, it is often the case that you focus more on reinvesting in your business over saving for retirement. That said, initiating a plan now gives you the chance to:
- Benefit from tax-deferred growth or withdrawals without taxes in the future.
- Enjoy adjustable savings that change with your earnings.
- Create a financial cushion that provides security, no matter how your business develops.
Getting started now, the less you’ll have to worry about making up for lost time later in life. Taking steps toward your retirement goals today means managing your financial future and creating for yourself the ability to concentrate on your dreams—both for your retirement years and your Grand Rapids, MI business.
Types of Self-Employed Retirement Plans
There are several retirement savings options designed for those working for themselves in Grand Rapids, MI, each offering its own pros and cons. A financial advisor is available to help you learn about the benefits and drawbacks of each plan and determine 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 retirement savings vehicles that include specific tax advantages. In a conventional IRA, you can usually deduct your contributions from taxable income, and earnings grow without immediate taxation, but retirement distributions are taxable. In contrast, Roth IRA contributions from post-tax earnings, but retirement withdrawals that qualify, including earnings, are not taxed. In both accounts, withdrawals come without penalties as long as you are at least 59½.
Eligibility: While many retirement plans, such as 401(k)s, are tied to employment, traditional and Roth IRAs 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: SEP IRAs serves as a retirement savings option that allows entrepreneurs to set aside a portion of their self-employment income. Contributions are strictly employer contributions an employer, so, as a independent business owner, you (the employee) would not be able to contribute beyond the 25% you (the employer) have designated. 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 fixed dollar figure or a percentage of wages to employee accounts. SEP IRAs is a good option for entrepreneurs facing periods of inconsistent earnings. Compared to other retirement options, SEP IRAs don’t have expensive setup or ongoing fees.
SEPs work like standard IRAs, where contributions are made with pre-tax money and retirement distributions are taxable.
Eligibility: Both employers and self-employed individuals can establish a SEP.
Contribution Limits: Contribution limits for employees in a SEP IRA are the lesser 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, also called an Individual 401(k) or one-participant 401(k) plan, is a savings option for the self-employed intended for businesses with no employees or where the only employee is a spouse. These plans are similar to traditional employer-managed 401(k) plans, and let you make contributions as both the employer and the employee with pre-tax money. This provides more savings than SEPs or IRAs; however, the increased savings potential can be balanced by more limited investment options. 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: 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: For self-employed individuals with a solo 401(k) plan, you are allowed to make two types of contributions:
- Deferrals as an employee 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 if you're over 50, or $34,750 for individuals aged 60-63 in 2025.
- Contributions as an employer (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 employee contributions you made.
Your combined contributions must not surpass $70,000, or $77,500 if you're over age 50 (as of 2025), $81,250 if you attain age 60-63 in 2025.
Individual Defined Benefit Plan
Plan Overview: A defined benefit plan offers a structured retirement solution that provides a pre-established payout to business owners upon retirement. As opposed to defined contribution plans, this plan is not influenced by market performance, but allows self-employed individuals to know exactly how much they'll receive in retirement. This strategy is ideal for high-earning entrepreneurs who want to save a large amount for retirement and are willing to make larger deposits. Contributions grow tax-free until withdrawal, and withdrawals are taxable as income during retirement.
Eligibility: Entrepreneurs operating a solo business or with less than five employees can open an individual defined benefit plan, but it's generally suggested for individuals aged 50+ who make $250,000 or more annually. 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 for those aged 50+)
- Companies already contributing 3-4% but are open to increasing contributions
- Companies that have demonstrated consistent profit patterns
- Business leaders over age 40 who aim to quickly build retirement savings or accelerate the retirement savings
Contribution Limits: The cap on contributions requires calculation from an actuary based on your income, age, and retirement goals. Allowable contributions are adjusted each year.
The Importance of a Financial Advisor in Grand Rapids, MI for Your Self-Employed Retirement Plan
A financial advisor in Grand Rapids, MI experienced with retirement plans for the self-employed serves as an essential partner for self-employed individuals. They offer the knowledge to assist navigate the complexities of retirement planning and develop a customized plan that aligns with your goals. A financial advisor in Grand Rapids, MI will review your finances, understand your risk tolerance, and assist you in selecting the best options about saving and investing for retirement. Included in what we do for you involves:
- Assist in selecting a plan that aligns with your objectives and circumstances
- Further adapt the plan to fit you personally even further
- Formalize a plan in writing that complies with IRS regulations
- Arrange a trust plan for assets
- Ensure you comprehend the plan's terms
- Track and fine-tune your plan to keep it aligned with your goals
- Provide ongoing education and advice throughout your retirement planning process
- Boost your retirement earnings by making the most of your social security
Self-Employed Retirement Plans in Grand Rapids, MI: Correct Capital's Process
Entrepreneurs in Grand Rapids, MI who lack the time, interest, or knowledge to oversee their retirement savings strategy independently may end up overwhelmed when faced with their available plans. At Correct Capital, our Grand Rapids, MI financial advisors manage the majority of your retirement planning for you, and strive to ensure meeting your financial objectives as straightforward as possible for you. We will guide you in creating your self-employed retirement plan in four simple steps:
- Schedule a Call: It only takes 20 minutes, a member of our advisor team will assess if we're a good fit for you and your business. This brief introduction helps us get a sense of your goals with no obligation or significant effort on your part.
- Gather Information: Once we mutually decide to continue, we'll gather information, including your employee count, your existing financial picture, and your long-term savings targets. This allows us to put together a custom plan suited specifically for your needs.
- Review Your Plan: When we finalize a plan based on 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. Over the course of our partnership, we'll have regular meetings and review your strategy to keep it tailored to your evolving circumstances.
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 prioritize your needs above all else.
Other financial advisory services we offer in Grand Rapids, MI 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 Grand Rapids, MI
Your business isn't "just a business" to you, and your Grand Rapids, MI financial advisors must deliver more than basic financial recommendations. At Correct Capital, we take the time to get to know our clients and their businesses to provide personalized self-employed retirement plans. To every client in Grand Rapids, MI, we provide our I.O.U. promise: everything we recommend will be independent, objective, and unbiased. To get started on your self-employment retirement plan, call Correct Capital today at 877-930-401k or contact us online.
