Self-employed retirement plans Irvine, CA. The flexibility of being your own boss in Irvine, CA is one of the greatest advantages of working for yourself. That said, this flexibility can come with potential drawbacks, particularly in terms of retirement savings, because 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 looking into other possibilities. In addition to having a more comfortable retirement, partnering with a financial advisor in Irvine, CA to establish your self-employed retirement plan offers significant tax advantages that allow you to move your business forward.
Few Irvine, CA wealth management and retirement planning firms understand the needs of 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 our firm take pride in supporting entrepreneurs with their retirement planning needs. We know that your business and retirement aspirations go far beyond just monetary concerns, and we work tirelessly to create tailored solutions that reflect your objectives. Read on to discover about your self-employed retirement plan options in Irvine, CA, or call Correct Capital at 877-930-401k or contact us online to consult with a small business financial advisor in Irvine, CA today.
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Why Irvine, CA Self-Employed Individuals Should Have a Retirement Plan
Retirement plans for self-employed individuals are essential for preparing you for the future, they also deliver real benefits today. Offering flexibility in contributions to substantial tax savings, consulting a financial advisor in Irvine, CA helps you design your retirement plan to align with your unique financial situation.
Flexibility That Fits Your Income
For those with fluctuating income from year to year, a plan like a SEP IRA or Solo 401(k) provides the flexibility to tailor how much you save:
- Customizable Contributions: Save extra during high-income years and scale back when your earnings dip, so your plan aligns with your financial situation.
- Roth Options: A Roth Solo 401(k) lets you handle taxes upfront, so you can withdraw your savings tax-free down the road—an advantageous choice if you believe your tax rate will increase in the future.
Save Money on Taxes
Retirement plans for self-employed individuals offer valuable tax benefits:
- Tax-Deductible Contributions: Contributions to a SEP IRA reduce what you owe in taxes, helping you keep more of your hard-earned money.
- Tax-Deferred Growth: Investments grow tax-free until withdrawal, giving your money more time to compound.
- State-Specific Incentives: Based on your location, you may be eligible for additional tax breaks as a sole proprietor. These local incentives make these plans even more valuable.
- Retirement Savings Contributions Credit (Saver’s Credit): Eligible individuals 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 requires more than how much you save—it’s also determined by your investment strategy:
- Diversified Portfolios: Distributing your investments across varied asset classes like stocks and bonds can help mitigate financial 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 financial hardships and facing tax penalties.
Plan for the Future of Your Irvine, CA Business
A thoughtful retirement strategy can assist you think through what’s next with your Irvine, CA business:
- Selling Your Business: When selling your business, plans like SEP IRAs or Solo 401(k)s remain yours and won’t be included in the sale. These accounts ensure the financial stability you’ll need during retirement. Keep in mind that while selling your business results in a capital gain, deposits into these plans are subject to yearly maximums (e.g., a maximum of $7,000 for IRAs or a maximum of $70,000 for Solo 401(k)s, factoring in catch-up contributions, according to plan rules).
- Minimizing Taxes: Using retirement contributions wisely minimizes the taxes you might face when you sell your business.
- Succession Planning: Whether you’re transferring ownership, your nest egg provide a stable foundation during the change. You can also seek advice from a financial advisor with expertise in succession and retirement planning to reduce taxes during the sale.
With the right retirement plan, you can take control of 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 Irvine, CA Now?
Time remains one of the most valuable resources when it comes to saving for retirement. Beginning sooner rather than later not only lets you accumulate a larger nest egg but also lowers the stress of catching up later in life. This is why it makes sense to begin today:
The Cost of Waiting
Delaying your retirement savings could lead to a major impact on the amount you’ll have when you stop working. The biggest reason is compound interest—the powerful process where your investments earn returns, and those returns, then, earn even more returns. The more time your money has to grow, the more significant the benefit of this compounding process.
Example: Two individuals, Alex and Taylor 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 contributes $7,500 annually to make up for lost time.
By age 65, using a projected 7% annual return:
- Alex contributes $180,000 and achieves a total of $691,184.39*.
- Taylor contributes $195,500 but only ends up with $474,367.78*.
How Early Contributions Grow
Small, consistent savings invested steadily can lead to impressive growth. Here’s a simple scenario showing the effect of consistent growth:
- Starting at age 25: By investing $200 per month in a retirement plan with an expected yearly growth rate 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 difference of over $260,000, simply due to a 10-year delay.
Starting sooner, the less you need to save each year to meet your retirement goals.
*The numbers shown in this scenario are estimates generated with NerdWallet’s Compound Interest Calculator, assuming a 7% annual return. These calculations involved multiplying yearly deposits by the years contributed. This information is for illustrative purposes only and are not a promise of future results. Your individual results may differ depending on variables including market conditions, fees, and personal factors. Always consult a financial advisor for guidance tailored to your needs.
Take Control of Your Financial Future
For self-employed individuals in Irvine, CA, it might seem easier to put more emphasis on reinvesting in your business rather than saving for retirement. However, starting a plan now gives you the chance to:
- Take advantage of tax-deferred growth or withdrawals without taxes down the road.
- Enjoy contribution flexibility that change with your cash flow.
- Create a financial cushion that provides security, no matter how your business changes.
Starting early, the less you’ll need to worry about playing catch-up later in life. Saving for retirement now means managing your financial future and giving yourself the freedom to turn your attention to your dreams—both for your golden years and your Irvine, CA business.
