Self-employed retirement plans Jackson, MS. The independence of being your own boss in Jackson, MS offers many benefits of being self-employed. However, this freedom sometimes brings with certain challenges, notably in terms of retirement savings, since you don't have the benefit 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 having a financially stable retirement, seeking advice from a financial advisor in Jackson, MS to establish your self-employed retirement plan can provide significant tax advantages that help you to move your business forward.
Few Jackson, MS financial advisory and retirement planning firms understand the needs of entrepreneurs better than Correct Capital. Our company’s founder grew up with a father who was a small business owner himself (check out our story here), and our firm take pride in supporting entrepreneurs with their retirement planning needs. We recognize that your business and retirement aspirations go far beyond just monetary concerns, and we are dedicated to provide tailored solutions aligned with your vision. Read on to discover about your self-employed retirement plan options in Jackson, MS, or call Correct Capital at 877-930-401k or contact us online to consult with a entrepreneurial financial advisor in Jackson, MS today.
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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 provide real benefits today. From flexible contributions to substantial tax savings, partnering with a financial advisor in Jackson, MS enables you to customize your retirement plan to suit your specific needs.
Flexibility That Fits Your Income
When your earnings vary from year to year, a plan like a SEP IRA or Solo 401(k) provides the freedom to adjust how much you save:
- Customizable Contributions: Contribute more during high-income years and scale back when your earnings dip, so your plan works 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 is likely to rise in the future.
Save Money on Taxes
Self-employed retirement plans deliver valuable tax benefits:
- Tax-Deductible Contributions: Contributions to a Solo 401(k) lower your taxable income, allowing you to keep more of your earnings.
- Tax-Deferred Growth: Investments grow tax-free until withdrawal, which gives your money more time to accumulate.
- State-Specific Incentives: In some states, you might access extra credits as a self-employed individual. These local incentives can make these plans even more beneficial.
- Retirement Savings Contributions Credit (Saver’s Credit): Qualified participants can take advantage of a credit of up to 50% of the first $2,000 they contribute a retirement plan, further reducing your tax bill even more.
Protect Your Savings With Smart Investments
Creating a stable future goes beyond just how much you save—it’s also about how you invest:
- Diversified Portfolios: Allocating your investments across varied asset classes like stocks and bonds can help reduce risk while still growing your savings.
- Emergency Back-Up: Pairing your retirement plan with a financial buffer for your business ensures you don’t using your retirement funds during tough times and facing tax penalties.
Plan for the Future of Your Jackson, MS Business
A thoughtful retirement strategy also helps you prepare for what’s next with your Jackson, MS business:
- Selling Your Business: When selling your business, retirement accounts like SEP IRAs and Solo 401(k)s stay in your name and won’t be included in the sale. These plans can provide the financial stability you’ll need later on. Remember that while the sale of a business usually creates a capital gain, contributions to retirement accounts are restricted by contribution 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, according to plan rules).
- Minimizing Taxes: Using retirement contributions wisely helps lower the taxes you are required to pay when you transfer your business.
- Succession Planning: If you’re passing the business on, your nest egg provide the funds you need during the change. You may also seek advice from a financial advisor who specializes in succession planning and retirement accounts to minimize tax burdens on the sale.
With the right retirement plan, you manage your financial future, cut down your tax obligations, and build a solid base for both your retirement and your business goals.
Why Start a Self-Employed Retirement Plan in Jackson, MS Now?
There’s no denying that time is one of the most crucial assets in retirement planning. Getting a head start not only allows you to build a larger nest egg but also minimizes the stress of catching up later in life. Here’s why it pays to take action now:
The Cost of Waiting
Waiting to start your retirement fund may cause a major impact on the total you’ll have when you retire. The primary reason is compound interest—the financial principle where your investments generate earnings, and those returns, subsequently, accumulate even more returns. The longer your money has to grow, the greater the effect of this growth.
Example: Taylor and Alex are both entrepreneurs. Their shared goal is to save $500,000 for retirement by age 65:
- Alex starts saving $5,000 annually at age 30.
- Taylor waits until age 40 but saves $7,500 annually to make up for lost time.
By age 65, assuming 7% annual return:
- Alex puts in $180,000 and ends up with $691,184.39*.
- Taylor puts in $195,500 but accumulates just $474,367.78*.
How Early Contributions Grow
Small, consistent savings invested steadily often create impressive growth. Take a look at this scenario showing the effect of consistent growth:
- Starting at age 25: Putting aside $200 per month in a retirement plan with an average annual return 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 shortfall of over $260,000, simply due to a 10-year delay.
Starting sooner, the less effort required each year to meet your retirement goals.
*These calculations are based on estimates derived from NerdWallet’s Compound Interest Calculator, with the assumption of 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. Actual results may vary based on elements like market conditions, fees, and individual circumstances. Always consult a financial advisor for custom recommendations.
Take Control of Your Financial Future
If you’re self-employed in Jackson, MS, it is often the case that you put more emphasis on 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 down the road.
- Benefit from flexible contributions that align with your cash flow.
- Establish a safety net that offers peace of mind, no matter how your business evolves.
The sooner you start, the less you’ll be required to worry about playing catch-up later in life. Taking steps toward your retirement goals today means managing your financial future and allowing yourself the opportunity to focus on your objectives—both for your retirement years and your Jackson, MS business.
