Self-employed retirement plans Jersey City, NJ. The independence of owning your own business in Jersey City, NJ is one of the best aspects of being self-employed. Even so, this independence often comes with certain challenges, notably when it comes to 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, yet countless should consider looking into other possibilities. In addition to enjoying a more secure retirement, partnering with a financial advisor in Jersey City, NJ to establish your self-employed retirement plan can provide significant tax advantages that enable you to move your business forward.
Few Jersey City, NJ investment consulting and retirement planning firms are as attuned to the requirements of small business owners quite like Correct Capital. Our founder's father was a small business owner himself (learn more about our story here), and we have a rich history of helping businesses with their retirement planning needs. We understand that your professional and personal aspirations extend well past simple financial figures, and we strive to offer personalized solutions that reflect your objectives. Continue exploring to find out about your self-employed retirement plan options in Jersey City, NJ, or call Correct Capital at 877-930-401k or contact us online to speak with a self-employed financial advisor in Jersey City, NJ today.
Why Jersey City, NJ Self-Employed Individuals Should Have a Retirement Plan
Retirement plans for self-employed individuals are essential for preparing you for the future, they also offer real benefits today. From flexible contributions to considerable tax savings, consulting a financial advisor in Jersey City, NJ helps you design your retirement plan to suit your individual circumstances.
Flexibility That Fits Your Income
When your earnings vary from year to year, a plan like a SEP IRA or Solo 401(k) offers the flexibility to tailor how much you save:
- Customizable Contributions: Contribute more during successful years and scale back when revenues are down, so that your plan works with your cash flow.
- 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
Retirement plans for self-employed individuals provide valuable tax benefits:
- Tax-Deductible Contributions: Contributions to a SEP IRA reduce what you owe in taxes, so you can keep more of your income.
- Tax-Deferred Growth: You won't pay taxes on investment growth until you withdraw it, giving your money more time to compound.
- State-Specific Incentives: In some states, you may be eligible for state-specific deductions as a sole proprietor. These state-level incentives make these plans even more beneficial.
- Retirement Savings Contributions Credit (Saver’s Credit): Eligible individuals can take advantage of a credit of up to 50% of the first $2,000 contributed a retirement plan, helping to lower your tax bill even more.
Protect Your Savings With Smart Investments
Building a secure retirement requires more than how much you save—it’s also linked to the way you invest:
- Diversified Portfolios: Distributing your investments across different stocks, bonds, and alternatives is a smart way to reduce risk while helping to grow your nest egg.
- Emergency Back-Up: Pairing your retirement plan with a dedicated business safety net prevents you from tapping into your nest egg during financial hardships and risking extra costs.
Plan for the Future of Your Jersey City, NJ Business
Preparing for retirement also helps you think through what’s next with your Jersey City, NJ business:
- Selling Your Business: When selling your business, retirement accounts like SEP IRAs and Solo 401(k)s remain yours and won’t be included in the sale. These savings ensure the steady income you’ll need during retirement. Keep in mind that while selling a business often leads to a capital gain, deposits into these plans are restricted by contribution limits (e.g., as much as $7,000 for IRAs or up to $70,000 for Solo 401(k)s, factoring in catch-up contributions, depending on plan details).
- Minimizing Taxes: Making the most of retirement savings helps lower the taxes you’ll owe when you transfer your business.
- Succession Planning: For those winding down or handing over their business, your retirement savings offer a stable foundation through the transition. You can also partner with a financial advisor with expertise in succession and retirement planning to minimize tax burdens on the sale.
With the best-fit retirement strategy, you gain control over your financial future, cut down your tax obligations, and create a strong framework for both your retirement and your business goals.
Why Start a Self-Employed Retirement Plan in Jersey City, NJ Now?
