Self-employed retirement plans Indianapolis, IN. The freedom of owning your own business in Indianapolis, IN offers many benefits of being self-employed. Even so, this independence can come with certain challenges, particularly regarding retirement savings, because you don't have the option of a workplace retirement plan. Only 13% of self-employed individuals have a workplace retirement plan, but many would be better off exploring their options. In addition to having a more comfortable retirement, working with a financial advisor in Indianapolis, IN to create your self-employed retirement plan delivers significant tax advantages that help both you and your business to thrive.
Few Indianapolis, IN wealth management and retirement planning firms truly grasp the challenges faced by small business owners as well as Correct Capital. The father of our founder was a small business owner himself (learn more about our story here), and we have a rich history of helping businesses with their retirement planning needs. We understand that your goals for your business and retirement extend well past basic numbers, and we are dedicated to create personalized solutions that reflect your objectives. Keep reading to learn more about your self-employed retirement plan options in Indianapolis, IN, or call Correct Capital at 877-930-401k or contact us online to consult with a entrepreneurial financial advisor in Indianapolis, IN today.
Why Indianapolis, IN Self-Employed Individuals Should Have a Retirement Plan
Retirement plans for self-employed individuals are essential for preparing you for the future, they also offer real benefits today. Offering flexibility in contributions to substantial tax savings, working with a financial advisor in Indianapolis, IN allows you to customize your retirement plan to fit your unique financial situation.
Flexibility That Fits Your Income
When your earnings vary annually, a plan like a SEP IRA or Solo 401(k) offers the option to adjust how much you save:
- Customizable Contributions: Set aside more during successful years and scale back when revenues are down, ensuring your plan works with your cash flow.
- Roth Options: Choosing a Roth Solo 401(k) lets you settle taxes at the time of contribution, enabling you to withdraw tax-free later—a smart decision if you expect your tax rate will increase in the future.
Save Money on Taxes
Plans designed for the self-employed offer valuable tax benefits:
- Tax-Deductible Contributions: Contributions to a Solo 401(k) reduce what you owe in taxes, allowing you to 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: Based on your location, you could qualify for extra deductions as a sole proprietor. These state-level incentives help make these plans even more valuable.
- Retirement Savings Contributions Credit (Saver’s Credit): Qualified participants can apply for a credit of up to 50% of the first $2,000 contributed a retirement plan, cutting down your tax bill even more.
Protect Your Savings With Smart Investments
Creating a stable future requires more than how much you save—it’s also about how you invest:
- Diversified Portfolios: Spreading your investments across a mix of asset classes like stocks and bonds serves to minimize exposure to risk while still growing your retirement fund.
- Emergency Back-Up: Combining your retirement strategy and a dedicated business safety net helps you avoid using your retirement funds during financial hardships and facing tax penalties.
Plan for the Future of Your Indianapolis, IN Business
Retirement planning can assist you prepare for what’s next with your Indianapolis, IN business:
- Selling Your Business: When selling your business, plans like SEP IRAs or Solo 401(k)s stay in your name and don’t transfer with the business. These accounts ensure the financial stability you’ll need in the future. Keep in mind that while the sale of a business usually creates a capital gain, contributions to retirement accounts are capped at annual limits (e.g., up to $7,000 for IRAs or a maximum of $70,000 for Solo 401(k)s, including catch-up contributions, based on plan compensation).
- Minimizing Taxes: Making the most of retirement savings helps lower the taxes you might face when you transfer your business.
- Succession Planning: If you’re passing the business on, your nest egg provide financial security during the change. You may also work with a financial advisor with expertise in succession and retirement planning to minimize tax burdens during the sale.
With the proper savings strategy, you manage your financial future, lower your tax bill, and establish a solid base for both your retirement and your business goals.
Why Start a Self-Employed Retirement Plan in Indianapolis, IN Now?
