Self-employed retirement plans Joliet, IL. The flexibility of owning your own business in Joliet, IL offers many benefits of being self-employed. Even so, this flexibility sometimes brings with potential drawbacks, notably regarding 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, although many could benefit from exploring their options. In addition to having a financially stable retirement, seeking advice from a financial advisor in Joliet, IL to set up your self-employed retirement plan can provide significant tax advantages that help you to move your business forward.
Few Joliet, IL investment consulting 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 (check out our story here), and Correct Capital take pride in helping businesses with their retirement planning needs. We recognize that your business and retirement aspirations extend well past basic numbers, and we work tirelessly to provide tailored solutions aligned with your vision. Read on to discover about your self-employed retirement plan options in Joliet, IL, or call Correct Capital at 877-930-401k or contact us online to consult with a entrepreneurial financial advisor in Joliet, IL today.
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Why Joliet, IL 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 immediate benefits today. Offering flexibility in contributions to considerable tax savings, partnering with a financial advisor in Joliet, IL allows you to create your retirement plan to align with your unique financial situation.
Flexibility That Fits Your Income
When your earnings vary from year to year, a plan like a SEP IRA or Solo 401(k) gives you the flexibility to adjust how much you save:
- Customizable Contributions: Save extra during successful years and scale back when income is lower, so your plan works with your cash flow.
- Roth Options: Choosing a Roth Solo 401(k) lets you settle taxes at the time of contribution, allowing you to withdraw tax-free later—a smart decision if you expect your tax rate is likely to rise in the future.
Save Money on Taxes
Retirement plans for self-employed individuals offer significant tax benefits:
- Tax-Deductible Contributions: Contributions to a SEP IRA shrink your tax liability, allowing you to keep more of your earnings.
- Tax-Deferred Growth: Investments grow tax-free until withdrawal, giving your money more time to grow.
- State-Specific Incentives: Depending on where you live, you could qualify for extra credits as a self-employed individual. These regional incentives make these plans even more advantageous.
- Retirement Savings Contributions Credit (Saver’s Credit): Eligible individuals can take advantage of 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
Building a secure retirement 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 can help mitigate financial risk while helping to grow your savings.
- Emergency Back-Up: Supplementing your retirement savings with a financial buffer for your business prevents you from using your retirement funds during financial hardships and risking extra costs.
Plan for the Future of Your Joliet, IL Business
Retirement planning can assist you plan ahead for what’s next with your Joliet, IL business:
- Selling Your Business: When selling your business, plans like SEP IRAs or Solo 401(k)s remain your personal assets and don’t transfer with the business. These accounts ensure the financial stability you’ll need in the future. Remember that while selling a business often leads to a capital gain, deposits into these plans are subject to yearly maximums (e.g., a maximum of $7,000 for IRAs or as much as $70,000 for Solo 401(k)s, with catch-up contributions, depending on plan details).
- Minimizing Taxes: Using retirement contributions wisely helps lower the taxes you’ll owe when you sell your business.
- Succession Planning: If you’re passing the business on, your retirement accounts offer the funds you need through the transition. You may also partner with a financial advisor experienced in both succession and retirement strategies to reduce taxes associated with the transaction.
With the proper savings strategy, you gain control over your financial future, reduce your tax burden, and create a secure foundation for both your retirement and your business goals.
Why Start a Self-Employed Retirement Plan in Joliet, IL Now?
Time remains one of the most valuable factors for building your retirement fund. Beginning sooner rather than later not only helps you grow a bigger financial cushion but also lowers the financial burden of catching up later in life. The following are reasons why it pays to take action now:
The Cost of Waiting
Putting off saving for retirement could lead to a major impact on the savings you’ll have when you stop working. The main reason is compound interest—the concept where your investments grow, and those returns, in turn, generate even more returns. The more time your money has to grow, the greater the impact of this growth.
Example: Taylor and Alex are both entrepreneurs. 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 saves $7,500 annually to bridge the gap.
By age 65, using a projected 7% annual return:
- Alex invests $180,000 and accumulates $691,184.39*.
- Taylor invests $195,500 but achieves a total of only $474,367.78*.
How Early Contributions Grow
Small, consistent savings invested steadily can lead to substantial growth. Here’s a simple scenario showing the impact of consistent growth:
- Starting at age 25: If you invest $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: Saving the same $200 per month would result in only $235,412.97* by age 65—a gap of over $260,000, all because of a 10-year delay.
The earlier you begin, the less you need to save each year to reach your retirement goals.
*These calculations are 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 for illustrative purposes only and are not a promise of future results. Actual results may vary depending on variables including market conditions, fees, and your unique situation. We recommend consulting a financial advisor for guidance tailored to your needs.
Take Control of Your Financial Future
For self-employed individuals in Joliet, IL, it can be tempting to prioritize reinvesting in your business over saving for retirement. However, beginning a plan now allows you to:
- Leverage tax-free future growth or penalty-free withdrawals later on.
- Benefit from adjustable savings that change with your cash flow.
- Build a safety net that provides security, no matter how your business evolves.
The sooner you start, the less you’ll need to worry about catching 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 goals—both for your golden years and your Joliet, IL business.
Types of Self-Employed Retirement Plans
Multiple retirement savings options available for those working for themselves in Joliet, IL, each with its own pros and cons. A financial advisor will guide you to evaluate the benefits and drawbacks of each choice and identify the one best suited for your unique situation. Typically, your self-employed retirement plan options in Joliet, IL include:
Traditional or Roth IRA
Plan Overview: Individual Retirement Accounts (IRAs), as explained here, represent financial tools for retirement that include distinct tax benefits. In a standard IRA, the money you contribute is often tax-deductible, and investment earnings grow tax-deferred, but withdrawals in retirement are taxed as income. In contrast, Roth IRA contributions from post-tax earnings, but qualified withdrawals in retirement, including earnings, are exempt from taxes. In both cases, withdrawals don’t incur penalties provided you are at least 59½.
