Self-employed retirement plans Joliet, IL. The independence of being your own boss in Joliet, IL is one of the greatest advantages of working for yourself. Even so, this flexibility can come with a lack of security, especially in terms of retirement savings, as you don't have the benefit of retirement programs through an employer. Only 13% of self-employed individuals have a workplace retirement plan, although many could benefit from looking into other possibilities. In addition to achieving 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 both you and your business to thrive.
Few Joliet, IL wealth management and retirement planning firms understand the needs of small business owners quite like Correct Capital. Our founder's father was a small business owner himself (read more of our story here), and our firm take pride in supporting entrepreneurs with their retirement planning needs. We know that your goals for your business and retirement extend well past just monetary concerns, and we are dedicated to provide tailored solutions that reflect your objectives. Continue exploring to find out about your self-employed retirement plan options in Joliet, IL, or give us a call at Correct Capital at 877-930-401k or contact us online to speak with a self-employed financial advisor in Joliet, IL today.
Why Joliet, IL Self-Employed Individuals Should Have a Retirement Plan
Retirement plans for self-employed individuals help prepare you for the future, they also offer immediate benefits today. With customizable contribution options to substantial tax savings, partnering with a financial advisor in Joliet, IL allows you to create your retirement plan to suit your individual circumstances.
Flexibility That Fits Your Income
For those with fluctuating income from year to year, a plan like a SEP IRA or Solo 401(k) gives you the option to tailor how much you save:
- Customizable Contributions: Contribute more during profitable years and cut back when revenues are down, so that your plan aligns with your cash flow.
- Roth Options: Opting for a Roth Solo 401(k) lets you handle taxes upfront, 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
Retirement plans for self-employed individuals provide significant tax benefits:
- Tax-Deductible Contributions: Contributions to a SIMPLE IRA reduce what you owe in taxes, allowing you to keep more of your hard-earned money.
- Tax-Deferred Growth: Your savings grow untaxed until withdrawn, which gives your money more time to grow.
- State-Specific Incentives: In some states, you might access extra credits as a business owner. These state-level incentives can make these plans even more advantageous.
- Retirement Savings Contributions Credit (Saver’s Credit): Eligible individuals can apply for a credit of up to 50% of the first $2,000 they contribute a retirement plan, cutting down your tax bill even more.
Protect Your Savings With Smart Investments
Planning for a safe retirement requires more than how much you save—it’s also linked to the way you invest:
- Diversified Portfolios: Spreading your investments across varied stocks, bonds, and other assets serves to minimize exposure to risk while continuing to build your retirement fund.
- Emergency Back-Up: Pairing your retirement plan with a financial buffer for your business prevents you from using your retirement funds during challenging periods and incurring penalties.
Plan for the Future of Your Joliet, IL Business
Preparing for retirement also helps you prepare for what’s next with your Joliet, IL business:
- Selling Your Business: If you’re planning to sell, retirement accounts like SEP IRAs and Solo 401(k)s stay in your name and are not part of the sale. These accounts offer the financial stability you’ll need later on. Keep in mind that while selling your business results in a capital gain, contributions to retirement accounts are restricted by contribution limits (e.g., a maximum of $7,000 for IRAs or as much as $70,000 for Solo 401(k)s, including catch-up contributions, based on plan compensation).
- Minimizing Taxes: Strategically planning your contributions helps lower the taxes you are required to pay when you pass on your business.
- Succession Planning: If you’re passing the business on, your nest egg offer a stable foundation as you make this shift. You can also partner with a financial advisor with expertise in succession and retirement planning to reduce taxes associated with the transaction.
With the proper savings strategy, you manage your financial future, cut down your tax obligations, and build a strong framework for both your retirement and your business goals.
Why Start a Self-Employed Retirement Plan in Joliet, IL Now?
Time is one of the most valuable factors when it comes to saving for retirement. Beginning sooner rather than later not only lets you accumulate a more substantial retirement fund but also reduces the financial burden of playing catch-up as you get older. Here’s why it pays to take action now:
The Cost of Waiting
Waiting to start your retirement fund could lead to a major impact on the savings you’ll have when you stop working. The primary reason is compound interest—the concept where your investments generate earnings, and those returns, subsequently, generate even more returns. The longer your money has to grow, the greater the benefit of this compounding process.
Example: Two individuals, Alex and Taylor are both self-employed individuals. Their shared goal is to save $500,000 for retirement by age 65:
- Alex initiates savings of $5,000 annually at age 30.
- Taylor postpones starting contributions to age 40 but puts away $7,500 annually to catch up.
By age 65, assuming 7% annual return:
- Alex invests $180,000 and achieves a total of $691,184.39*.
- Taylor contributes $195,500 but achieves a total of only $474,367.78*.
How Early Contributions Grow
Regular, modest investments made consistently 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 projected return of 7%, you’ll grow to approximately $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.
Starting sooner, the less effort required each year to meet your retirement goals.
*The figures provided in this example are estimates derived from NerdWallet’s Compound Interest Calculator, based on a 7% annual return. Annual deposits were multiplied by the number of years to estimate total contributions. These examples are for illustrative purposes only and cannot predict actual future outcomes. Actual results may vary due to factors such as market conditions, fees, and personal factors. We recommend consulting a financial advisor for personalized advice.
Take Control of Your Financial Future
For self-employed individuals in Joliet, IL, it is often the case that you focus more on reinvesting in your business instead of saving for retirement. However, beginning a plan now gives you the chance to:
- Leverage tax-free future growth or tax-free withdrawals down the road.
- Take advantage of contribution flexibility that change with your earnings.