Time is one of the most crucial assets in retirement planning. Getting a head start not only helps you grow a more substantial retirement fund but also reduces the pressure of saving aggressively in the future. The following are reasons why it pays to take action now:
The Cost of Waiting
Waiting to start your retirement fund may cause a significant impact on the savings you’ll have when you retire. The biggest reason is compound interest—the concept where your investments generate earnings, and those returns, subsequently, generate even more returns. The more time your money has to grow, the larger the effect of this growth.
Example: Taylor and Alex are both entrepreneurs. Both of them want to save $500,000 for retirement by age 65:
- Alex begins contributing $5,000 annually at age 30.
- Taylor delays savings until age 40 but contributes $7,500 annually to bridge the gap.
By age 65, assuming 7% annual return:
- Alex puts in $180,000 and ends up with $691,184.39*.
- Taylor invests $195,500 but only ends up with $474,367.78*.
How Early Contributions Grow
Even modest contributions contributed over time may result in impressive growth. Take a look at this scenario showing the power of compounding:
- Starting at age 25: Putting aside $200 per month in a retirement plan with an projected return of 7%, you’ll accumulate $497,303.29* by age 65.
- Starting at age 35: Investing the same $200 per month would result in only $235,412.97* by age 65—a gap of over $260,000, all because of a 10-year delay.
The earlier you begin, the lower your annual savings needs each year to reach your retirement goals.
*These calculations are based on estimates calculated using NerdWallet’s Compound Interest Calculator, based on a 7% annual return. These calculations involved multiplying yearly deposits by the years contributed. These examples are intended as illustrative examples and are not a promise of future results. Your individual results may differ based on factors such as market conditions, fees, and your unique situation. Be sure to speak with a financial advisor for custom recommendations.
Take Control of Your Financial Future
For self-employed individuals in Indianapolis, IN, it can be tempting to put more emphasis on reinvesting in your business instead of saving for retirement. That said, initiating a plan now allows you to:
- Take advantage of growth that is tax-deferred or withdrawals without taxes later on.
- Take advantage of flexible contributions that adapt to your cash flow.
- Create a long-term safety measure that ensures stability, no matter how your business changes.
Starting early, the less you’ll have to worry about playing catch-up later in life. Building your retirement savings today means gaining control over your financial future and creating for yourself the ability to turn your attention to your goals—both for your golden years and your Indianapolis, IN business.
Types of Self-Employed Retirement Plans
Multiple retirement savings options designed for entrepreneurs in Indianapolis, IN, each offering its own benefits and trade-offs. A financial advisor can help you evaluate the pros and cons of each plan and identify the one most suitable for your circumstances. In most cases, your self-employed retirement plan options in Indianapolis, IN include:
Traditional or Roth IRA
Plan Overview: IRAs, or Individual Retirement Accounts, are financial tools for retirement that offer key tax perks. In a traditional IRA, you can usually deduct your contributions from taxable income, and returns grow free of current taxes, but withdrawals in retirement are taxed as income. In contrast, with Roth IRAs, you contribute from post-tax earnings, but retirement withdrawals that qualify, including earnings, are not taxed. In both accounts, withdrawals are penalty-free provided you are at least 59½.
Eligibility: Unlike 401(k)s, which are employer-sponsored, both traditional and Roth IRAs are accessible for individuals 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 is a retirement plan that enables entrepreneurs to set aside a portion of their self-employment income. Contributions must come from 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) 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 flat-dollar amount or a percentage of wages to employee accounts. A SEP IRA is a good option for entrepreneurs facing fluctuating revenue streams. Unlike other plans, SEP IRAs don’t have costly startup or administrative 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 capped at the lower of:
- 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: The Solo 401(k), also called an Individual 401(k) or one-participant 401(k) plan, is a self-employed retirement plan designed for businesses with no employees or where the only employee is a spouse. This type of plan operate much like standard 401(k) plans, and let you make contributions as both an employer and an employee with pre-tax money. This offers more savings versus SEPs or IRAs; however, the additional opportunities can be balanced by more restricted investment choices. 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: This plan is exclusively for business owners and their spouses can set up and contribute to a solo 401(k).
