Self-employed retirement plans Little Rock, AR. The independence of running your own company in Little Rock, AR is one of the greatest advantages of working for yourself. Even so, this independence can come with a lack of security, notably when it comes to planning for retirement, as you don't have the benefit of employer-sponsored retirement plans. Only 13% of self-employed individuals have a workplace retirement plan, yet countless could benefit from understanding their retirement options. In addition to enjoying a financially stable retirement, partnering with a financial advisor in Little Rock, AR to create your self-employed retirement plan can provide significant tax advantages that help both you and your business to thrive.
Few Little Rock, AR investment consulting and retirement planning firms are as attuned to the requirements of self-employed individuals quite like Correct Capital. Our company’s founder grew up with a father who was a small business owner himself (learn more about our story here), and our firm have a rich history of supporting entrepreneurs with their retirement planning needs. We recognize that your business and retirement aspirations aren’t limited to simple financial figures, and we work tirelessly to offer personalized solutions to meet your unique goals. Continue exploring to find out about your self-employed retirement plan options in Little Rock, AR, 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 Little Rock, AR today.
Why Little Rock, AR Self-Employed Individuals Should Have a Retirement Plan
Retirement plans for self-employed individuals help prepare you for the future, they also offer real benefits today. Offering flexibility in contributions to significant tax savings, consulting a financial advisor in Little Rock, AR enables you to create your retirement plan to fit your unique financial situation.
Flexibility That Fits Your Income
If your income changes over time, a plan like a SEP IRA or Solo 401(k) gives you the freedom to modify how much you save:
- Customizable Contributions: Contribute more during profitable years and scale back when your earnings dip, so your plan aligns with your financial situation.
- Roth Options: A Roth Solo 401(k) lets you pay taxes on contributions now, allowing you to withdraw without tax penalties in the future—a smart decision if you expect your tax rate will increase in the future.
Save Money on Taxes
Self-employed retirement plans offer valuable tax benefits:
- Tax-Deductible Contributions: Contributions to a Solo 401(k) lower your taxable income, allowing you to keep more of your hard-earned money.
- Tax-Deferred Growth: Investments grow tax-free until withdrawal, which gives your money more time to accumulate.
- State-Specific Incentives: In some states, you might access additional tax breaks as a sole proprietor. These regional incentives can make these plans even more beneficial.
- Retirement Savings Contributions Credit (Saver’s Credit): Those who meet the requirements can claim a tax credit of up to 50% of the first $2,000 put into a retirement plan, helping to lower 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 mitigate financial risk while helping to grow your retirement fund.
- Emergency Back-Up: Combining your retirement strategy and a dedicated business safety net helps you avoid tapping into your nest egg during financial hardships and incurring penalties.
Plan for the Future of Your Little Rock, AR Business
A thoughtful retirement strategy enables you to plan ahead for what’s next with your Little Rock, AR business:
- Selling Your Business: For those considering a sale, accounts such as SEP IRAs or Solo 401(k)s remain your personal assets and are not part of the sale. These savings offer the steady income you’ll need during retirement. Remember that while the sale of a business usually creates a capital gain, retirement plan contributions are restricted by contribution limits (e.g., a maximum of $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: Strategically planning your contributions helps lower the taxes you might face when you transfer your business.
- Succession Planning: If you’re passing the business on, your nest egg ensure a stable foundation during the change. You may also work with a financial advisor with expertise in succession and retirement planning to reduce taxes associated with the transaction.
With the best-fit retirement strategy, you manage your financial future, cut down your tax obligations, and create a solid base for both your retirement and your business goals.
Why Start a Self-Employed Retirement Plan in Little Rock, AR Now?
There’s no denying that time is one of the most valuable resources when it comes to saving for retirement. Beginning sooner rather than later not only allows you to build a larger nest egg but also reduces the financial burden of saving aggressively in the future. Here’s why it is beneficial to start now:
The Cost of Waiting
Waiting to start your retirement fund can have a major impact on the total you’ll have when you reach retirement age. The primary reason is compound interest—the powerful process where your investments generate earnings, and those returns, then, earn even more returns. The longer your money has to grow, the more significant the impact of this compounding process.
