Self-employed retirement plans Grand Rapids, MI. The independence of being your own boss in Grand Rapids, MI is one of the greatest advantages of working for yourself. However, this independence often comes with potential drawbacks, particularly in terms of retirement savings, as 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 looking into other possibilities. In addition to enjoying a more secure retirement, partnering with a financial advisor in Grand Rapids, MI to create your self-employed retirement plan delivers significant tax advantages that enable you to move your business forward.
Few Grand Rapids, MI investment consulting and retirement planning firms truly grasp the challenges faced by small business owners quite like Correct Capital. Our founder's father was a small business owner himself (learn more about our story here), and Correct Capital are deeply experienced in supporting entrepreneurs with their retirement planning needs. We understand that your professional and personal aspirations aren’t limited to basic numbers, and we are dedicated to create customized solutions that reflect your objectives. Continue exploring to find out about your self-employed retirement plan options in Grand Rapids, MI, 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 Grand Rapids, MI today.
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 provide real benefits today. With customizable contribution options to considerable tax savings, partnering with a financial advisor in Grand Rapids, MI enables you to design your retirement plan to align with your specific needs.
Flexibility That Fits Your Income
When your earnings vary over time, a plan like a SEP IRA or Solo 401(k) provides the freedom to adjust how much you save:
- Customizable Contributions: Set aside more during successful years and reduce savings when revenues are down, so that your plan fits your current income.
- Roth Options: Opting for a Roth Solo 401(k) lets you pay taxes on contributions now, enabling you to withdraw your savings tax-free down the road—a wise move if you believe your tax rate will increase in the future.
Save Money on Taxes
Retirement plans for self-employed individuals offer powerful tax benefits:
- Tax-Deductible Contributions: Contributions to a Solo 401(k) lower your taxable income, so you can keep more of your earnings.
- Tax-Deferred Growth: Your savings grow untaxed until withdrawn, which gives your money more time to grow.
- State-Specific Incentives: Depending on where you live, you might access additional credits 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 they contribute a retirement plan, cutting down your tax bill even more.
Protect Your Savings With Smart Investments
Planning for a safe retirement goes beyond just how much you save—it’s also determined by your investment strategy:
- Diversified Portfolios: Spreading your investments across different stocks, bonds, and alternatives serves to minimize exposure to risk while continuing to build your savings.
- Emergency Back-Up: Supplementing your retirement savings with a business emergency fund helps you avoid using your retirement funds during financial hardships and incurring penalties.
Plan for the Future of Your Grand Rapids, MI Business
Preparing for retirement can assist you prepare for 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 yours and won’t be included in the sale. These savings offer the financial stability you’ll need later on. Remember that while selling a business often leads to a capital gain, retirement plan contributions are restricted by contribution limits (e.g., as much as $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: Using retirement contributions wisely minimizes the taxes you might face when you sell your business.
- Succession Planning: If you’re passing the business on, your nest egg provide the funds you need during the change. You may also seek advice from a financial advisor with expertise in succession and retirement planning to help with taxes on the sale.
With the proper savings strategy, you manage 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 crucial assets in retirement planning. Beginning sooner rather than later not only helps you grow a larger nest egg but also reduces the stress of catching up later in life. The following are reasons why it pays to take action now:
The Cost of Waiting
Putting off saving for retirement may cause a substantial impact on the amount you’ll have when you retire. The main reason is compound interest—the powerful process where your investments grow, and those returns, in turn, generate even more returns. The longer your money has to grow, the greater the effect of this growth.
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 delays savings until age 40 but puts away $7,500 annually to make up for lost time.
By age 65, with an assumption of 7% annual return:
- Alex invests $180,000 and accumulates $691,184.39*.
- Taylor contributes $195,500 but achieves a total of only $474,367.78*.
How Early Contributions Grow
Small, consistent savings invested steadily often create substantial growth. Consider this example showing the effect of consistent growth:
- Starting at age 25: Putting aside $200 per month in a retirement plan with an average annual return of 7%, you’ll end up with $497,303.29* by age 65.
- Starting at age 35: Investing the same $200 per month leaves you with only $235,412.97* by age 65—a shortfall of over $260,000, simply due to a 10-year delay.
The earlier you begin, the less you need to save each year to achieve your retirement goals.
*The numbers shown in this scenario are based on estimates calculated using 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 intended as illustrative examples and are not a promise of future results. Outcomes may change due to elements like 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 might seem easier to focus more on reinvesting in your business over saving for retirement. However, beginning a plan now allows you to:
- Benefit from tax-deferred growth or tax-free withdrawals down the road.
- Take advantage of flexible contributions that adapt to your earnings.
- Build a financial cushion that ensures stability, no matter how your business changes.
Starting early, the less you’ll need to worry about making up for lost time later in life. Building your retirement savings today means managing your financial future and giving 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 designed for those working for themselves in Grand Rapids, MI, each providing its own benefits and trade-offs. 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 consist of:
Traditional or Roth IRA
Plan Overview: IRAs, or Individual Retirement Accounts, are financial tools for retirement that offer specific tax advantages. In a standard IRA, contributions are typically tax-deductible, and investment earnings grow tax-deferred, but retirement distributions are taxable. In contrast, Roth IRAs require contributions are made with after-tax income, but qualified withdrawals in retirement, including earnings, are not taxed. In both accounts, withdrawals don’t incur penalties provided 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 for those aged 50+.
