Self-employed retirement plans Knoxville, TN. The freedom of running your own company in Knoxville, TN is one of the greatest advantages of having a self-directed career. However, this flexibility often comes with potential drawbacks, notably regarding retirement savings, because you don't have access to employer-sponsored retirement plans. 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 more secure retirement, partnering with a financial advisor in Knoxville, TN to set up your self-employed retirement plan can provide significant tax advantages that help both you and your business to thrive.
Few Knoxville, TN investment consulting 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 (read more of our story here), and Correct Capital have a rich history of helping businesses with their retirement planning needs. We understand that your goals for your business and retirement aren’t limited to basic numbers, and we strive to offer customized solutions aligned with your vision. Read on to discover about your self-employed retirement plan options in Knoxville, TN, or give us a call at Correct Capital at 877-930-401k or contact us online to talk to a self-employed financial advisor in Knoxville, TN today.
Why Knoxville, TN Self-Employed Individuals Should Have a Retirement Plan
Retirement plans for self-employed individuals not only prepare you for the future, they also provide tangible benefits today. From flexible contributions to significant tax savings, partnering with a financial advisor in Knoxville, TN allows you to design your retirement plan to fit your unique financial situation.
Flexibility That Fits Your Income
For those with fluctuating income annually, a plan like a SEP IRA or Solo 401(k) gives you the flexibility to modify how much you save:
- Customizable Contributions: Save extra during high-income years and cut back when your earnings dip, so your plan fits your cash flow.
- Roth Options: Choosing a Roth Solo 401(k) lets you handle taxes upfront, so you can withdraw without tax penalties in the future—a wise move if you anticipate your tax rate is likely to rise in the future.
Save Money on Taxes
Retirement plans for self-employed individuals provide powerful tax benefits:
- Tax-Deductible Contributions: Contributions to a Solo 401(k) lower your taxable income, allowing you to keep more of your income.
- Tax-Deferred Growth: Investments grow tax-free until withdrawal, providing your money more time to accumulate.
- State-Specific Incentives: Based on your location, you might access additional deductions as a business owner. These state-level incentives can make these plans even more valuable.
- 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
Planning for a safe retirement goes beyond just how much you save—it’s also linked to the way you invest:
- Diversified Portfolios: Spreading your investments across a mix of asset classes like stocks and bonds is a smart way to minimize exposure to risk while helping to grow your savings.
- Emergency Back-Up: Pairing your retirement plan with a business emergency fund prevents you from tapping into your nest egg during tough times and risking extra costs.
Plan for the Future of Your Knoxville, TN Business
A thoughtful retirement strategy enables you to plan ahead for what’s next with your Knoxville, TN business:
- Selling Your Business: For those considering a sale, accounts such as SEP IRAs or Solo 401(k)s stay in your name and are not part of the sale. These accounts can provide the reliable income you’ll need during retirement. It’s important to note that while selling a business often leads to a capital gain, contributions to retirement accounts are subject to yearly maximums (e.g., as much as $7,000 for IRAs or up to $70,000 for Solo 401(k)s, factoring in catch-up contributions, according to plan rules).
- Minimizing Taxes: Using retirement contributions wisely can reduce the taxes you’ll owe when you pass on your business.
- Succession Planning: If you’re passing the business on, your retirement accounts provide the funds you need during the change. You may also work with a financial advisor who specializes in succession planning and retirement accounts to minimize tax burdens on the sale.
With the right retirement plan, you gain control over your financial future, cut down your tax obligations, and build a secure foundation for both your retirement and your business goals.
Why Start a Self-Employed Retirement Plan in Knoxville, TN Now?
Time is one of the most crucial factors when it comes to saving for retirement. Getting a head start not only helps you grow a more substantial retirement fund but also reduces the financial burden of saving aggressively in the future. Here’s why it makes sense to begin today:
The Cost of Waiting
Putting off saving for retirement may cause a substantial impact on the savings you’ll have when you reach retirement age. The biggest reason is compound interest—the powerful process where your investments generate earnings, and those returns, in turn, generate even more returns. The greater time span your money has to grow, the greater the benefit of this growth.
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 saves $7,500 annually to bridge the gap.
By age 65, assuming 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
Regular, modest investments made consistently may result in impressive growth. Consider this example showing the impact of consistent growth:
- Starting at age 25: By investing $200 per month in a retirement plan with an expected yearly growth rate of 7%, you’ll end up with $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, simply due to a 10-year delay.
The earlier you begin, the lower your annual savings needs each year to reach your retirement goals.
*The figures provided in this example are based on estimates derived from NerdWallet’s Compound Interest Calculator, assuming a 7% annual return. These calculations involved multiplying yearly deposits by the years contributed. This information is meant to provide general guidance and cannot predict actual future outcomes. Actual results may vary depending on elements like market conditions, fees, and your unique situation. Always consult a financial advisor for personalized advice.
Take Control of Your Financial Future
If you’re self-employed in Knoxville, TN, it is often the case that you focus more on reinvesting in your business over saving for retirement. That said, beginning a plan now gives you the chance to:
- Benefit from tax-free future growth or penalty-free withdrawals later on.
- Take advantage of adjustable savings that adapt to your cash flow.
- Establish a long-term safety measure that ensures stability, no matter how your business develops.
Getting started now, the less you’ll be required to worry about playing catch-up later in life. Building your retirement savings today means managing your financial future and creating for yourself the opportunity to turn your attention to your goals—both for your future retirement and your Knoxville, TN business.
