Self-employed retirement plans Jackson, MS. The flexibility of owning your own business in Jackson, MS is one of the greatest advantages of having a self-directed career. That said, this independence can come with certain challenges, notably when it comes to planning for retirement, as you don't have the benefit of employer-sponsored retirement plans. Only 13% of self-employed individuals have a workplace retirement plan, but many should consider understanding their retirement options. In addition to enjoying a more secure retirement, working with a financial advisor in Jackson, MS to set up your self-employed retirement plan delivers significant tax advantages that help your business to grow and succeed.
Few Jackson, MS financial advisory and retirement planning firms truly grasp the challenges faced by small business owners as well as 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 know that your business and retirement aspirations go far beyond basic numbers, and we are dedicated to offer personalized solutions that reflect your objectives. Read on to discover 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 speak with a small business 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 real benefits today. With customizable contribution options to considerable tax savings, partnering with a financial advisor in Jackson, MS enables you to design your retirement plan to align with your specific needs.
Flexibility That Fits Your Income
If your income changes annually, a plan like a SEP IRA or Solo 401(k) provides the freedom to modify how much you save:
- Customizable Contributions: Save extra during successful years and cut back when income is lower, so your plan fits your current income.
- Roth Options: Opting for a Roth Solo 401(k) lets you pay taxes on contributions now, allowing you to withdraw tax-free later—a wise move if you expect your tax rate to be higher in the future.
Save Money on Taxes
Plans designed for the self-employed offer powerful tax benefits:
- Tax-Deductible Contributions: Contributions to a SIMPLE IRA shrink your tax liability, helping you keep more of your income.
- Tax-Deferred Growth: Investments grow tax-free until withdrawal, providing your money more time to compound.
- State-Specific Incentives: Based on your location, you may be eligible for state-specific tax breaks as a sole proprietor. These state-level incentives 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 put into 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 different stocks, bonds, and other assets serves to minimize exposure to risk while helping to grow your savings.
- Emergency Back-Up: Pairing your retirement plan with a financial buffer for your business ensures you don’t tapping into your nest egg during challenging periods and incurring penalties.
Plan for the Future of Your Jackson, MS Business
Preparing for retirement can assist you prepare for what’s next with your Jackson, MS business:
- Selling Your Business: For those considering a sale, 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 in the future. It’s important to note that while the sale of a business usually creates a capital gain, deposits into these plans are restricted by contribution limits (e.g., up to $7,000 for IRAs or up to $70,000 for Solo 401(k)s, with catch-up contributions, depending on plan details).
- Minimizing Taxes: Strategically planning your contributions can reduce the taxes you might face when you transfer your business.
- Succession Planning: For those winding down or handing over their business, your nest egg offer the funds you need during the change. You might want to seek advice from a financial advisor who specializes in succession planning and retirement accounts to help with taxes associated with the transaction.
With the right retirement plan, you manage your financial future, cut down your tax obligations, and establish a strong framework for both your retirement and your business goals.
Why Start a Self-Employed Retirement Plan in Jackson, MS Now?
Time is one of the most crucial resources when it comes to saving for retirement. Starting early not only helps you grow a larger nest egg but also reduces the stress of saving aggressively in the future. Here’s why it makes sense to begin today:
The Cost of Waiting
Delaying your retirement savings could lead to a substantial impact on the savings you’ll have when you stop working. The primary reason is compound interest—the concept where your investments earn returns, and those returns, subsequently, accumulate even more returns. The more time your money has to grow, the more significant the effect of compounding.
Example: Taylor and Alex are both self-employed professionals. Their shared goal is to save $500,000 for retirement by age 65:
- Alex initiates savings of $5,000 annually at age 30.
- Taylor delays savings until age 40 but puts away $7,500 annually to bridge the gap.
By age 65, using a projected 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
Small, consistent savings invested steadily may result in substantial growth. Consider this example showing the impact of compounding:
- Starting at age 25: Putting aside $200 per month in a retirement plan with an average annual 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 gap of over $260,000, just from a 10-year delay.
Saving early, the less effort required each year to reach your retirement goals.
*These calculations are estimates derived from NerdWallet’s Compound Interest Calculator, based on a 7% annual return. These calculations involved multiplying yearly deposits by the years contributed. The scenarios provided are meant to provide general guidance and are not a promise of future results. Your individual results may differ due to elements like 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 Jackson, MS, it might seem easier to put more emphasis on reinvesting in your business over saving for retirement. Even so, initiating a plan now enables you to:
- Benefit from tax-deferred growth or withdrawals without taxes in the future.
- Benefit from contribution flexibility that align with your cash flow.
- Establish a long-term safety measure that provides security, no matter how your business changes.
Getting started now, the less you’ll be required to worry about playing catch-up later in life. Taking steps toward your retirement goals today means gaining control over your financial future and creating for yourself the ability to concentrate on your dreams—both for your golden 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 providing its own benefits and trade-offs. A financial advisor is available to help you evaluate the advantages and disadvantages of each plan and choose the one most suitable for your circumstances. Generally speaking, your self-employed retirement plan options in Jackson, MS include:
Traditional or Roth IRA
Plan Overview: IRAs, or Individual Retirement Accounts, are retirement savings vehicles that offer distinct tax benefits. In a standard IRA, you can usually deduct your contributions from taxable income, and earnings grow without immediate taxation, but withdrawals in retirement are subject to income tax. In contrast, Roth IRAs require contributions are made with after-tax income, but eligible distributions during retirement, including earnings, are not taxed. In both accounts, withdrawals don’t incur penalties provided you are at least 59½.
