Self-employed retirement plans Hayward, CA. The flexibility of owning your own business in Hayward, CA is one of the greatest advantages of being self-employed. Even so, this freedom can come with a lack of security, notably in terms of planning for retirement, as you don't have the benefit of retirement programs through an employer. Only 13% of self-employed individuals have a workplace retirement plan, yet countless could benefit from exploring their options. In addition to achieving a more secure retirement, partnering with a financial advisor in Hayward, CA to create your self-employed retirement plan can provide significant tax advantages that allow your business to grow and succeed.
Few Hayward, CA wealth management and retirement planning firms truly grasp the challenges faced by entrepreneurs as well as Correct Capital. Our company’s founder grew up with a father who was a small business owner himself (read more of our story here), and Correct Capital are deeply experienced in assisting business owners in their retirement planning needs. We know that your business and retirement aspirations go far beyond basic numbers, and we are dedicated to create customized solutions to meet your unique goals. Continue exploring to find out about your self-employed retirement plan options in Hayward, CA, or give us a call at Correct Capital at 877-930-401k or contact us online to consult with a small business financial advisor in Hayward, CA today.
Why Hayward, CA Self-Employed Individuals Should Have a Retirement Plan
Retirement plans for self-employed individuals not only prepare you for the future, they also provide immediate benefits today. From flexible contributions to considerable tax savings, partnering with a financial advisor in Hayward, CA enables you to create your retirement plan to fit your individual circumstances.
Flexibility That Fits Your Income
For those with fluctuating income annually, a plan like a SEP IRA or Solo 401(k) gives you the freedom to modify how much you save:
- Customizable Contributions: Save extra during successful years and scale back when your earnings dip, ensuring your plan aligns with your financial situation.
- Roth Options: Opting for a Roth Solo 401(k) lets you pay taxes on contributions now, allowing you to withdraw without tax penalties in the future—a wise move if you expect your tax rate is likely to rise in the future.
Save Money on Taxes
Retirement plans for self-employed individuals provide valuable tax benefits:
- Tax-Deductible Contributions: Contributions to a Solo 401(k) shrink your tax liability, helping you keep more of your hard-earned money.
- Tax-Deferred Growth: Your savings grow untaxed until withdrawn, which gives your money more time to grow.
- State-Specific Incentives: In some states, you may be eligible for extra tax breaks as a self-employed individual. These local incentives can make these plans even more valuable.
- 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, helping to lower your tax bill even more.
Protect Your Savings With Smart Investments
Planning for a safe retirement isn’t only about how much you save—it’s also determined by your investment strategy:
- Diversified Portfolios: Allocating your investments across a mix of asset classes like stocks and bonds can help minimize exposure to risk while continuing to build your nest egg.
- Emergency Back-Up: Pairing your retirement plan with a business emergency fund prevents you from using your retirement funds during challenging periods and facing tax penalties.
Plan for the Future of Your Hayward, CA Business
Retirement planning also helps you think through what’s next with your Hayward, CA business:
- Selling Your Business: If you’re planning to sell, accounts such as SEP IRAs or Solo 401(k)s remain yours and won’t be included in the sale. These savings can provide the steady income you’ll need in the future. It’s important to note that while selling a business often leads to a capital gain, retirement plan contributions are capped at annual limits (e.g., a maximum of $7,000 for IRAs or up to $70,000 for Solo 401(k)s, with catch-up contributions, depending on plan details).
- Minimizing Taxes: Making the most of retirement savings can reduce the taxes you are required to pay when you transfer your business.
- Succession Planning: For those winding down or handing over their business, your retirement savings ensure the funds you need during the change. You can also work with a financial advisor with expertise in succession and retirement planning to help with taxes during the sale.
With the right retirement plan, you gain control over your financial future, cut down your tax obligations, and build a solid base for both your retirement and your business goals.
Why Start a Self-Employed Retirement Plan in Hayward, CA Now?
There’s no denying that time is one of the most valuable factors for building your retirement fund. Getting a head start not only lets you accumulate a bigger financial cushion but also reduces the pressure of catching up later in life. Here’s why it is beneficial to start now:
The Cost of Waiting
Putting off saving for retirement could lead to a substantial impact on the total you’ll have when you stop working. The biggest reason is compound interest—the financial principle where your investments earn returns, and those returns, subsequently, generate even more returns. The greater time span your money has to grow, the greater the effect of compounding.
Example: Two individuals, Alex and Taylor are both self-employed professionals. They each aim to save $500,000 for retirement by age 65:
- Alex begins contributing $5,000 annually at age 30.
- Taylor waits until age 40 but puts away $7,500 annually to catch up.
By age 65, using a projected 7% annual return:
- Alex puts in $180,000 and ends up with $691,184.39*.
- Taylor contributes $195,500 but accumulates just $474,367.78*.
How Early Contributions Grow
Small, consistent savings invested steadily can lead to impressive growth. Here’s a simple scenario showing the impact of compounding:
- Starting at age 25: Putting aside $200 per month in a retirement plan with an projected return of 7%, you’ll end up with $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, all because of a 10-year delay.
Starting sooner, the lower your annual savings needs each year to achieve your retirement goals.
*The figures provided in this example are based on estimates calculated using NerdWallet’s Compound Interest Calculator, based on a 7% annual return. Annual deposits were multiplied by the number of years to estimate total contributions. This information is meant to provide general guidance and do not guarantee future performance. Actual results may vary based on factors such as market conditions, fees, and personal factors. We recommend consulting a financial advisor for custom recommendations.
Take Control of Your Financial Future
If you’re self-employed in Hayward, CA, it might seem easier to focus more on reinvesting in your business rather than saving for retirement. However, beginning a plan now gives you the chance to:
- Benefit from growth that is tax-deferred or withdrawals without taxes later on.
