Self-employed retirement plans Knoxville, TN. The independence of owning your own business in Knoxville, TN is one of the best aspects of being self-employed. That said, this flexibility often comes with potential drawbacks, notably when it comes to building your retirement fund, since you don't have the option of retirement programs through an employer. Only 13% of self-employed individuals have a workplace retirement plan, but many could benefit from exploring their options. In addition to achieving a more secure retirement, working with a financial advisor in Knoxville, TN to establish your self-employed retirement plan delivers significant tax advantages that enable both you and your business to thrive.
Few Knoxville, TN wealth management and retirement planning firms truly grasp the challenges faced by self-employed individuals quite like Correct Capital. Our company’s founder grew up with a father who was a small business owner himself (check out our story here), and we take pride in supporting entrepreneurs with their retirement planning needs. We understand that your goals for your business and retirement go far beyond simple financial figures, and we are dedicated to provide personalized solutions aligned with your vision. Read on to discover about your self-employed retirement plan options in Knoxville, TN, or reach out to Correct Capital at 877-930-401k or contact us online to speak with a self-employed financial advisor in Knoxville, TN today.
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Why Knoxville, TN Self-Employed Individuals Should Have a Retirement Plan
Retirement plans for self-employed individuals help prepare you for the future, they also deliver tangible benefits today. Offering flexibility in contributions to considerable tax savings, consulting a financial advisor in Knoxville, TN helps you design your retirement plan to suit your specific needs.
Flexibility That Fits Your Income
If your income changes over time, a plan like a SEP IRA or Solo 401(k) gives you the option to adjust how much you save:
- Customizable Contributions: Save extra during high-income years and cut back when your earnings dip, so your plan fits your current income.
- Roth Options: Choosing a Roth Solo 401(k) lets you settle taxes at the time of contribution, enabling you to withdraw without tax penalties in the future—an advantageous choice if you believe your tax rate is likely to rise in the future.
Save Money on Taxes
Plans designed for the self-employed provide powerful tax benefits:
- Tax-Deductible Contributions: Contributions to a Solo 401(k) reduce what you owe in taxes, helping you keep more of your hard-earned money.
- Tax-Deferred Growth: Investments grow tax-free until withdrawal, providing your money more time to grow.
- State-Specific Incentives: Based on your location, you may be eligible for additional credits as a self-employed individual. These state-level incentives help make these plans even more valuable.
- Retirement Savings Contributions Credit (Saver’s Credit): Those who meet the requirements can apply for 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 isn’t only about how much you save—it’s also linked to the way you invest:
- Diversified Portfolios: Spreading your investments across varied asset classes like stocks and bonds can help mitigate financial risk while continuing to build your savings.
- Emergency Back-Up: Supplementing your retirement savings with a financial buffer for your business helps you avoid using your retirement funds during tough times and incurring penalties.
Plan for the Future of Your Knoxville, TN Business
A thoughtful retirement strategy also helps you think through what’s next with your Knoxville, TN business:
- Selling Your Business: If you’re planning to sell, plans like SEP IRAs or Solo 401(k)s stay in your name and won’t be included in the sale. These accounts ensure the financial stability you’ll need during retirement. It’s important to note that while selling your business results in a capital gain, deposits into these plans are subject to yearly maximums (e.g., up to $7,000 for IRAs or as much as $70,000 for Solo 401(k)s, including catch-up contributions, depending on plan details).
- Minimizing Taxes: Making the most of retirement savings minimizes the taxes you are required to pay when you pass on your business.
- Succession Planning: For those winding down or handing over their business, your retirement accounts offer the funds you need through the transition. You might want to work with a financial advisor who specializes in succession planning and retirement accounts to minimize tax burdens on the sale.
With the proper savings strategy, you gain control over your financial future, lower your tax bill, and build a strong framework for both your retirement and your business goals.
Why Start a Self-Employed Retirement Plan in Knoxville, TN Now?