Example: Taylor and Alex are both self-employed individuals. They each aim to save $500,000 for retirement by age 65:
- Alex starts saving $5,000 annually at age 30.
- Taylor waits until age 40 but saves $7,500 annually to make up for lost time.
By age 65, using a projected 7% annual return:
- Alex puts in $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 contributed over time often create significant growth. Consider this example showing the impact of compound interest:
- Starting at age 25: By investing $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: Investing the same $200 per month leaves you with only $235,412.97* by age 65—a shortfall of over $260,000, all because of a 10-year delay.
The earlier you begin, the lower your annual savings needs each year to meet your retirement goals.
*The numbers shown in this scenario represent estimates generated with NerdWallet’s Compound Interest Calculator, assuming a 7% annual return. Annual deposits were multiplied by the number of years to estimate total contributions. The scenarios provided are meant to provide general guidance and do not guarantee future performance. Actual results may vary depending on variables including market conditions, fees, and individual circumstances. We recommend consulting a financial advisor for custom recommendations.
Take Control of Your Financial Future
If you’re self-employed in Little Rock, AR, it is often the case that you prioritize reinvesting in your business instead of saving for retirement. Even so, starting a plan now allows you to:
- Leverage tax-deferred growth or tax-free withdrawals later on.
- Benefit from adjustable savings that align with your earnings.
- Establish a long-term safety measure that offers peace of mind, no matter how your business evolves.
Starting early, the less you’ll be required to worry about playing catch-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 dreams—both for your future retirement and your Little Rock, AR business.
Types of Self-Employed Retirement Plans
A variety of retirement savings options designed for entrepreneurs in Little Rock, AR, each providing its own advantages and considerations. A financial advisor will guide you to learn about the benefits and drawbacks of each option and choose the one ideal for your needs. Generally speaking, your self-employed retirement plan options in Little Rock, AR include:
Traditional or Roth IRA
Plan Overview: Individual Retirement Accounts (IRAs), as explained here, represent financial tools for retirement that offer key tax perks. In a standard IRA, you can usually deduct your contributions from taxable income, and investment earnings grow tax-deferred, but withdrawals in retirement are taxable. In contrast, with Roth IRAs, you contribute are made with after-tax income, but eligible distributions during retirement, including earnings, are not taxed. In both cases, withdrawals come without penalties provided you are at least 59½.
Eligibility: Unlike plans linked to your job, traditional and Roth IRAs are accessible for individuals with an earned income.
Contribution Limits: For 2025, annual contribution limits for IRAs remain $7,000, or $8,000 if you qualify for catch-up contributions.
Simplified Employee Pension Plan (SEP IRA)
Plan Overview: The Simplified Employee Pension IRA is a retirement plan that permits entrepreneurs to contribute a percentage of their net earnings. Contributions can only be made by an employer, so, as a sole proprietor, you (the employee) are limited to contributions from the employer role 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 have the flexibility to contribute a set monetary value or a percentage of wages to employee accounts. A SEP IRA works well for entrepreneurs facing cycles of high revenue and low revenue. Unlike other plans, SEP IRAs don’t have costly startup or administrative 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 establish 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: A Solo 401(k) plan, commonly known as an Individual 401(k) or one-participant 401(k) plan, is a self-employed retirement plan meant for businesses without employees or if the only employee is your spouse. This type of plan operate much like employer-sponsored 401(k) plans, and enable contributions as both an employee or an employer with pre-tax money. This allows for more savings compared to SEPs or IRAs; however, the extra savings options can be balanced by more restricted investment choices. In a solo 401(k) plan, you can make either traditional or Roth deferrals, which share the same tax benefits as their IRA contribution counterparts.