Types of Self-Employed Retirement Plans
A variety of retirement savings options designed for entrepreneurs in Jackson, MS, each with its own benefits and trade-offs. A financial advisor can help you evaluate the pros and cons of each plan and identify the one ideal for your circumstances. In most cases, your self-employed retirement plan options in Jackson, MS are:
Traditional or Roth IRA
Plan Overview: IRAs, or Individual Retirement Accounts, are retirement savings vehicles that offer key tax perks. In a standard IRA, the money you contribute is often tax-deductible, and returns grow free of current taxes, but retirement distributions are subject to income tax. In contrast, Roth IRAs require contributions are made with after-tax income, but qualified withdrawals in retirement, including earnings, are not taxed. In both accounts, withdrawals are penalty-free as long as 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 offers a way to save for retirement that permits those who are self-employed to contribute a percentage of their net earnings. Contributions must come from 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) have designated. If you have employees, you must 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 works well for entrepreneurs facing cycles of high revenue and low revenue. In contrast to some alternatives, SEP IRAs don’t have costly startup or administrative fees.
SEPs work like standard 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 capped at the lower 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: The Solo 401(k), commonly known as 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 operate much like standard 401(k) plans, and allow you to contribute as both an employer and an employee with pre-tax money. This offers more savings than SEPs or IRAs; however, the increased savings potential may be offset by 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: 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 are allowed to make two types of contributions:
- Deferrals as an employee of up to 100% of your self-employment income, 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) must not surpass 25% of your adjusted self-employment income, which is your net profit minus half of your self-employment tax and the deferrals you made.
The total contribution cannot exceed $70,000, or $77,500 for those aged 50 and older (for 2025), $81,250 for those aged 60-63 in 2025.
Individual Defined Benefit Plan
Plan Overview: A defined benefit plan offers a structured retirement solution that provides a pre-established payout to entrepreneurs upon retirement. In contrast to the plans discussed earlier, investment returns don’t affect the payout, but enables participants to determine the precise amount they'll get in retirement. This plan is recommended for high-earning self-employed individuals who want to save a significant sum for retirement and are prepared to contribute larger deposits. Contributions offer tax-deferred growth, and withdrawals are taxed as income upon retirement.
Eligibility: Self-employed professionals running an owner-only business or with less than five employees are eligible to open an individual defined benefit plan, but it's generally suggested for those over 50 who generate a minimum of $250,000 yearly. Typically, good candidates for defined benefit plans are:
- Partners or owners who aim to deposit more than $70,000 (or $77,500 for those aged 50+)
- Companies already contributing 3-4% but are open to increasing contributions
- Companies showing consistent profit patterns
- Partners or owners over age 40 who wish to accelerate savings or increase their retirement contributions rapidly
Contribution Limits: The cap on contributions must be determined by an actuary using your earnings, age, and retirement objectives. Allowable contributions are adjusted each year.
The Importance of a Financial Advisor in Jackson, MS for Your Self-Employed Retirement Plan
A financial advisor in Jackson, MS specialized in self-employed retirement plans can be an important asset for those working for themselves. They have the expertise to help navigate the complexities of retirement planning and craft a tailored strategy that matches your objectives. A financial advisor in Jackson, MS will review your finances, determine how much risk you’re comfortable with, and help you in making informed decisions about saving and investing for retirement. Included in what we do for you includes:
- Assist in selecting a plan that aligns with your objectives and circumstances
- Further adapt the plan to fit you personally even further
- Formalize a plan in writing as required by IRS rules
- Set up an asset trust plan
- Help 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
- Boost your retirement earnings by making the most of your social security
Self-Employed Retirement Plans in Jackson, MS: Correct Capital's Process
Self-employed individuals in Jackson, MS who lack the time, interest, or knowledge to oversee their self-employed retirement plan independently often feel overwhelmed by their available plans. Through our team at Correct Capital, our Jackson, MS financial advisors manage the lion's share of your retirement planning for you, and strive to ensure meeting your future savings targets as hassle-free as possible for you. We are here to assist you in setting up your self-employed retirement plan in just four steps:
- Schedule a Call: In just 20 minutes, a member of our advisor team will assess if we're a good fit for you and your business. This short conversation helps us get a sense of your goals with no obligation or major time investment on your part.
- Gather Information: If we both decide to move forward, we'll gather information, including whether you have employees, your current financial situation, and your long-term savings targets. This allows us to put together a personalized strategy designed just for you.
- Review Your Plan: When we finalize a plan based on the information you provide, we'll sit down with you and review your plan in detail to ensure you understand 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. Throughout our relationship, we'll meet with you 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, meaning they are legally and ethically bound to act in your best interest.
Other financial advisory services we offer in Jackson, MS 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 Jackson, MS
To you, your business is more than "just a business", and your Jackson, MS financial advisors should provide more than basic financial recommendations. Correct Capital takes pride in, we make it a priority to understand our clients and their businesses to deliver tailored self-employed retirement plans. We offer all our Jackson, MS clients our I.O.U. promise: all guidance we provide will be independent, objective, and unbiased. To take the first step on your self-employment retirement plan, reach out to Correct Capital at 877-930-401k or contact us online.
