Self-employed retirement plans Huntsville, AL. The independence of running your own company in Huntsville, AL offers many benefits of working for yourself. Even so, this freedom can come with certain challenges, especially when it comes to planning for retirement, as you don't have access to a workplace retirement plan. Only 13% of self-employed individuals have a workplace retirement plan, but many should consider looking into other possibilities. In addition to having a more comfortable retirement, seeking advice from a financial advisor in Huntsville, AL to create your self-employed retirement plan delivers significant tax advantages that enable your business to grow and succeed.
Few Huntsville, AL wealth management and retirement planning firms understand the needs of self-employed individuals as well as Correct Capital. Our company’s founder grew up with a father who was a small business owner himself (check out our story here), and we have a rich history of helping businesses with their retirement planning needs. We understand that your professional and personal aspirations aren’t limited to 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 Huntsville, AL, or reach out to Correct Capital at 877-930-401k or contact us online to talk to a small business financial advisor in Huntsville, AL today.
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Why Huntsville, AL Self-Employed Individuals Should Have a Retirement Plan
Retirement plans for self-employed individuals help prepare you for the future, they also offer tangible benefits today. From flexible contributions to substantial tax savings, consulting a financial advisor in Huntsville, AL enables you to create your retirement plan to suit your specific needs.
Flexibility That Fits Your Income
When your earnings vary annually, a plan like a SEP IRA or Solo 401(k) provides the flexibility to adjust how much you save:
- Customizable Contributions: Save extra during high-income years and reduce savings when revenues are down, so your plan fits your financial situation.
- Roth Options: Opting for a Roth Solo 401(k) lets you handle taxes upfront, so you can withdraw without tax penalties in the future—a smart decision if you expect your tax rate is likely to rise in the future.
Save Money on Taxes
Plans designed for the self-employed offer powerful tax benefits:
- Tax-Deductible Contributions: Contributions to a Solo 401(k) reduce what you owe in taxes, 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 accumulate.
- State-Specific Incentives: In some states, you may be eligible for additional tax breaks as a self-employed individual. These local incentives make these plans even more advantageous.
- Retirement Savings Contributions Credit (Saver’s Credit): Those who meet the requirements can take advantage of a credit of up to 50% of the first $2,000 contributed 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 determined by your investment strategy:
- Diversified Portfolios: Distributing your investments across a mix of stocks, bonds, and alternatives serves to mitigate financial risk while still growing your retirement fund.
- Emergency Back-Up: Combining your retirement strategy and a business emergency fund helps you avoid using your retirement funds during challenging periods and risking extra costs.
Plan for the Future of Your Huntsville, AL Business
Preparing for retirement can assist you plan ahead for what’s next with your Huntsville, AL business:
- Selling Your Business: For those considering a sale, retirement accounts like SEP IRAs and Solo 401(k)s stay in your name and are not part of the sale. These accounts offer the reliable income you’ll need in the future. It’s important to note that while the sale of a business usually creates a capital gain, retirement plan contributions are capped at annual limits (e.g., as much as $7,000 for IRAs or as much as $70,000 for Solo 401(k)s, including catch-up contributions, depending on plan details).
- Minimizing Taxes: Making the most of retirement savings helps lower the taxes you are required to pay when you sell your business.
- Succession Planning: If you’re passing the business on, your retirement accounts offer financial security as you make this shift. You may also seek advice from a financial advisor who specializes in succession planning and retirement accounts to minimize tax burdens associated with the transaction.
With the right retirement plan, you manage your financial future, reduce your tax burden, and establish a solid base for both your retirement and your business goals.
Why Start a Self-Employed Retirement Plan in Huntsville, AL Now?
There’s no denying that time is one of the most valuable assets in retirement planning. Beginning sooner rather than later not only helps you grow a larger nest egg but also minimizes the stress of saving aggressively in the future. Here’s why it makes sense to begin today:
The Cost of Waiting
Waiting to start your retirement fund may cause a major 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, then, accumulate even more returns. The more time your money has to grow, the larger the benefit of this growth.
Example: Taylor and Alex are both self-employed individuals. They each aim to save $500,000 for retirement by age 65:
- Alex initiates savings of $5,000 annually at age 30.
- Taylor waits until age 40 but contributes $7,500 annually to make up for lost time.
By age 65, using a projected 7% annual return:
- Alex puts in $180,000 and ends up with $691,184.39*.
- Taylor invests $195,500 but accumulates just $474,367.78*.
How Early Contributions Grow
Regular, modest investments made consistently often create substantial growth. Consider this example showing the effect of compounding:
- Starting at age 25: If you invest $200 per month in a retirement plan with an expected yearly growth rate of 7%, you’ll grow to approximately $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 gap of over $260,000, just from a 10-year delay.
Saving early, the lower your annual savings needs each year to achieve your retirement goals.
*These calculations represent 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 for illustrative purposes only and do not guarantee future performance. Actual results may vary due to variables including market conditions, fees, and individual circumstances. We recommend consulting a financial advisor for personalized advice.
Take Control of Your Financial Future
As a self-employed person in Huntsville, AL, it can be tempting to prioritize reinvesting in your business instead of saving for retirement. That said, initiating a plan now gives you the chance to:
- Take advantage of tax-deferred growth or tax-free withdrawals down the road.
- Enjoy adjustable savings that change with your income.
- Establish a long-term safety measure that ensures stability, no matter how your business develops.
Starting early, the less you’ll be required to worry about making up for lost time later in life. Saving for retirement now means taking control of your financial future and allowing yourself the opportunity to concentrate on your goals—both for your future retirement and your Huntsville, AL business.