Contribution Limits: As a self-employed individual with a solo 401(k) plan, you are allowed to make two types of contributions:
- Employee contributions 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 if you are 50 or older, or $34,750 for those who turn 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 deferrals you made.
Total contributions are capped at $70,000, or $77,500 if you're over age 50 (in 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 delivers a pre-established payout to self-employed individuals upon retirement. Unlike defined contribution plans mentioned above, this plan is not influenced by market performance, but enables participants to determine what they'll receive in retirement. This strategy is recommended for high-earning self-employed individuals who aim to accumulate a large amount for retirement and are willing to make substantial contributions. Contributions grow tax-free until withdrawal, and withdrawals are taxable as income during retirement.
Eligibility: Entrepreneurs operating a solo business or employing fewer than five people may establish an individual defined benefit plan, but it's generally advised for those over 50 who earn at least $250,000 a year. Typically, good candidates for defined benefit plans include:
- Business owners or partners who aim to deposit more than $70,000 (or $77,500 for individuals 50 and older)
- Organizations that already put in 3-4% and are willing to do more
- Companies showing consistent profit patterns
- Entrepreneurs over age 40 who desire to "catch up" or increase their retirement contributions rapidly
Contribution Limits: The maximum allowable contribution is calculated by an actuary using your income, age, and retirement goals. Allowable contributions are updated yearly.
The Importance of a Financial Advisor in Indianapolis, IN for Your Self-Employed Retirement Plan
Partnering with an advisor in Indianapolis, IN specialized in self-employed retirement plans is an essential partner for those working for themselves. They have the expertise to help understand the intricacies of saving for retirement and design a personalized approach that reflects your aspirations. An expert in your area will evaluate your financial situation, identify your risk preferences, and assist you in selecting the best options about saving and investing for retirement. Included in what we do for you features:
- Assist in selecting a plan that suits your unique requirements
- Customize the plan to your needs even further
- Adopt a written plan in accordance with IRS guidelines
- Arrange a trust plan for assets
- 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
- Increase your retirement income by optimizing your social security benefits
Self-Employed Retirement Plans in Indianapolis, IN: Correct Capital's Process
Self-employed individuals in Indianapolis, IN who don’t have the time or expertise to manage their retirement savings strategy independently often feel overwhelmed by their options. With Correct Capital, our Indianapolis, IN financial advisors take on the majority of your retirement strategy for you, to help make meeting your retirement goals as hassle-free as possible for you. We can help you get set up your self-employed retirement plan in four simple steps:
- Schedule a Call: It only takes 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 lets us learn about your needs with zero commitment or extensive time commitment on your part.
- Gather Information: Should we agree to proceed, we'll ask for information, including your employee count, your present financial standing, and your future objectives. This allows us to put together a tailored approach that aligns with your goals.
- Review Your Plan: When we finalize a plan from the information you provide, we'll sit down with you and go over your plan thoroughly to help you fully grasp it and show how it aligns with your goals.
- 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 ensure it stays suited to your needs.
Our Indianapolis, IN financial advisors and retirement plan consultants act 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 Indianapolis, IN include:
- Investment Planning
- Retirement Financial Planning
- Independent Financial Advisor
- Roth Conversion
- Investment Management
- 401(k) Audit
- High-Net-Worth Wealth Management
- Retirement Planner
- Financial Planning
- Retirement Plan Consultants
Call Correct Capital for Your Self-Employed Retirement Plan in Indianapolis, IN
You don't see your business as "just a business", and your Indianapolis, IN financial advisors must deliver more than basic financial recommendations. With Correct Capital, we make it a priority to understand our clients and their businesses to provide customized self-employed retirement plans. To every client in Indianapolis, IN, we provide our I.O.U. promise: all of the advice you get from us will be independent, objective, and unbiased. To begin on your self-employment retirement plan, reach out to Correct Capital at 877-930-401k or contact us online.