Simplified Employee Pension Plan (SEP IRA)
Plan Overview: SEP IRAs serves as a retirement savings option that allows self-employed individuals to set aside a portion of their self-employment income. Contributions are strictly employer contributions an employer, so, as a self-employed individual, you (the employee) are limited to contributions from the employer role beyond the 25% you (the employer) allocate. If you have employees, it's required to 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. A SEP IRA works well for companies with cycles of high revenue and low revenue. Compared to other retirement options, SEP IRAs don’t have expensive setup or ongoing fees.
SEPs work like standard IRAs, where you contribute pre-tax dollars and withdrawals are taxed as income.
Eligibility: Employers of any type, including self-employed individuals can open 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 contribution you can make 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 self-employed retirement plan intended for businesses without employees or when the sole employee is your spouse. This type of plan operate much like employer-sponsored 401(k) plans, and let you make contributions as both the employer and the employee with pre-tax money. This allows for more savings versus SEPs or IRAs; however, the increased savings potential often come with more limited investment options. With this type of plan, you can make either traditional or Roth deferrals, which offer 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:
- Deferrals as an employee of up to 100% of your self-employment income, up 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.
- Contributions as an employer (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 elective deferrals you made.
Your combined contributions must not surpass $70,000, or $77,500 for those aged 50 and older (as of 2025), $81,250 for individuals turning 60-63 in 2025.
Individual Defined Benefit Plan
Plan Overview: Defined benefit plans offers a structured retirement solution that provides a fixed, predetermined benefit 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 strategy is best suited for wealthier self-employed individuals who want to save a large amount for retirement and are willing to make sizeable contributions. Contributions are tax deferred, and withdrawals incur taxes as income during retirement.
Eligibility: Any self-employed individual operating a solo business or with a small staff of under five can open an individual defined benefit plan, but it's typically advised for those over 50 who earn at least $250,000 a year. In most cases, good candidates for defined benefit plans include:
- Entrepreneurs who aim to deposit more than $70,000 (or $77,500 for those aged 50+)
- Organizations that already put in 3-4% and are willing to do more
- Companies with proven consistent profit patterns
- Entrepreneurs over age 40 who desire to "catch up" or boost savings within a short timeframe
Contribution Limits: The maximum allowable contribution is calculated by an actuary based on your earnings, age, and retirement objectives. Contribution limits change annually.
The Importance of a Financial Advisor in Grand Rapids, MI for Your Self-Employed Retirement Plan
A financial advisor in Grand Rapids, MI specialized in self-employed retirement plans serves as an essential partner for those working for themselves. They offer the knowledge to assist navigate the complexities of retirement planning and design a customized plan that aligns with your goals. An expert in your area will assess where you stand financially, identify your risk preferences, and guide you in selecting the best options about saving and investing for retirement. Included in what we do for you features:
- Help you choose a plan that suits your unique requirements
- Further adapt the plan to your specific situation even further
- Adopt a written plan in accordance with IRS guidelines
- Arrange a trust plan for assets
- Ensure you comprehend the plan's terms
- Monitor and adjust your plan as needed
- Deliver continuous support and financial insights as you continue on the road to retirement
- Increase your retirement income by optimizing your social security benefits
Self-Employed Retirement Plans in Grand Rapids, MI: Correct Capital's Process
Self-employed individuals in Grand Rapids, MI who lack the time, interest, or knowledge to handle their retirement savings strategy independently may end up overwhelmed when faced with their available plans. Through our team at Correct Capital, our Grand Rapids, MI financial advisors manage the bulk of your retirement planning for you, working to make meeting your future savings targets as easy as possible for you. We are here to assist you in setting up your self-employed retirement plan in just four 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 lets us get a sense of your goals with zero commitment or significant effort on your part.
- Gather Information: Once we mutually decide to continue, we'll request information, including how many employees you have (if any), your existing financial picture, and your future objectives. This helps us create a tailored approach that aligns with your goals.
- Review Your Plan: Once we've developed a plan from the information you provide, we'll sit down with you and discuss your plan thoroughly to help you fully grasp it and show how it aligns with your goals.
- Implementation and Monitoring: When we finalize on your plan, we'll set everything up so you can begin contributing. Throughout our relationship, we'll meet with you and review your strategy to ensure it stays suited to your needs.
Our Grand Rapids, MI financial advisors and retirement plan consultants serve as fiduciary advisors, which means they are committed by law and ethics to act in your best interest.
Other financial advisory services we offer in Grand Rapids, MI include:
- Financial Planning for Business Owners
- Comprehensive Financial Planning
- Retirement Income Planning
- Investment Planning
- Retirement Financial Planning
- Independent Financial Advisor
- Roth Conversion
- Investment Management
- 401(k) Audit
- High-Net-Worth Wealth Management
Call Correct Capital for Your Self-Employed Retirement Plan in Grand Rapids, MI
To you, your business is more than "just a business", and your Grand Rapids, MI financial advisors must deliver more than basic financial recommendations. Correct Capital takes pride in, we make it a priority to understand our clients and their businesses to provide personalized self-employed retirement plans. We offer all our Grand Rapids, MI clients our I.O.U. promise: all guidance we provide will be independent, objective, and unbiased. To get started on your self-employment retirement plan, contact Correct Capital now at 877-930-401k or contact us online.