Eligibility: Unlike 401(k)s, which are employer-sponsored, both traditional and Roth IRAs are available to anyone with a source of income.
Contribution Limits: For 2025, annual contribution limits for IRAs are capped at $7,000, or $8,000 if you're 50 or older.
Simplified Employee Pension Plan (SEP IRA)
Plan Overview: SEP IRAs offers a way to save for retirement that permits self-employed individuals to contribute a percentage of their net earnings. Contributions must come from an employer, so, as a sole proprietor, you (the employee) would not be able to contribute above the 25% you (the employer) allocate. If you have employees, you are obligated to 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 businesses that experience periods of inconsistent earnings. In contrast to some alternatives, SEP IRAs lack the high fees associated with starting or maintaining other plans.
SEPs operate like conventional IRAs, where you contribute pre-tax dollars and retirement distributions are taxable.
Eligibility: Both employers and 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 amount eligible to be contributed is based on a special calculation.
Solo 401(k)
Plan Overview: A Solo 401(k) plan, sometimes referred to as an Individual 401(k) or one-participant 401(k) plan, is a self-employed retirement plan intended for companies that have no employees or where the only employee is a spouse. Solo 401(k)s operate much like standard 401(k) plans, and enable contributions as both the employer and the employee with pre-tax money. This offers more savings than SEPs or IRAs; however, the extra savings options often come with more restricted investment choices. Using a solo 401(k), you can make either traditional or Roth deferrals, which have the same tax benefits as their IRA contribution counterparts.
Eligibility: Only business owners and their spouses can set up and contribute to a solo 401(k).
Contribution Limits: As a self-employed individual with a solo 401(k) plan, you have the ability to make two types of contributions:
- 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.
- Contributions as an employer (as an employer) are limited to 25% of your net 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 if you're over age 50 (as of 2025), $81,250 for individuals turning 60-63 in 2025.
Individual Defined Benefit Plan
Plan Overview: The defined benefit plan is a retirement option that guarantees a pre-established payout to entrepreneurs upon retirement. Unlike defined contribution plans mentioned above, a defined benefit plan doesn't fluctuate based on investment returns, but enables participants to determine what they'll get in retirement. This plan is best suited for higher-income self-employed individuals who aim to accumulate a substantial amount for retirement and are prepared to contribute larger deposits. Contributions grow tax-free until withdrawal, and withdrawals are taxable as income upon retirement.
Eligibility: Entrepreneurs running an owner-only business or employing fewer than five people may establish an individual defined benefit plan, but it's generally advised for those over 50 who earn at least $250,000 a year. Typically, good candidates for defined benefit plans tend to be:
- Partners or owners who aim to deposit more than $70,000 (or $77,500 if over age 50)
- Businesses currently investing 3-4% and are willing to do more
- Companies with proven consistent profit patterns
- Business leaders over age 40 who aim to quickly build retirement savings or boost savings within a short timeframe
Contribution Limits: The cap on contributions must be determined by an actuary based on your financial situation, age, and savings targets. Contribution limits are adjusted each year.
The Importance of a Financial Advisor in Joliet, IL for Your Self-Employed Retirement Plan
Partnering with an advisor in Joliet, IL experienced with retirement plans for the self-employed can be an essential partner for entrepreneurs. They offer the knowledge to assist understand the intricacies of saving for retirement and craft a personalized approach that reflects your aspirations. Your advisor in Joliet, IL will evaluate your financial situation, identify your risk preferences, and help you in making informed decisions about saving and investing for retirement. Part of what we do for you features:
- Guide you in choosing a plan that suits your unique requirements
- Customize the plan to your specific situation even further
- Formalize a plan in writing that complies with IRS regulations
- Set up an asset trust plan
- Help you understand the plan's terms
- Track and fine-tune your plan when necessary
- Deliver continuous support and financial insights 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 Joliet, IL: Correct Capital's Process
Entrepreneurs in Joliet, IL who don’t have the time or expertise to manage their retirement savings strategy themselves can become overwhelmed when faced with their options. At Correct Capital, our Joliet, IL 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 will guide you in creating your self-employed retirement plan in a quick, four-step process:
- Schedule a Call: In just 20 minutes, a member of our advisor team can help understand if we're suited to your needs for you and your business. This brief introduction lets us learn about your needs with zero commitment or major time investment 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 enables us to craft a tailored approach suited specifically for your needs.
- Review Your Plan: After we put together a plan based on the information you provide, we'll meet with you and discuss your plan thoroughly to make sure it's clear and explain its fit to your circumstances.
- Implementation and Monitoring: After we agree on your plan, we'll set everything up so you can initiate your savings journey. Over the course of our partnership, we'll meet with you and monitor your plan to ensure it stays suited to your needs.
Our Joliet, IL 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 Joliet, IL 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 Joliet, IL
You don't see your business as "just a business", and your Joliet, IL financial advisors need to offer more than simply sound financial advice. Correct Capital takes pride in, we focus on building a relationship with our clients and their businesses to create personalized self-employed retirement plans. All our clients in Joliet, IL benefit from our I.O.U. promise: all guidance we provide will be independent, objective, and unbiased. To begin on your self-employment retirement plan, contact Correct Capital now at 877-930-401k or contact us online.