There’s no denying that time is one of the most crucial assets in retirement planning. Starting early not only helps you grow a larger nest egg but also lowers the stress of saving aggressively in the future. This is why it pays to take action now:
The Cost of Waiting
Putting off saving for retirement may cause a major impact on the savings you’ll have when you retire. The main reason is compound interest—the financial principle where your investments grow, and those returns, then, generate even more returns. The greater time span your money has to grow, the larger the effect 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 contributes $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 invests $195,500 but achieves a total of only $474,367.78*.
How Early Contributions Grow
Even modest contributions contributed over time often create impressive growth. Consider this example showing the power of compounding:
- 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: Contributing the same $200 per month yields 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 meet your retirement goals.
*The numbers shown in this scenario 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. These examples are for illustrative purposes only and are not a promise of future results. Outcomes may change based on factors such as market conditions, fees, and your unique situation. We recommend consulting a financial advisor for custom recommendations.
Take Control of Your Financial Future
As a self-employed person in Jersey City, NJ, it might seem easier to prioritize reinvesting in your business instead of saving for retirement. Even so, starting a plan now enables you to:
- Benefit from tax-deferred growth or penalty-free withdrawals later on.
- Benefit from adjustable savings that change with your income.
- Create a long-term safety measure that provides security, no matter how your business evolves.
Starting early, the less you’ll need to worry about catching up later in life. Building your retirement savings today means managing your financial future and giving yourself the freedom to concentrate on your goals—both for your future retirement and your Jersey City, NJ business.
Types of Self-Employed Retirement Plans
A variety of retirement savings options open for entrepreneurs in Jersey City, NJ, each offering its own advantages and considerations. A financial advisor is available to help you learn about the advantages and disadvantages of each plan and determine the one most suitable for your circumstances. In most cases, your self-employed retirement plan options in Jersey City, NJ are:
Traditional or Roth IRA
Plan Overview: Individual Retirement Accounts (IRAs), as explained here, represent financial tools for retirement that provide distinct tax benefits. In a traditional IRA, contributions are typically tax-deductible, and investment earnings grow tax-deferred, but withdrawals in retirement are taxable. In contrast, Roth IRAs require contributions are made with after-tax income, but retirement withdrawals that qualify, including earnings, are exempt from taxes. In both cases, withdrawals come without penalties provided you are at least 59½.
Eligibility: Unlike 401(k)s, which are employer-sponsored, IRAs, including traditional and Roth options are open to those with taxable earnings.
Contribution Limits: For 2025, annual contribution limits for IRAs are capped at $7,000, or $8,000 for those aged 50+.
Simplified Employee Pension Plan (SEP IRA)
Plan Overview: A Simplified Employee Pension (SEP) IRA is a retirement plan that permits entrepreneurs to set aside a portion of their self-employment income. Contributions can only be made by an employer, so, as a sole proprietor, you (the employee) cannot make additional contributions beyond the 25% you (the employer) have designated. 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 flat-dollar amount or a percentage of wages to employee accounts. This type of plan works well for businesses that experience cycles of high revenue and low revenue. Unlike other plans, SEP IRAs lack costly startup or administrative fees.
SEPs operate like conventional IRAs, where the contributions are tax-deferred and retirement distributions are taxable.
Eligibility: Any employer, including the self-employed can set up a SEP.
Contribution Limits: Contribution limits for employees in a SEP IRA must not exceed:
- 25% of compensation, or
- $70,000 for 2025
As a self-employed person, 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 self-employed retirement plan meant for businesses with no employees or when the sole employee is your spouse. This type of plan function similarly to standard 401(k) plans, and enable contributions as both the employer and the employee with pre-tax money. This offers more savings versus SEPs or IRAs; however, the additional opportunities can be balanced by 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: This plan is exclusively for business owners and their spouses are eligible to open and contribute to a solo 401(k).
Contribution Limits: If you are self-employed with a solo 401(k) plan, you can make two types of contributions:
- Elective deferrals (as an employee) of up to 100% of your earned income from self-employment, up to the annual contribution limit. In 2025, those limits are $23,500, or $31,000 for those aged 50 and above, or $34,750 if you attain age 60-63 in 2025.
