Self-employed retirement plans Jackson, MS. The flexibility of owning your own business in Jackson, MS is one of the best aspects of working for yourself. Even so, this flexibility often comes with certain challenges, notably regarding building your retirement fund, since you don't have access to retirement programs through an employer. Only 13% of self-employed individuals have a workplace retirement plan, but many should consider understanding their retirement options. In addition to achieving a financially stable retirement, working with a financial advisor in Jackson, MS to set up your self-employed retirement plan can provide significant tax advantages that enable your business to grow and succeed.
Few Jackson, MS investment consulting and retirement planning firms are as attuned to the requirements 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 (learn more about our story here), and Correct Capital have a rich history of assisting business owners in their retirement planning needs. We recognize that your business and retirement aspirations extend well past just monetary concerns, and we work tirelessly to provide customized solutions that reflect your objectives. Keep reading to learn more about your self-employed retirement plan options in Jackson, MS, or reach out to Correct Capital at 877-930-401k or contact us online to consult with a entrepreneurial financial advisor in Jackson, MS today.
Why Jackson, MS Self-Employed Individuals Should Have a Retirement Plan
Retirement plans for self-employed individuals not only prepare you for the future, they also deliver tangible benefits today. With customizable contribution options to considerable tax savings, working with a financial advisor in Jackson, MS helps you customize your retirement plan to fit your individual circumstances.
Flexibility That Fits Your Income
If your income changes over time, a plan like a SEP IRA or Solo 401(k) offers the flexibility to tailor how much you save:
- Customizable Contributions: Save extra during high-income years and reduce savings when income is lower, ensuring your plan works with your current income.
- Roth Options: Opting for a Roth Solo 401(k) lets you settle taxes at the time of contribution, enabling you to withdraw without tax penalties in the future—a wise move if you believe your tax rate is likely to rise in the future.
Save Money on Taxes
Self-employed retirement plans provide significant tax benefits:
- Tax-Deductible Contributions: Contributions to a SEP IRA shrink your tax liability, so you can keep more of your income.
- Tax-Deferred Growth: Investments grow tax-free until withdrawal, providing your money more time to grow.
- State-Specific Incentives: In some states, you may be eligible for additional deductions as a self-employed individual. These state-level incentives can make these plans even more valuable.
- Retirement Savings Contributions Credit (Saver’s Credit): Those who meet the requirements can claim a tax 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 different stocks, bonds, and other assets serves to reduce risk while still growing your nest egg.
- Emergency Back-Up: Supplementing your retirement savings with a financial buffer for your business prevents you from tapping into your nest egg during tough times and risking extra costs.
Plan for the Future of Your Jackson, MS Business
Preparing for retirement enables you to plan ahead for what’s next with your Jackson, MS business:
- Selling Your Business: When selling your business, accounts such as SEP IRAs or Solo 401(k)s stay in your name and won’t be included in the sale. These plans offer the steady income 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., 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: Using retirement contributions wisely minimizes the taxes you’ll owe when you transfer your business.
- Succession Planning: For those winding down or handing over their business, your retirement accounts ensure financial security through the transition. You might want to seek advice from a financial advisor with expertise in succession and retirement planning to minimize tax burdens on the sale.
With the proper savings strategy, you manage your financial future, lower your tax bill, and build a strong framework for both your retirement and your business goals.
Why Start a Self-Employed Retirement Plan in Jackson, MS Now?
Time remains one of the most important assets for building your retirement fund. Starting early not only helps you grow a bigger financial cushion but also lowers the pressure of saving aggressively in the future. The following are reasons why it is beneficial to start now:
The Cost of Waiting
Putting off saving for retirement may cause a significant impact on the total you’ll have when you reach retirement age. The biggest reason is compound interest—the concept where your investments earn returns, and those returns, then, earn even more returns. The more time your money has to grow, the greater the benefit of this compounding process.
Example: Taylor and Alex are both self-employed professionals. Both of them want 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 saves $7,500 annually to catch up.
By age 65, assuming 7% annual return:
- Alex contributes $180,000 and accumulates $691,184.39*.
- Taylor puts in $195,500 but accumulates just $474,367.78*.
How Early Contributions Grow
Even modest contributions contributed over time can lead to substantial growth. Consider this example showing the power of consistent growth:
- Starting at age 25: By investing $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 would result in only $235,412.97* by age 65—a shortfall of over $260,000, just from a 10-year delay.
Saving early, the lower your annual savings needs each year to meet your retirement goals.
*These calculations represent estimates calculated using NerdWallet’s Compound Interest Calculator, with the assumption of a 7% annual return. The contributions were calculated by multiplying the annual deposit amount by the total number of years contributions were made. The scenarios provided are intended as illustrative examples and do not guarantee future performance. Outcomes may change due to elements like market conditions, fees, and personal factors. Always consult a financial advisor for custom recommendations.
Take Control of Your Financial Future
For self-employed individuals in Jackson, MS, it is often the case that you prioritize reinvesting in your business over saving for retirement. However, starting a plan now gives you the chance to:
- Leverage growth that is tax-deferred or withdrawals without taxes later on.
- Take advantage of flexible contributions that change with your earnings.
- Build a safety net that offers peace of mind, no matter how your business evolves.
Getting started now, the less you’ll be required to worry about playing catch-up later in life. Saving for retirement now means managing your financial future and giving yourself the opportunity to turn your attention to your dreams—both for your retirement years and your Jackson, MS business.