Eligibility: Unlike plans linked to your job, traditional and Roth IRAs are open to those with a source of income.
Contribution Limits: For 2025, annual contribution limits for IRAs remain $7,000, or $8,000 if you qualify for catch-up contributions.
Simplified Employee Pension Plan (SEP IRA)
Plan Overview: A Simplified Employee Pension (SEP) IRA offers a way to save for retirement that permits entrepreneurs to save a percentage of their net business profits. Contributions must come from an employer, so, as a sole proprietor, you (the employee) are limited to contributions from the employer role above the 25% you (the employer) already contributed. 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. This type of plan is a good option for businesses that experience cycles of high revenue and low revenue. In contrast to some alternatives, SEP IRAs don’t have the high fees associated with starting or maintaining other plans.
SEPs operate like conventional IRAs, where you contribute pre-tax dollars and money withdrawn is subject to income tax.
Eligibility: Any employer, including the self-employed 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 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 meant for companies that have no employees or if the only employee is your spouse. This type of plan are similar to standard 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 restricted investment choices. 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: Solo 401(k)s are available solely to 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 have the ability to make two types of contributions:
- Elective deferrals (as an employee) of up to 100% of your self-employment income, capped at the annual contribution limit. For 2025, the limits will be $23,500, or $31,000 if you are 50 or older, or $34,750 for individuals aged 60-63 in 2025.
- Employer profit-sharing contributions (as an employer) are limited to 25% of your net self-employment income, which is calculated as net profits less half of your self-employment tax and the elective deferrals you made.
Your combined contributions must not surpass $70,000, or $77,500 for those aged 50 and older (in 2025), $81,250 if you attain age 60-63 in 2025.
Individual Defined Benefit Plan
Plan Overview: The defined benefit plan is a retirement option that provides a set amount to business owners upon retirement. Unlike defined contribution plans mentioned above, investment returns don’t affect the payout, but lets individuals clearly understand exactly how much they'll have in retirement. This plan is best suited for high-earning self-employed individuals who aim to accumulate a large amount for retirement and are willing to make substantial contributions. Contributions offer tax-deferred growth, and withdrawals are taxed as income during retirement.
Eligibility: Self-employed professionals 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 earn at least $250,000 a year. Generally, good candidates for defined benefit plans are:
- Entrepreneurs who want to invest more than $70,000 (or $77,500 for those aged 50+)
- Organizations that already put in 3-4% and are willing to do more
- Companies showing consistent profit patterns
- Partners or owners over age 40 who desire to "catch up" or accelerate the retirement savings
Contribution Limits: The cap on contributions is calculated by an actuary using your financial situation, age, and savings targets. Limits on contributions are updated yearly.
The Importance of a Financial Advisor in Jackson, MS for Your Self-Employed Retirement Plan
Working with a financial advisor in Jackson, MS focused on self-employed retirement strategies can be an invaluable resource for entrepreneurs. They bring the skills needed to navigate the complexities of retirement planning and craft a tailored strategy that aligns with your goals. Your advisor in Jackson, MS will review your finances, understand your risk tolerance, and help you in choosing wisely about saving and investing for retirement. Part of what we do for you features:
- Assist in selecting a plan that best fits your needs and goals
- Further adapt the plan to your specific situation even further
- Create a written plan that complies with IRS regulations
- Organize a trust plan to manage your assets
- Help you understand the plan's terms
- Review and modify your plan to keep it aligned with your goals
- Deliver continuous support and financial insights as you continue on the road to retirement
- Boost your retirement earnings by maximizing your social security benefits
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 handle their own retirement planning themselves often feel overwhelmed by their options. With Correct Capital, our Jackson, MS financial advisors handle the lion's share of your retirement planning for you, and strive to ensure meeting your financial objectives as straightforward as possible for you. We can help you get set up your self-employed retirement plan in just four steps:
- Schedule a Call: A quick 20-minute call is all it takes, a member of our advisor team can determine if we're suited to your needs for you and your business. This short conversation helps us get a sense of your goals with no obligation or extensive time commitment on your part.
- Gather Information: Once we mutually decide to continue, we'll ask for information, including whether you have employees, your existing financial picture, and your retirement goals. This allows us to put together a tailored approach designed just for you.
- Review Your Plan: Once we've developed a plan using the information you provide, we'll schedule a meeting and go over your plan in detail to make sure it's clear and understand how it best correlates to your needs.
- Implementation and Monitoring: When we finalize on your plan, we'll put everything in place so you can initiate your savings journey. Over the course of our partnership, we'll check in and monitor your plan to ensure it stays suited to your needs.
Our Jackson, MS financial advisors and retirement plan consultants act as 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 Jackson, MS include:
- Family Wealth Planning
- 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
Call Correct Capital for Your Self-Employed Retirement Plan in Jackson, MS
Your business isn't "just a business" to you, and your Jackson, MS financial advisors should provide more than just good financial guidance. With Correct Capital, we focus on building a relationship with our clients and their businesses to provide tailored self-employed retirement plans. All our clients in Jackson, MS benefit from 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.