- Profit-sharing contributions (as an employer) cannot exceed 25% of your net self-employment income, which is your 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 individuals aged 50+ (as of 2025), $81,250 for those aged 60-63 in 2025.
Individual Defined Benefit Plan
Plan Overview: The defined benefit plan is a retirement option that guarantees a fixed, predetermined benefit to self-employed individuals upon retirement. As opposed to defined contribution plans, a defined benefit plan doesn't fluctuate based on investment returns, but enables participants to determine what they'll get in retirement. This option is ideal for wealthier self-employed individuals who are focused on saving a large amount for retirement and can commit to making larger deposits. Contributions offer tax-deferred growth, and withdrawals are taxable as income during retirement.
Eligibility: Entrepreneurs managing a one-person company or employing fewer than five people can open an individual defined benefit plan, but it's typically suggested for individuals aged 50+ who earn at least $250,000 a year. In most cases, good candidates for defined benefit plans are:
- Partners or owners who aim to deposit more than $70,000 (or $77,500 for individuals 50 and older)
- Organizations that already put in 3-4% but are open to increasing contributions
- Businesses with proven consistent profit patterns
- Business leaders over age 40 who aim to quickly build retirement savings or increase their retirement contributions rapidly
Contribution Limits: The contribution limit requires calculation from an actuary using your earnings, age, and retirement objectives. Allowable contributions are updated yearly.
The Importance of a Financial Advisor in Jersey City, NJ for Your Self-Employed Retirement Plan
A financial advisor in Jersey City, NJ specialized in self-employed retirement plans can be an important asset for self-employed individuals. They have the expertise to help understand the intricacies of saving for retirement and develop a tailored strategy that reflects your aspirations. Your advisor in Jersey City, NJ will review your finances, determine how much risk you’re comfortable with, and assist you in selecting the best options about saving and investing for retirement. Included in what we do for you involves:
- Assist in selecting a plan that aligns with your objectives and circumstances
- Further adapt the plan to fit you personally even further
- Create a written plan in accordance with IRS guidelines
- Arrange a trust plan for assets
- Help you understand the plan's terms
- Review and modify your plan as needed
- Provide ongoing education and advice throughout your retirement planning process
- Maximize what you receive in retirement by optimizing your social security benefits
Self-Employed Retirement Plans in Jersey City, NJ: Correct Capital's Process
Entrepreneurs in Jersey City, NJ who aren’t equipped with the time or understanding to oversee their own retirement planning independently may end up overwhelmed by their choices. At Correct Capital, our Jersey City, NJ financial advisors manage the lion's share of your savings plan setup for you, and strive to ensure meeting your future savings targets as straightforward as possible for you. We can help you get set up your self-employed retirement plan in a quick, four-step process:
- Schedule a Call: It only takes 20 minutes, a member of our advisor team can help understand if we're suited to your needs for you and your business. This short conversation lets us understand what you're looking for with no obligation or significant effort on your part.
- Gather Information: Once we mutually decide to continue, we'll request information, including your employee count, your present financial standing, and your long-term savings targets. This helps us create a personalized strategy designed just for you.
- Review Your Plan: After we put together a plan using the information you provide, we'll sit down with you and go over your plan step by step to ensure you understand it and understand how it best correlates to your needs.
- Implementation and Monitoring: Once we've agreed on your plan, we'll set everything up so you can begin contributing. As time goes on, we'll meet with you and track your progress to keep it tailored to your evolving circumstances.
Our Jersey City, NJ financial advisors and retirement plan consultants act as fiduciary advisors, which means they are committed by law and ethics to prioritize your needs above all else.
Other financial advisory services we offer in Jersey City, NJ 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 Jersey City, NJ
Your business isn't "just a business" to you, and your Jersey City, NJ financial advisors should provide more than simply sound financial advice. Correct Capital takes pride in, we make it a priority to understand our clients and their businesses to create tailored self-employed retirement plans. We offer all our Jersey City, NJ clients our I.O.U. promise: all guidance we provide 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.