Eligibility: Only 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 are allowed to make two types of contributions:
- Deferrals as an employee of up to 100% of your earned income from self-employment, capped at the annual contribution limit. The contribution limits for 2025 include $23,500, or $31,000 if you are 50 or older, or $34,750 if you attain age 60-63 in 2025.
- Contributions as an employer (as an employer) are limited to 25% of your adjusted self-employment income, which is defined as net profit minus half of your self-employment tax and the elective deferrals you made.
Your combined contributions must not surpass $70,000, or $77,500 for those aged 50 and older (in 2025), $81,250 for individuals turning 60-63 in 2025.
Individual Defined Benefit Plan
Plan Overview: The defined benefit plan represents a type of retirement plan that delivers a pre-established payout to business owners upon retirement. Unlike defined contribution plans mentioned above, this plan is not influenced by market performance, but enables participants to determine what they'll have in retirement. This strategy is ideal for high-earning entrepreneurs who are focused on saving a large amount for retirement and are willing to make sizeable contributions. Contributions are tax deferred, and withdrawals incur taxes as income upon retirement.
Eligibility: Entrepreneurs operating a solo business or with less than five employees may establish an individual defined benefit plan, but it's generally suggested for people above age 50 who make $250,000 or more annually. Typically, good candidates for defined benefit plans include:
- Partners or owners who aim to deposit more than $70,000 (or $77,500 for those aged 50+)
- Companies already contributing 3-4% but are open to increasing contributions
- Businesses that have demonstrated consistent profit patterns
- Entrepreneurs over age 40 who desire to "catch up" or boost savings within a short timeframe
Contribution Limits: The cap on contributions is calculated by an actuary using your earnings, age, and retirement objectives. Contribution limits are updated yearly.
The Importance of a Financial Advisor in Little Rock, AR for Your Self-Employed Retirement Plan
A financial advisor in Little Rock, AR focused on self-employed retirement strategies serves as an important asset for entrepreneurs. They bring the skills needed to guide you through the challenges of retirement planning and design a customized plan that matches your objectives. An expert in your area will review your finances, understand your risk tolerance, and guide you in selecting the best options 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
- Tailor the plan to fit you personally even further
- Adopt a written plan as required by IRS rules
- 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 to help you navigate your retirement journey
- Maximize what you receive in retirement by making the most of your social security
Self-Employed Retirement Plans in Little Rock, AR: Correct Capital's Process
Little Rock, AR business owners who don’t have the time or expertise to manage their own retirement planning on their own often feel overwhelmed when faced with their options. At Correct Capital, our Little Rock, AR financial advisors manage the bulk of your retirement strategy for you, to help make meeting your retirement goals as easy 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 can help understand if we're suited to your needs for you and your business. This initial call lets us understand what you're looking for with zero commitment or extensive time commitment on your part.
- Gather Information: If we both decide to move forward, we'll ask for information, including your employee count, your existing financial picture, and your future objectives. This helps us create 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 go over your plan thoroughly to make sure it's clear and show how it aligns with your goals.
- Implementation and Monitoring: When we finalize on your plan, we'll put everything in place so you can initiate your savings journey. Over the course of our partnership, we'll have regular meetings and monitor your plan to ensure it stays suited to your needs.
Our Little Rock, AR financial advisors and retirement plan consultants serve as fiduciary advisors, who are obligated to they are committed by law and ethics to prioritize your needs above all else.
Other financial advisory services we offer in Little Rock, AR 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 Little Rock, AR
To you, your business is more than "just a business", and your Little Rock, AR financial advisors should provide more than simply sound financial advice. At Correct Capital, we make it a priority to understand our clients and their businesses to provide tailored self-employed retirement plans. We offer all our Little Rock, AR clients our I.O.U. promise: all guidance we provide will be independent, objective, and unbiased. To take the first step on your self-employment retirement plan, reach out to Correct Capital at 877-930-401k or contact us online.