- Enjoy flexible contributions that adapt to your cash flow.
- Establish a long-term safety measure that provides security, no matter how your business evolves.
Starting early, the less you’ll have to worry about catching up later in life. Saving for retirement now means managing your financial future and creating for yourself the ability to focus on your goals—both for your retirement years and your Hayward, CA business.
Types of Self-Employed Retirement Plans
There are several retirement savings options available for entrepreneurs in Hayward, CA, each providing its own pros and cons. A financial advisor is available to help you evaluate the advantages and disadvantages of each option and identify the one ideal for your unique situation. Typically, your self-employed retirement plan options in Hayward, CA consist of:
Traditional or Roth IRA
Plan Overview: Individual Retirement Accounts (IRAs), as explained here, represent retirement savings vehicles that provide key tax perks. In a conventional IRA, you can usually deduct your contributions from taxable income, and investment earnings grow tax-deferred, but withdrawals in retirement are taxable. In contrast, Roth IRAs require contributions from post-tax earnings, but eligible distributions during retirement, including earnings, are not taxed. In both accounts, withdrawals don’t incur penalties if you are at least 59½.
Eligibility: Unlike plans linked to your job, IRAs, including traditional and Roth options are open to those 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: A Simplified Employee Pension (SEP) IRA is a retirement plan 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 independent business owner, you (the employee) are limited to contributions from the employer role more than the 25% you (the employer) have designated. If you have employees, you must contribute the same amount for them as you do for yourself. You may choose to contribute a flat-dollar amount or a percentage of wages to employee accounts. A SEP IRA is a good option 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 traditional IRAs, where the contributions are tax-deferred and retirement distributions are taxable.
Eligibility: Employers of any type, including 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, 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 where the only employee is a spouse. Solo 401(k)s function similarly to traditional employer-managed 401(k) plans, and enable contributions as both the employer and the employee with pre-tax money. This provides more savings versus SEPs or IRAs; however, the extra savings options may be offset by more constrained investment avenues. Using a solo 401(k), you can make either traditional or Roth deferrals, which have the same tax benefits as their IRA contribution counterparts.
Eligibility: Only business owners and their spouses may establish 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 self-employed earnings, subject to the annual contribution limit. The contribution limits for 2025 include $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 calculated as net profits less half of your self-employment tax and the elective deferrals you made.
Total contributions are capped at $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 offers a structured retirement solution that guarantees a set amount to business owners upon retirement. In contrast to the plans discussed earlier, this plan is not influenced by market performance, but enables participants to determine exactly how much they'll get in retirement. This option is best suited for high-earning professionals who want to save a substantial amount for retirement and can commit to making larger deposits. Contributions offer tax-deferred growth, and withdrawals are taxed as income during retirement.
Eligibility: Any self-employed individual running an owner-only business or with less than five employees are eligible to open an individual defined benefit plan, but it's typically advised for those over 50 who earn at least $250,000 a year. Generally, good candidates for defined benefit plans are:
- Business owners or partners who aim to deposit more than $70,000 (or $77,500 for individuals 50 and older)
- Companies already contributing 3-4% and are willing to do more
- Businesses with proven consistent profit patterns
- Partners or owners over age 40 who wish to accelerate savings or boost savings within a short timeframe
Contribution Limits: The maximum allowable contribution is calculated by an actuary based on your financial situation, age, and savings targets. Allowable contributions are adjusted each year.
The Importance of a Financial Advisor in Hayward, CA for Your Self-Employed Retirement Plan
A financial advisor in Hayward, CA experienced with retirement plans for the self-employed serves as an invaluable resource for those working for themselves. They offer the knowledge to assist navigate the complexities of retirement planning and craft a customized plan that matches your objectives. Your advisor in Hayward, CA will review your finances, determine how much risk you’re comfortable with, and assist you in making informed decisions about saving and investing for retirement. Part of what we do for you includes:
- Help you choose a plan that best fits your needs and goals
- Further adapt the plan to your needs even further
- Adopt a written plan that complies with IRS regulations
- Arrange a trust plan for assets
- Ensure you comprehend the plan's terms
- Review and modify your plan to keep it aligned with your goals
- Deliver continuous support and financial insights throughout your retirement planning process
- Increase your retirement income by optimizing your social security benefits
Self-Employed Retirement Plans in Hayward, CA: Correct Capital's Process
Self-employed individuals in Hayward, CA who lack the time, interest, or knowledge to manage their self-employed retirement plan independently may end up overwhelmed as they look at their available plans. Through our team at Correct Capital, our Hayward, CA financial advisors handle the lion's share of your savings plan setup for you, to help make meeting your retirement goals as straightforward 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: In just 20 minutes, a member of our advisor team can help understand if we're suited to your needs for you and your business. This brief introduction lets us get a sense of your goals with zero commitment or major time investment on your part.
- Gather Information: Should we agree to proceed, we'll request information, including whether you have employees, your current financial situation, and your retirement goals. This allows us to put together a tailored approach suited specifically for your needs.
- Review Your Plan: After we put together a plan using the information you provide, we'll meet with you and discuss your plan step by step to make sure it's clear 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 initiate your savings journey. Over the course of our partnership, we'll meet with you and monitor your plan to ensure it stays suited to your needs.
Our Hayward, CA financial advisors and retirement plan consultants act as fiduciary advisors, which means they are legally and ethically bound to act in your best interest.
Other financial advisory services we offer in Hayward, 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 Hayward, CA
You don't see your business as "just a business", and your Hayward, CA financial advisors must deliver more than simply sound financial advice. At Correct Capital, we make it a priority to understand our clients and their businesses to create personalized self-employed retirement plans. We offer all our Hayward, CA clients our I.O.U. promise: all of the advice you get from us 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.