There’s no denying that time is one of the most crucial resources when it comes to saving for retirement. Starting early not only helps you grow a more substantial retirement fund but also minimizes the stress of playing catch-up as you get older. This is why it makes sense to begin today:
The Cost of Waiting
Waiting to start your retirement fund could lead to a significant impact on the total you’ll have when you reach retirement age. The biggest reason is compound interest—the concept where your investments generate earnings, and those returns, subsequently, accumulate even more returns. The greater time span your money has to grow, the larger the impact of this growth.
Example: Alex and Taylor are both self-employed professionals. Both of them want to save $500,000 for retirement by age 65:
- Alex initiates savings of $5,000 annually at age 30.
- Taylor waits 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 contributes $195,500 but only ends up with $474,367.78*.
How Early Contributions Grow
Small, consistent savings contributed over time can lead to significant growth. Take a look at this scenario showing the impact of compounding:
- Starting at age 25: If you invest $200 per month in a retirement plan with an projected return of 7%, you’ll accumulate $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 shortfall of over $260,000, all because of a 10-year delay.
Starting sooner, the less you need to save each year to achieve your retirement goals.
*These calculations are estimates calculated using NerdWallet’s Compound Interest Calculator, based on a 7% annual return. Annual deposits were multiplied by the number of years to estimate total contributions. This information is intended as illustrative examples and cannot predict actual future outcomes. Outcomes may change based on factors such as market conditions, fees, and your unique situation. Always consult a financial advisor for custom recommendations.
Take Control of Your Financial Future
If you’re self-employed in Knoxville, TN, it can be tempting to prioritize reinvesting in your business over saving for retirement. Even so, beginning a plan now allows you to:
- Leverage tax-free future growth or penalty-free withdrawals later on.
- Enjoy contribution flexibility that change with your cash flow.
- Establish a financial cushion that ensures stability, no matter how your business changes.
Getting started now, the less you’ll need to worry about playing catch-up later in life. Saving for retirement now means gaining control over your financial future and allowing yourself the ability to concentrate on your objectives—both for your retirement years and your Knoxville, TN business.
Types of Self-Employed Retirement Plans
There are several retirement savings options available for self-employed individuals in Knoxville, TN, each providing its own advantages and considerations. A financial advisor can help you learn about the benefits and drawbacks of each plan and identify the one best suited for your needs. Generally speaking, your self-employed retirement plan options in Knoxville, TN are:
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 conventional 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 using income already taxed, but retirement withdrawals that qualify, including earnings, are not taxed. In both cases, withdrawals come without penalties 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 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 offers a way to save for retirement that enables self-employed individuals to contribute a percentage of their net earnings. Contributions can only be made by an employer, so, as a self-employed individual, you (the employee) cannot make additional contributions above the 25% you (the employer) already contributed. 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 fixed dollar figure or a percentage of wages to employee accounts. A SEP IRA may be ideal for companies with fluctuating revenue streams. In contrast to some alternatives, SEP IRAs lack expensive setup or ongoing fees.
SEPs function like conventional IRAs, where contributions are made with pre-tax money and retirement distributions are taxable.
Eligibility: Employers of any type, including self-employed individuals can open a SEP.
Contribution Limits: Contribution limits for employees in a SEP IRA are capped at the lower of:
- 25% of compensation, or
- $70,000 for 2025
As a self-employed person, the amount eligible to be contributed is based on a special calculation.
Solo 401(k)
Plan Overview: The Solo 401(k), sometimes referred to as an Individual 401(k) or one-participant 401(k) plan, is a savings option for the self-employed designed for companies that have no employees or where the only employee is a spouse. These plans are similar to employer-sponsored 401(k) plans, and allow you to contribute as both an employer and an employee with pre-tax money. This provides more savings versus SEPs or IRAs; however, the extra savings options may be offset by more constrained investment avenues. With this type of plan, you can make either traditional or Roth deferrals, which share the same tax benefits as their IRA contribution counterparts.