Types of Self-Employed Retirement Plans
A variety of retirement savings options designed for self-employed individuals in Knoxville, TN, each offering its own pros and cons. A financial advisor will guide you to evaluate the pros and cons of each plan and identify the one most suitable for your unique situation. In most cases, your self-employed retirement plan options in Knoxville, TN consist of:
Traditional or Roth IRA
Plan Overview: IRAs, or Individual Retirement Accounts, are retirement savings vehicles that provide key tax perks. In a traditional IRA, you can usually deduct your contributions from taxable income, and earnings grow without immediate taxation, but withdrawals in retirement are taxable. In contrast, with Roth IRAs, you contribute are made with after-tax income, but qualified withdrawals in retirement, including earnings, are tax-free. In both types of accounts, withdrawals are penalty-free provided you are at least 59½.
Eligibility: While many retirement plans, such as 401(k)s, are tied to employment, both traditional and Roth IRAs are accessible for individuals with taxable earnings.
Contribution Limits: For 2025, annual contribution limits for IRAs are set 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 is a retirement plan that allows self-employed individuals to set aside a portion of their self-employment income. Contributions are strictly employer contributions an employer, so, as a self-employed individual, you (the employee) are limited to contributions from the employer role 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. You have the flexibility to contribute a set monetary value or a percentage of wages to employee accounts. This type of plan may be ideal for businesses that experience fluctuating revenue streams. Compared to other retirement options, SEP IRAs are free of the high fees associated with starting or maintaining other plans.
SEPs work like traditional 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 are the lesser of:
- 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: 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 companies that have no employees or where the only employee is a spouse. This type of plan are similar to traditional employer-managed 401(k) plans, and let you make contributions as both an employer and an employee with pre-tax money. This provides more savings than SEPs or IRAs; however, the extra savings options often come with more restricted investment choices. With this type of plan, you can make either traditional or Roth deferrals, which have 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: As a self-employed individual with a solo 401(k) plan, you can make two types of contributions:
- Deferrals as an employee of up to 100% of your earned income from self-employment, subject to the annual contribution limit. In 2025, those limits are $23,500, or $31,000 if you are 50 or older, or $34,750 for individuals aged 60-63 in 2025.
- Profit-sharing contributions (as an employer) are limited to 25% of your adjusted 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 those aged 50 and older (for 2025), $81,250 if you attain age 60-63 in 2025.
Individual Defined Benefit Plan
Plan Overview: A defined benefit plan offers a structured retirement solution that delivers a set amount to entrepreneurs upon retirement. Unlike defined contribution plans mentioned above, a defined benefit plan doesn't fluctuate based on investment returns, but allows self-employed individuals to know exactly how much they'll have in retirement. This strategy is best suited for high-earning professionals who want to save a significant sum for retirement and are willing to make substantial contributions. Contributions are tax deferred, and withdrawals are taxed as income in retirement.
Eligibility: Entrepreneurs running an owner-only business or employing fewer than five people can open an individual defined benefit plan, but it's generally advised for individuals aged 50+ who generate a minimum of $250,000 yearly. Generally, good candidates for defined benefit plans are:
- Business owners or partners 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
- Organizations showing consistent profit patterns
- Partners or owners over age 40 who wish to accelerate savings or increase their retirement contributions rapidly
Contribution Limits: The contribution limit must be determined by an actuary determined by your income, age, and retirement goals. Limits on contributions are adjusted each year.
The Importance of a Financial Advisor in Knoxville, TN for Your Self-Employed Retirement Plan
Partnering with an advisor in Knoxville, TN experienced with retirement plans for the self-employed can be an essential partner for self-employed individuals. They bring the skills needed to understand the intricacies of saving for retirement and develop a tailored strategy that reflects your aspirations. Your advisor in Knoxville, TN will review your finances, determine how much risk you’re comfortable with, and guide you in making informed decisions about saving and investing for retirement. Included in what we do for you includes:
- Help you choose a plan that best fits your needs and goals
- Customize 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
- Monitor and adjust 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 Knoxville, TN: Correct Capital's Process
Knoxville, TN business owners who don’t have the time or expertise to oversee their own retirement planning themselves often feel overwhelmed as they look at their available plans. With Correct Capital, our Knoxville, TN financial advisors handle the bulk of your savings plan setup for you, to help make meeting your retirement goals 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: In just 20 minutes, a member of our advisor team can determine if we're suited to your needs for you and your business. This initial call allows us to understand what you're looking for with no obligation or major time investment on your part.
- Gather Information: Should we agree to proceed, we'll request information, including how many employees you have (if any), your present financial standing, and your retirement goals. This enables us to craft a custom plan designed just for you.
- Review Your Plan: When we finalize a plan from the information you provide, we'll meet with you and discuss your plan step by step 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 set everything up so you can begin contributing. As time goes on, we'll have regular meetings and track your progress to make sure it remains aligned with your goals.
Our Knoxville, TN financial advisors and retirement plan consultants serve as fiduciary advisors, meaning they are legally and ethically bound to do what's in your best interest.
Other financial advisory services we offer in Knoxville, TN include:
- Retirement Income Planning
- Investment Planning
- Retirement Financial Planning
- Investment Management
- 401(k) Audit
- High-Net-Worth Wealth Management
- Retirement Planner
- Financial Planning
Call Correct Capital for Your Self-Employed Retirement Plan in Knoxville, TN
You don't see your business as "just a business", and your Knoxville, TN financial advisors need to offer more than basic financial recommendations. Correct Capital takes pride in, we make it a priority to understand our clients and their businesses to create tailored self-employed retirement plans. To every client in Knoxville, TN, we provide our I.O.U. promise: everything we recommend 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.