- Create a long-term safety measure that provides security, no matter how your business develops.
Starting early, the less you’ll have to worry about playing catch-up later in life. Saving for retirement now means managing your financial future and giving yourself the freedom to turn your attention to your dreams—both for your future retirement and your Joliet, IL business.
Types of Self-Employed Retirement Plans
A variety of retirement savings options available for self-employed individuals in Joliet, IL, each with its own benefits and trade-offs. A financial advisor is available to help you evaluate the advantages and disadvantages of each choice and determine the one most suitable for your unique situation. In most cases, your self-employed retirement plan options in Joliet, IL consist of:
Traditional or Roth IRA
Plan Overview: IRAs, or Individual Retirement Accounts, are retirement savings vehicles that offer specific tax advantages. In a traditional IRA, contributions are typically tax-deductible, and investment earnings grow tax-deferred, but retirement distributions are taxed as income. 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 are penalty-free as long as you are at least 59½.
Eligibility: While many retirement plans, such as 401(k)s, are tied to employment, 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 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 allows self-employed individuals 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) would not be able to contribute beyond the 25% you (the employer) allocate. If you have employees, it's required to 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 entrepreneurs facing periods of inconsistent earnings. In contrast to some alternatives, SEP IRAs are free of expensive setup or ongoing fees.
SEPs operate like conventional IRAs, where the contributions are tax-deferred and withdrawals are taxed as income.
Eligibility: Both employers and self-employed individuals can set up 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 retirement savings plan intended for companies that have no employees or where the only employee is a spouse. This type of plan function similarly to traditional employer-managed 401(k) plans, and allow you to contribute as both an employee or an employer with pre-tax money. This provides more savings versus 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: Only business owners and their spouses may establish and contribute to a solo 401(k).
Contribution Limits: For self-employed individuals 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-employed earnings, subject 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 those who turn 60-63 in 2025.
- Employer profit-sharing contributions (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 employee contributions you made.
The total contribution cannot exceed $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: Defined benefit plans offers a structured retirement solution that guarantees a fixed, predetermined benefit to self-employed individuals upon retirement. As opposed to defined contribution plans, this plan is not influenced by market performance, but lets individuals clearly understand exactly how much they'll receive in retirement. This option is ideal for wealthier entrepreneurs who aim to accumulate a substantial amount for retirement and are willing to make larger deposits. Contributions are tax deferred, and withdrawals are taxable as income in retirement.
Eligibility: Any self-employed individual managing a one-person company or with less than five employees may establish an individual defined benefit plan, but it's typically suggested for individuals aged 50+ who make $250,000 or more annually. Typically, good candidates for defined benefit plans are:
- Entrepreneurs who desire to contribute more than $70,000 (or $77,500 for individuals 50 and older)
- Organizations that already put in 3-4% with plans to contribute more
- Businesses showing consistent profit patterns
- Entrepreneurs over age 40 who desire to "catch up" or increase their retirement contributions rapidly
Contribution Limits: The maximum allowable contribution must be determined by an actuary based on your income, age, and retirement goals. Allowable contributions are updated yearly.
The Importance of a Financial Advisor in Joliet, IL for Your Self-Employed Retirement Plan
A financial advisor in Joliet, IL focused on self-employed retirement strategies is an invaluable resource for those working for themselves. They have the expertise to help guide you through the challenges of retirement planning and develop a tailored strategy that aligns with your goals. An expert in your area 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 involves:
- Guide you in choosing a plan that aligns with your objectives and circumstances
- Tailor the plan to your specific situation even further
- Create a written plan that complies with IRS regulations
- Arrange a trust plan for assets
- Make sure you understand the plan's terms
- Track and fine-tune your plan when necessary
- Provide ongoing education and advice throughout your retirement planning process
- Increase your retirement income by optimizing your social security benefits
Self-Employed Retirement Plans in Joliet, IL: Correct Capital's Process
Self-employed individuals in Joliet, IL who aren’t equipped with the time or understanding to handle their own retirement planning independently can become overwhelmed as they look at their choices. Through our team at Correct Capital, our Joliet, IL financial advisors handle the lion's share of your retirement strategy for you, and strive to ensure meeting your financial objectives as hassle-free as possible for you. We are here to assist you in setting up your self-employed retirement plan in four simple steps:
- Schedule a Call: It only takes 20 minutes, a member of our advisor team will assess if our services align for you and your business. This initial call allows us to get a sense of your goals with no obligation or significant effort on your part.
- Gather Information: If we both decide to move forward, we'll ask for information, including your employee count, your present financial standing, and your future objectives. This enables us to craft a tailored approach designed just for you.
- Review Your Plan: When we finalize a plan based on the information you provide, we'll schedule a meeting and review your plan thoroughly to help you fully grasp 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. As time goes on, we'll have regular meetings and monitor your plan to keep it tailored to your evolving circumstances.
Our Joliet, IL financial advisors and retirement plan consultants act as fiduciary advisors, who are obligated to they are legally and ethically bound to prioritize your needs above all else.
Other financial advisory services we offer in Joliet, IL include:
- 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
- High-Net-Worth Wealth Management
Call Correct Capital for Your Self-Employed Retirement Plan in Joliet, IL
To you, your business is more than "just a business", and your Joliet, IL financial advisors should provide more than simply sound financial advice. At Correct Capital, we take the time to get to know our clients and their businesses to deliver personalized self-employed retirement plans. All our clients in Joliet, IL benefit from our I.O.U. promise: all of the advice you get from us will be independent, objective, and unbiased. To get started on your self-employment retirement plan, contact Correct Capital now at 877-930-401k or contact us online.
