Self-employed retirement plans Indianapolis, IN. The flexibility of being your own boss in Indianapolis, IN is one of the greatest advantages of having a self-directed career. Even so, this freedom often comes with certain challenges, notably when it comes to building your retirement fund, since you don't have the option of retirement programs through an employer. Only 13% of self-employed individuals have a workplace retirement plan, but many should consider exploring their options. In addition to enjoying a more comfortable retirement, working with a financial advisor in Indianapolis, IN to establish your self-employed retirement plan delivers significant tax advantages that help your business to grow and succeed.
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 (read more of our story here), and Correct Capital take pride in supporting entrepreneurs with their retirement planning needs. We recognize that your goals for your business and retirement aren’t limited to just monetary concerns, and we strive to provide personalized solutions aligned with your vision. Continue exploring to find out about your self-employed retirement plan options in Indianapolis, IN, or call Correct Capital at 877-930-401k or contact us online to talk to a self-employed financial advisor in Indianapolis, IN today.
Why Indianapolis, IN Self-Employed Individuals Should Have a Retirement Plan
Retirement plans for self-employed individuals help prepare you for the future, they also provide immediate benefits today. With customizable contribution options to substantial tax savings, working with a financial advisor in Indianapolis, IN enables you to customize 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) gives you the flexibility to adjust how much you save:
- Customizable Contributions: Contribute more during profitable years and cut back when your earnings dip, so your plan aligns with your cash flow.
- Roth Options: Choosing 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 believe your tax rate is likely to rise in the future.
Save Money on Taxes
Plans designed for the self-employed provide powerful tax benefits:
- Tax-Deductible Contributions: Contributions to a Solo 401(k) lower your taxable income, so you can keep more of your income.
- 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 might access extra tax breaks as a business owner. These local incentives help make these plans even more beneficial.
- Retirement Savings Contributions Credit (Saver’s Credit): Qualified participants can claim a tax credit of up to 50% of the first $2,000 put into a retirement plan, cutting down 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 linked to the way you invest:
- Diversified Portfolios: Allocating your investments across a mix of stocks, bonds, and alternatives can help minimize exposure to risk while still growing your retirement fund.
- Emergency Back-Up: Supplementing your retirement savings with a dedicated business safety net ensures you don’t tapping into your nest egg during challenging periods and facing tax penalties.
Plan for the Future of Your Indianapolis, IN Business
Preparing for retirement enables you to think through 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 are not part of the sale. These accounts can provide the financial stability you’ll need in the future. Remember that while selling a business often leads to a capital gain, retirement plan contributions are capped at annual limits (e.g., up to $7,000 for IRAs or as much as $70,000 for Solo 401(k)s, factoring in catch-up contributions, depending on plan details).
- Minimizing Taxes: Using retirement contributions wisely 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 accounts provide financial security during the change. You may also seek advice from a financial advisor who specializes in succession planning and retirement accounts to reduce taxes during the sale.
With the right retirement plan, you manage your financial future, reduce your tax burden, and build a secure foundation 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 larger nest egg but also reduces the pressure of playing catch-up as you get older. Here’s why it is beneficial to start now:
The Cost of Waiting
Delaying your retirement savings could lead to a significant impact on the amount you’ll have when you stop working. The main reason is compound interest—the financial principle where your investments grow, and those returns, in turn, accumulate even more returns. The more time your money has to grow, the larger the benefit of compounding.
Example: Alex and Taylor 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 postpones starting contributions to age 40 but puts away $7,500 annually to make up for lost time.
By age 65, assuming 7% annual return:
- Alex puts in $180,000 and accumulates $691,184.39*.
- Taylor puts in $195,500 but only ends up with $474,367.78*.
How Early Contributions Grow
Regular, modest investments invested steadily can lead to impressive growth. Take a look at this scenario showing the impact of compound interest:
- Starting at age 25: By investing $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: Contributing the same $200 per month leaves you with only $235,412.97* by age 65—a shortfall of over $260,000, just from a 10-year delay.
Starting sooner, the lower your annual savings needs each year to meet your retirement goals.
*The numbers shown in this scenario are estimates generated with NerdWallet’s Compound Interest Calculator, based on 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. Actual results may vary based on factors such as market conditions, fees, and individual circumstances. Always consult a financial advisor for personalized advice.
Take Control of Your Financial Future
If you’re self-employed in Indianapolis, IN, it is often the case that you put more emphasis on reinvesting in your business over saving for retirement. Even so, starting a plan now gives you the chance to:
- Leverage tax-free future growth or penalty-free withdrawals later on.
- Benefit from adjustable savings that align with your cash flow.
- Establish a long-term safety measure that provides security, no matter how your business develops.
Getting started now, the less you’ll need to worry about catching up later in life. Saving for retirement now means managing your financial future and creating for yourself the opportunity to focus on your dreams—both for your golden years and your Indianapolis, IN business.
Types of Self-Employed Retirement Plans
A variety of retirement savings options designed for those working for themselves in Indianapolis, IN, each offering its own advantages and considerations. A financial advisor is available to help you learn about the pros and cons of each choice and choose the one best suited for your unique situation. Generally speaking, your self-employed retirement plan options in Indianapolis, IN are:
Traditional or Roth IRA
Plan Overview: Individual Retirement Accounts (IRAs), as explained here, represent retirement savings vehicles that offer specific tax advantages. In a conventional IRA, the money you contribute is often tax-deductible, and earnings grow without immediate taxation, but withdrawals in retirement are taxable. In contrast, Roth IRAs require contributions from post-tax earnings, but retirement withdrawals that qualify, including earnings, are not taxed. In both types of accounts, withdrawals come without penalties provided you are at least 59½.