Types of Self-Employed Retirement Plans
There are several retirement savings options designed for self-employed individuals in Jackson, MS, each offering its own benefits and trade-offs. A financial advisor can help you learn about the pros and cons of each option and choose the one best suited for your unique situation. Typically, your self-employed retirement plan options in Jackson, MS consist of:
Traditional or Roth IRA
Plan Overview: IRAs, or Individual Retirement Accounts, are financial tools for retirement that provide specific tax advantages. In a standard IRA, contributions are typically tax-deductible, and investment earnings grow tax-deferred, but money taken out during retirement are taxed as income. In contrast, with Roth IRAs, you contribute are made with after-tax income, but qualified withdrawals in retirement, including earnings, are exempt from taxes. In both cases, withdrawals are penalty-free if you are at least 59½.
Eligibility: Unlike plans linked to your job, IRAs, including traditional and Roth options are open to those with taxable earnings.
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: The Simplified Employee Pension IRA is a retirement plan that enables entrepreneurs to save a percentage of their net business profits. Contributions are strictly employer contributions an employer, so, as a self-employed individual, you (the employee) would not be able to contribute 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. It's your choice whether to contribute a set monetary value or a percentage of wages to employee accounts. A SEP IRA works well for companies with fluctuating revenue streams. In contrast to some alternatives, SEP IRAs are free of expensive setup or ongoing fees.
SEPs operate like traditional IRAs, where the contributions are tax-deferred and money withdrawn is subject to income tax.
Eligibility: Employers of any type, including self-employed individuals 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
If you’re self-employed, the allowable contribution is based on a special calculation.
Solo 401(k)
Plan Overview: Solo 401(k)s, 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 when the sole employee is your spouse. This type of plan are similar to traditional employer-managed 401(k) plans, and let you make contributions as both the employer and the employee with pre-tax money. This allows for more savings versus SEPs or IRAs; however, the increased savings potential may be offset by more restricted investment choices. Using a solo 401(k), you can make either traditional or Roth deferrals, which offer the same tax benefits as their IRA contribution counterparts.
Eligibility: This plan is exclusively for business owners and their spouses are eligible to open and contribute to a solo 401(k).
Contribution Limits: As a self-employed individual 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, 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 individuals aged 60-63 in 2025.
- Profit-sharing contributions (as an employer) must not surpass 25% of your adjusted self-employment income, which is defined as net profit minus half of your self-employment tax and the elective deferrals you made.
Total contributions are capped at $70,000, or $77,500 for those aged 50 and older (for 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 provides a set amount to business owners upon retirement. In contrast to the plans discussed earlier, this plan is not influenced by market performance, but allows self-employed individuals to know what they'll get in retirement. This plan is recommended for wealthier self-employed individuals who want to save a substantial amount for retirement and are willing to make larger deposits. Contributions are tax deferred, and withdrawals incur taxes as income during 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 typically advised for those over 50 who make $250,000 or more annually. In most cases, good candidates for defined benefit plans are:
- Entrepreneurs who want to invest more than $70,000 (or $77,500 if over age 50)
- Organizations that already put in 3-4% and are willing to do more
- Businesses that have demonstrated consistent profit patterns
- Partners or owners over age 40 who aim to quickly build retirement savings or increase their retirement contributions rapidly
Contribution Limits: The contribution limit is calculated by an actuary determined by your earnings, age, and retirement objectives. Allowable contributions are updated yearly.
The Importance of a Financial Advisor in Jackson, MS for Your Self-Employed Retirement Plan
Partnering with an advisor in Jackson, MS focused on self-employed retirement strategies serves as an important asset for entrepreneurs. They offer the knowledge to assist navigate the complexities of retirement planning and develop a customized plan that matches your objectives. An expert in your area will assess where you stand financially, understand your risk tolerance, and guide you in choosing wisely about saving and investing for retirement. Included in what we do for you features:
- Help you choose a plan that suits your unique requirements
- Tailor the plan to fit you personally even further
- Create a written plan that complies with IRS regulations
- Set up an asset trust plan
- Help you understand the plan's terms
- Monitor and adjust your plan as needed
- Offer continued financial education and guidance as you continue on the road to retirement
- Increase your retirement income by maximizing your social security benefits
Self-Employed Retirement Plans in Jackson, MS: Correct Capital's Process
Self-employed individuals in Jackson, MS who don’t have the time or expertise to oversee their retirement savings strategy independently often feel overwhelmed when faced with their choices. With Correct Capital, our Jackson, MS financial advisors manage the lion's share of your retirement planning for you, to help make meeting your financial objectives 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: In just 20 minutes, a member of our advisor team will assess if we're suited to your needs for you and your business. This short conversation allows us to get a sense of your goals with no obligation or significant effort on your part.
- Gather Information: Once we mutually decide to continue, we'll ask for information, including your employee count, your current financial situation, and your future objectives. This helps us create a custom plan that aligns with your goals.
- Review Your Plan: After we put together a plan using the information you provide, we'll sit down with you and review your plan in detail 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 implement the necessary steps so you can initiate your savings journey. As time goes on, we'll check in and review your strategy to keep it tailored to your evolving circumstances.
Our Jackson, MS financial advisors and retirement plan consultants serve as fiduciary advisors, which means they are legally and ethically bound to do what's in your best interest.
Other financial advisory services we offer in Jackson, MS 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 Jackson, MS
To you, your business is more than "just a business", and your Jackson, MS financial advisors must deliver more than basic financial recommendations. Correct Capital takes pride in, we focus on building a relationship with our clients and their businesses to deliver customized self-employed retirement plans. All our clients in Jackson, MS benefit from our I.O.U. promise: everything we recommend will be independent, objective, and unbiased. To get started on your self-employment retirement plan, reach out to Correct Capital at 877-930-401k or contact us online.