Types of Self-Employed Retirement Plans
There are several retirement savings options available for self-employed individuals in Huntsville, AL, each with its own benefits and trade-offs. A financial advisor will guide you to learn about the pros and cons of each option and determine the one ideal for your needs. In most cases, your self-employed retirement plan options in Huntsville, AL include:
Traditional or Roth IRA
Plan Overview: IRAs, or Individual Retirement Accounts, are retirement savings vehicles that offer distinct tax benefits. In a traditional IRA, contributions are typically tax-deductible, and returns grow free of current taxes, but withdrawals in retirement are subject to income tax. 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 come without penalties if you are at least 59½.
Eligibility: Unlike 401(k)s, which are employer-sponsored, both traditional and Roth IRAs are available to anyone with a source of income.
Contribution Limits: For 2025, annual contribution limits for IRAs are set at $7,000, or $8,000 if you're 50 or older.
Simplified Employee Pension Plan (SEP IRA)
Plan Overview: A Simplified Employee Pension (SEP) IRA offers a way to save for retirement that enables 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 sole proprietor, you (the employee) cannot make additional contributions above 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 set monetary value or a percentage of wages to employee accounts. SEP IRAs is a good option for entrepreneurs facing cycles of high revenue and low revenue. In contrast to some alternatives, SEP IRAs are free of the high fees associated with starting or maintaining other plans.
SEPs work like conventional IRAs, where you contribute pre-tax dollars and retirement distributions are taxable.
Eligibility: Any employer, including the self-employed 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
As a self-employed person, the contribution you can make 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 retirement savings plan meant for businesses with no employees or if the only employee is your 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 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 offer 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:
- Elective 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.
- Employer profit-sharing contributions (as an employer) are limited to 25% of your adjusted self-employment income, which is calculated as net profits less half of your self-employment tax and the employee contributions you made.
The total contribution cannot exceed $70,000, or $77,500 if you're over age 50 (as of 2025), $81,250 for those aged 60-63 in 2025.
Individual Defined Benefit Plan
Plan Overview: A defined benefit plan is a retirement option that delivers a set amount to entrepreneurs upon retirement. As opposed to defined contribution plans, a defined benefit plan doesn't fluctuate based on investment returns, but allows self-employed individuals to know the precise amount they'll have in retirement. This plan is best suited for wealthier self-employed individuals who are focused on saving a significant sum for retirement and can commit to making sizeable contributions. Contributions grow tax-free until withdrawal, and withdrawals are taxed as income in retirement.
Eligibility: Self-employed professionals running an owner-only business or with a small staff of under five are eligible to open an individual defined benefit plan, but it's generally suggested for individuals aged 50+ who generate a minimum of $250,000 yearly. In most cases, good candidates for defined benefit plans tend to be:
- Business owners or partners who aim to deposit more than $70,000 (or $77,500 for those aged 50+)
- Companies already contributing 3-4% with plans to contribute more
- Companies with proven consistent profit patterns
- Business leaders over age 40 who wish to accelerate savings or increase their retirement contributions rapidly
Contribution Limits: The maximum allowable contribution is calculated by an actuary using your earnings, age, and retirement objectives. Contribution limits are updated yearly.
The Importance of a Financial Advisor in Huntsville, AL for Your Self-Employed Retirement Plan
Partnering with an advisor in Huntsville, AL focused on self-employed retirement strategies serves as an invaluable resource for those working for themselves. They bring the skills needed to guide you through the challenges of retirement planning and design a customized plan that matches your objectives. An expert in your area 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 involves:
- Guide you in choosing a plan that aligns with your objectives and circumstances
- Customize the plan to your needs even further
- Create a written plan in accordance with IRS guidelines
- Set up an asset trust plan
- Ensure you comprehend the plan's terms
- Review and modify your plan as needed
- Provide ongoing education and advice as you continue on the road to retirement
- Maximize what you receive in retirement by making the most of your social security
Self-Employed Retirement Plans in Huntsville, AL: Correct Capital's Process
Huntsville, AL business owners who don’t have the time or expertise to oversee their self-employed retirement plan themselves often feel overwhelmed when faced with their options. At Correct Capital, our Huntsville, AL financial advisors handle the bulk of your retirement planning for you, to help make meeting your financial objectives as straightforward as possible for you. We can help you get set 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 help understand if our services align for you and your business. This short conversation helps us get a sense of your goals with no obligation or extensive time commitment on your part.
- Gather Information: Once we mutually decide to continue, we'll ask for information, including how many employees you have (if any), your existing financial picture, and your future objectives. This enables us to craft a custom plan designed just for you.
- Review Your Plan: After we put together a plan using the information you provide, we'll schedule a meeting and discuss your plan thoroughly to ensure you understand it and explain its fit to your circumstances.
- Implementation and Monitoring: After we agree on your plan, we'll implement the necessary steps so you can initiate your savings journey. Over the course of our partnership, we'll have regular meetings and monitor your plan to keep it tailored to your evolving circumstances.
Our Huntsville, AL financial advisors and retirement plan consultants serve as fiduciary advisors, who are obligated to they are legally and ethically bound to act in your best interest.
Other financial advisory services we offer in Huntsville, AL 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 Huntsville, AL
To you, your business is more than "just a business", and your Huntsville, AL financial advisors need to offer more than just good financial guidance. With Correct Capital, we focus on building a relationship with our clients and their businesses to create customized self-employed retirement plans. We offer all our Huntsville, AL clients 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, call Correct Capital today at 877-930-401k or contact us online.