Eligibility: While many retirement plans, such as 401(k)s, are tied to employment, traditional and Roth IRAs are accessible for individuals with a source of income.
Contribution Limits: For 2025, annual contribution limits for IRAs are set at $7,000, or $8,000 if you qualify for catch-up contributions.
Simplified Employee Pension Plan (SEP IRA)
Plan Overview: The Simplified Employee Pension IRA offers a way to save for retirement that enables those who are self-employed to contribute a percentage of their net earnings. Contributions are strictly employer contributions 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) allocate. If you have employees, you must contribute the same amount for them as you do for yourself. You have the flexibility to contribute a flat-dollar amount or a percentage of wages to employee accounts. SEP IRAs works well for entrepreneurs facing cycles of high revenue and low revenue. In contrast to some alternatives, SEP IRAs lack expensive setup or ongoing fees.
SEPs operate like traditional IRAs, where contributions are made with pre-tax money and money withdrawn is subject to income tax.
Eligibility: Both employers and self-employed individuals can establish a SEP.
Contribution Limits: Contribution limits for employees in a SEP IRA must not exceed:
- 25% of compensation, or
- $70,000 for 2025
For self-employed individuals, the amount eligible to be contributed is based on a special calculation.
Solo 401(k)
Plan Overview: The Solo 401(k), commonly known as an Individual 401(k) or one-participant 401(k) plan, is a self-employed retirement plan designed for companies that have no employees or where the only employee is a spouse. This type of plan operate much like traditional employer-managed 401(k) plans, and allow you to contribute as both the employer and the employee with pre-tax money. This allows for more savings compared to SEPs or IRAs; however, the extra savings options often come with more constrained investment avenues. 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: This plan is exclusively for business owners and their spouses can set up and contribute to a solo 401(k).
Contribution Limits: If you are self-employed 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-employment income, subject to the annual contribution limit. In 2025, those limits are $23,500, or $31,000 if you're over 50, or $34,750 if you attain age 60-63 in 2025.
- Contributions as an employer (as an employer) must not surpass 25% of your net self-employment income, which is calculated as net profits less half of your self-employment tax and the deferrals you made.
The total contribution cannot exceed $70,000, or $77,500 for individuals aged 50+ (for 2025), $81,250 for those aged 60-63 in 2025.
Individual Defined Benefit Plan
Plan Overview: The defined benefit plan offers a structured retirement solution that guarantees a set amount to self-employed individuals upon retirement. As opposed to defined contribution plans, a defined benefit plan doesn't fluctuate based on investment returns, but lets individuals clearly understand exactly how much they'll have in retirement. This strategy is recommended for higher-income entrepreneurs who want to save a substantial amount for retirement and are prepared to contribute larger deposits. Contributions are tax deferred, and withdrawals are taxed as income upon retirement.
Eligibility: Entrepreneurs operating a solo business or with less than five employees are eligible to open an individual defined benefit plan, but it's generally recommended for those over 50 who generate a minimum of $250,000 yearly. In most cases, good candidates for defined benefit plans tend to be:
- Entrepreneurs who want to invest more than $70,000 (or $77,500 if over age 50)
- Companies already contributing 3-4% and are willing to do more
- Organizations with proven consistent profit patterns
- Business leaders over age 40 who aim to quickly build retirement savings or boost savings within a short timeframe
Contribution Limits: The cap on contributions is calculated by an actuary using your earnings, age, and retirement objectives. Allowable contributions change annually.
The Importance of a Financial Advisor in Indianapolis, IN for Your Self-Employed Retirement Plan
Working with a financial advisor in Indianapolis, IN focused on self-employed retirement strategies is an important asset for those working for themselves. They bring the skills needed to understand the intricacies of saving for retirement and design a customized plan that reflects your aspirations. Your advisor in Indianapolis, IN will evaluate your financial situation, identify your risk preferences, and help you in choosing wisely about saving and investing for retirement. Included in what we do for you features:
- Guide you in choosing a plan that suits your unique requirements
- Tailor the plan to your needs even further
- Create a written plan as required by IRS rules
- Organize a trust plan to manage your assets
- Make sure you understand the plan's terms
- Review and modify your plan to keep it aligned with your goals
- Provide ongoing education and advice as you continue on the road to retirement
- Increase your retirement income by making the most of your social security
Self-Employed Retirement Plans in Indianapolis, IN: Correct Capital's Process
Entrepreneurs in Indianapolis, IN who don’t have the time or expertise to oversee their retirement savings strategy themselves may end up overwhelmed as they look at their options. At Correct Capital, our Indianapolis, IN financial advisors manage the bulk of your retirement strategy for you, to help make meeting your retirement goals as easy 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 will assess if our services align for you and your business. This initial call lets us learn about your needs with no obligation or extensive time commitment on your part.
- Gather Information: Should we agree to proceed, we'll gather information, including how many employees you have (if any), your current financial situation, and your future objectives. This enables us to craft a personalized strategy that aligns with your goals.
- Review Your Plan: Once we've developed a plan from the information you provide, we'll meet 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 put everything in place so you can begin contributing. As time goes on, we'll check in and review your strategy to keep it tailored to your evolving circumstances.
Our Indianapolis, IN financial advisors and retirement plan consultants are fiduciary advisors, which means they are required by law and ethical standards to prioritize your needs above all else.
Other financial advisory services we offer in Indianapolis, IN 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 Indianapolis, IN
You don't see your business as "just a business", and your Indianapolis, IN financial advisors need to offer 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. We offer all our Indianapolis, IN 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.