Eligibility: Solo 401(k)s are available solely to business owners and their spouses are eligible to open 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:
- Elective deferrals (as an employee) of up to 100% of your earned income from self-employment, subject to the annual contribution limit. The contribution limits for 2025 include $23,500, or $31,000 for those aged 50 and above, or $34,750 for individuals aged 60-63 in 2025.
- Profit-sharing contributions (as an employer) must not surpass 25% of your net earnings from self-employment, which is your net profit minus half of your self-employment tax and the employee contributions you made.
Total contributions are capped at $70,000, or $77,500 for individuals aged 50+ (for 2025), $81,250 for individuals turning 60-63 in 2025.
Individual Defined Benefit Plan
Plan Overview: Defined benefit plans represents a type of retirement plan that provides a pre-established payout to self-employed individuals upon retirement. Unlike defined contribution plans mentioned above, investment returns don’t affect the payout, but lets individuals clearly understand the precise amount they'll receive in retirement. This option is best suited for higher-income professionals who are focused on saving a significant sum for retirement and are prepared to contribute larger deposits. Contributions are tax deferred, and withdrawals incur taxes as income during retirement.
Eligibility: Self-employed professionals running an owner-only business or with a small staff of under five may establish an individual defined benefit plan, but it's generally recommended for those over 50 who make $250,000 or more annually. Generally, good candidates for defined benefit plans are:
- Entrepreneurs who want to invest more than $70,000 (or $77,500 for those aged 50+)
- Businesses currently investing 3-4% but are open to increasing contributions
- Companies 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 determined by your earnings, age, and retirement objectives. Contribution limits are adjusted each year.
The Importance of a Financial Advisor in Knoxville, TN for Your Self-Employed Retirement Plan
Working with a financial advisor in Knoxville, TN specialized in self-employed retirement plans can be an important asset for self-employed individuals. They bring the skills needed to understand the intricacies of saving for retirement and design a tailored strategy that aligns with your goals. A financial advisor in Knoxville, TN will assess where you stand financially, determine how much risk you’re comfortable with, and assist you in making informed decisions 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 your needs even further
- Create a written plan that complies with IRS regulations
- Set up an asset trust plan
- Ensure you comprehend the plan's terms
- Review and modify your plan when necessary
- Offer continued financial education and guidance as you continue on the road to retirement
- Maximize what you receive in retirement by making the most of your social security
Self-Employed Retirement Plans in Knoxville, TN: Correct Capital's Process
Entrepreneurs in Knoxville, TN who don’t have the time or expertise to oversee their own retirement planning independently can become overwhelmed when faced with their options. At Correct Capital, our Knoxville, TN financial advisors take on the majority of your savings plan setup for you, and strive to ensure meeting your financial objectives as straightforward as possible for you. We are here to assist you in setting up your self-employed retirement plan in a quick, four-step process:
- Schedule a Call: A quick 20-minute call is all it takes, 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 significant effort on your part.
- Gather Information: If we both decide to move forward, we'll ask for 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 that aligns with your goals.
- Review Your Plan: When we finalize a plan using the information you provide, we'll schedule a meeting and review your plan in detail to ensure you understand it and show how it aligns with your goals.
- Implementation and Monitoring: After we agree on your plan, we'll put everything in place so you can start saving. Throughout our relationship, we'll check in and review your strategy to make sure it remains aligned with your goals.
Our Knoxville, TN financial advisors and retirement plan consultants serve as fiduciary advisors, which means they are legally and ethically bound to do what's in your best interest.
Other financial advisory services we offer in Knoxville, TN 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 Knoxville, TN
Your business isn't "just a business" to you, and your Knoxville, TN financial advisors need to offer more than basic financial recommendations. With Correct Capital, we take the time to get to know our clients and their businesses to create customized self-employed retirement plans. To every client in Knoxville, TN, we provide our I.O.U. promise: all guidance we provide will be independent, objective, and unbiased. To begin on your self-employment retirement plan, call Correct Capital today at 877-930-401k or contact us online.