Types of Self-Employed Retirement Plans
Multiple retirement savings options available for self-employed individuals in Irvine, CA, each providing its own benefits and trade-offs. A financial advisor is available to help you understand the pros and cons of each plan and determine the one best suited for your circumstances. Typically, your self-employed retirement plan options in Irvine, CA are:
Traditional or Roth IRA
Plan Overview: Individual Retirement Accounts (IRAs), as explained here, represent retirement savings vehicles that include key tax perks. In a standard IRA, you can usually deduct your contributions from taxable income, and returns grow free of current taxes, but money taken out during retirement are subject to income tax. In contrast, with Roth IRAs, you contribute using income already taxed, but qualified withdrawals in retirement, including earnings, are exempt from taxes. In both cases, withdrawals come without penalties if you are at least 59½.
Eligibility: While many retirement plans, such as 401(k)s, are tied to employment, 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: SEP IRAs offers a way to save for retirement that enables self-employed individuals to contribute a percentage of their net earnings. Contributions are strictly employer contributions an employer, so, as a sole proprietor, you (the employee) are limited to contributions from the employer role more than 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. It's your choice whether to contribute a fixed dollar figure or a percentage of wages to employee accounts. SEP IRAs may be ideal for entrepreneurs facing fluctuating revenue streams. In contrast to some alternatives, SEP IRAs don’t have costly startup or administrative fees.
SEPs function like standard IRAs, where you contribute pre-tax dollars and withdrawals are taxed as income.
Eligibility: Both employers and self-employed individuals can establish a SEP.
Contribution Limits: Contribution limits for employees in a SEP IRA are the lesser of:
- 25% of compensation, or
- $70,000 for 2025
If you’re self-employed, the contribution you can make is based on a special calculation.
Solo 401(k)
Plan Overview: A Solo 401(k) plan, also called an Individual 401(k) or one-participant 401(k) plan, is a retirement savings plan designed for businesses without employees or when the sole employee is your spouse. Solo 401(k)s are similar to standard 401(k) plans, and enable contributions as both an employer and an employee with pre-tax money. This provides more savings compared to SEPs or IRAs; however, the additional opportunities often come with more constrained investment avenues. 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: Only business owners and their spouses are eligible to open and contribute to a solo 401(k).
Contribution Limits: For self-employed individuals with a solo 401(k) plan, you can make two types of contributions:
- Deferrals as an employee of up to 100% of your self-employed earnings, up to the annual contribution limit. The contribution limits for 2025 include $23,500, or $31,000 if you're over 50, or $34,750 for individuals aged 60-63 in 2025.
- Contributions as an employer (as an employer) are limited to 25% of your net earnings from self-employment, which is your net profit minus 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 individuals turning 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 business owners upon retirement. In contrast to the plans discussed earlier, a defined benefit plan doesn't fluctuate based on investment returns, but enables participants to determine exactly how much they'll get in retirement. This plan is recommended for wealthier self-employed individuals who are focused on saving a substantial amount for retirement and are prepared to contribute larger deposits. Contributions are tax deferred, and withdrawals incur taxes as income during retirement.
Eligibility: Any self-employed individual 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 typically recommended for people above age 50 who make $250,000 or more annually. Generally, good candidates for defined benefit plans include:
- Partners or owners who desire to contribute more than $70,000 (or $77,500 for those aged 50+)
- Businesses currently investing 3-4% but are open to increasing contributions
- Organizations that have demonstrated consistent profit patterns
- Business leaders over age 40 who wish to accelerate savings or accelerate the retirement savings
Contribution Limits: The contribution limit requires calculation from an actuary based on your financial situation, age, and savings targets. Contribution limits change annually.
The Importance of a Financial Advisor in Irvine, CA for Your Self-Employed Retirement Plan
Partnering with an advisor in Irvine, CA specialized in self-employed retirement plans can be an important asset for entrepreneurs. They bring the skills needed to guide you through the challenges of retirement planning and craft a tailored strategy that matches your objectives. An expert in your area will evaluate your financial situation, 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 includes:
- Help you choose a plan that suits your unique requirements
- Customize the plan to your needs even further
- Formalize a plan in writing as required by IRS rules
- Set up an asset trust plan
- Make sure you understand the plan's terms
- Track and fine-tune your plan to keep it aligned with your goals
- Offer continued financial education and guidance 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 Irvine, CA: Correct Capital's Process
Self-employed individuals in Irvine, CA who lack the time, interest, or knowledge to handle their self-employed retirement plan on their own often feel overwhelmed as they look at their available plans. Through our team at Correct Capital, our Irvine, CA financial advisors handle the lion's share of your retirement strategy for you, and strive to ensure meeting your financial objectives as hassle-free 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: A quick 20-minute call is all it takes, a member of our advisor team can help understand if we're a good fit for you and your business. This brief introduction helps us learn about your needs with zero commitment or major time investment on your part.
- Gather Information: Should we agree to proceed, we'll gather information, including whether you have employees, your existing financial picture, and your long-term savings targets. This allows us to put together a custom plan suited specifically for your needs.
- 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: After we agree on your plan, we'll put everything in place so you can start saving. Throughout our relationship, we'll have regular meetings and monitor your plan to make sure it remains aligned with your goals.
Our Irvine, CA financial advisors and retirement plan consultants are fiduciary advisors, which means they are required by law and ethical standards to act in your best interest.
Other financial advisory services we offer in Irvine, CA 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 Irvine, CA
To you, your business is more than "just a business", and your Irvine, CA financial advisors should provide more than basic financial recommendations. With Correct Capital, we make it a priority to understand our clients and their businesses to create tailored self-employed retirement plans. To every client in Irvine, CA, we provide 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.
