Self-employed retirement plans Little Rock, AR. The independence of being your own boss in Little Rock, AR is one of the best aspects of having a self-directed career. That said, this freedom can come with certain challenges, especially 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, although many would be better off understanding their retirement options. In addition to having a financially stable retirement, partnering with a financial advisor in Little Rock, AR to create your self-employed retirement plan offers significant tax advantages that enable both you and your business to thrive.
Few Little Rock, AR financial advisory and retirement planning firms truly grasp the challenges faced by entrepreneurs as well as Correct Capital. The father of our founder was a small business owner himself (learn more about our story here), and we have a rich history of assisting business owners in their retirement planning needs. We recognize that your business and retirement aspirations go far beyond basic numbers, and we are dedicated to offer customized solutions that reflect your objectives. Read on to discover about your self-employed retirement plan options in Little Rock, AR, or reach out to 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 are essential for preparing you for the future, they also deliver real benefits today. From flexible contributions to considerable tax savings, partnering with a financial advisor in Little Rock, AR enables you to customize your retirement plan to align with your specific needs.
Flexibility That Fits Your Income
When your earnings vary annually, a plan like a SEP IRA or Solo 401(k) gives you the option to tailor how much you save:
- Customizable Contributions: Save extra during successful years and scale back when revenues are down, so your plan fits your cash flow.
- Roth Options: A Roth Solo 401(k) lets you handle taxes upfront, enabling you to withdraw your savings tax-free down the road—an advantageous choice if you believe your tax rate will increase in the future.
Save Money on Taxes
Self-employed retirement plans provide powerful tax benefits:
- Tax-Deductible Contributions: Contributions to a SIMPLE IRA shrink your tax liability, helping you keep more of your hard-earned money.
- Tax-Deferred Growth: Investments grow tax-free until withdrawal, which gives your money more time to compound.
- State-Specific Incentives: Depending on where you live, you might access extra credits as a sole proprietor. These state-level incentives make these plans even more beneficial.
- Retirement Savings Contributions Credit (Saver’s Credit): Qualified participants can apply for a credit of up to 50% of the first $2,000 they contribute a retirement plan, helping to lower 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 about how you invest:
- Diversified Portfolios: Allocating your investments across varied stocks, bonds, and other assets is a smart way to reduce risk while helping to grow your retirement fund.
- Emergency Back-Up: Supplementing your retirement savings with a dedicated business safety net ensures you don’t dipping into savings during financial hardships and risking extra costs.
Plan for the Future of Your Little Rock, AR Business
Retirement planning also helps you prepare for what’s next with your Little Rock, AR business:
- Selling Your Business: For those considering a sale, retirement accounts like SEP IRAs and Solo 401(k)s stay in your name and won’t be included in the sale. These accounts can provide the financial stability you’ll need later on. It’s important to note that while selling a business often leads to a capital gain, deposits into these plans are restricted by contribution limits (e.g., as much as $7,000 for IRAs or a maximum of $70,000 for Solo 401(k)s, factoring in catch-up contributions, depending on plan details).
- Minimizing Taxes: Using retirement contributions wisely minimizes the taxes you might face when you transfer your business.
- Succession Planning: For those winding down or handing over their business, your retirement savings offer financial security as you make this shift. You might want to work with a financial advisor who specializes in succession planning and retirement accounts to reduce taxes associated with the transaction.
With the right retirement plan, you gain control over your financial future, cut down your tax obligations, and create a strong framework 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. Starting early not only allows you to build a larger nest egg but also minimizes the stress of catching up later in life. Here’s why it is beneficial to start now:
The Cost of Waiting
Waiting to start your retirement fund can have a substantial impact on the total you’ll have when you reach retirement age. The main reason is compound interest—the concept where your investments generate earnings, and those returns, subsequently, earn even more returns. The more time your money has to grow, the more significant the impact of this compounding process.
Example: Alex and Taylor are both self-employed individuals. They each aim 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 catch up.
By age 65, assuming 7% annual return:
- Alex contributes $180,000 and ends up with $691,184.39*.
- Taylor puts in $195,500 but achieves a total of only $474,367.78*.
How Early Contributions Grow
Regular, modest investments made consistently often create substantial growth. Consider this example showing the effect of compound interest:
- Starting at age 25: Putting aside $200 per month in a retirement plan with an expected yearly growth rate of 7%, you’ll grow to approximately $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 difference of over $260,000, all because of a 10-year delay.
Saving early, the less effort required each year to meet your retirement goals.
*The figures provided in this example are estimates generated with NerdWallet’s Compound Interest Calculator, based on 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 cannot predict actual future outcomes. Actual results may vary due to variables including market conditions, fees, and your unique situation. We recommend consulting a financial advisor for personalized advice.
Take Control of Your Financial Future
For self-employed individuals in Little Rock, AR, it is often the case that you put more emphasis on reinvesting in your business over saving for retirement. However, starting a plan now enables you to:
- Leverage tax-free future growth or tax-free withdrawals in the future.
- Take advantage of flexible contributions that align with your cash flow.
- Create a safety net that provides security, no matter how your business changes.
Starting early, the less you’ll need to worry about making up for lost time later in life. Building your retirement savings today means managing your financial future and allowing yourself the ability to concentrate on your dreams—both for your golden years and your Little Rock, AR business.
Types of Self-Employed Retirement Plans
There are several retirement savings options available for self-employed individuals in Little Rock, AR, each offering its own benefits and trade-offs. A financial advisor is available to help you learn about 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 Little Rock, AR consist of:
Traditional or Roth IRA
Plan Overview: IRAs, or Individual Retirement Accounts, are long-term savings plans that include key tax perks. In a standard IRA, you can usually deduct your contributions from taxable income, and earnings grow without immediate taxation, but retirement distributions are taxed as income. In contrast, with Roth IRAs, you contribute from post-tax earnings, but eligible distributions during retirement, including earnings, are exempt from taxes. In both types of accounts, withdrawals don’t incur penalties if you are at least 59½.
Eligibility: While many retirement plans, such as 401(k)s, are tied to employment, traditional and Roth IRAs are accessible for individuals with an earned 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 allows those who are self-employed to save a percentage of their net business profits. Contributions can only be made by an employer, so, as a self-employed individual, you (the employee) would not be able to contribute beyond the 25% you (the employer) already contributed. If you have employees, you are obligated to contribute the same amount for them as you do for yourself. It's your choice whether to contribute a flat-dollar amount or a percentage of wages to employee accounts. A SEP IRA works well for companies with fluctuating revenue streams. Unlike other plans, SEP IRAs lack expensive setup or ongoing fees.
SEPs work like standard IRAs, where you contribute pre-tax dollars and retirement distributions are taxable.
Eligibility: Any employer, including the self-employed can open a SEP.
Contribution Limits: Contribution limits for employees in a SEP IRA must not exceed:
- 25% of compensation, or
- $70,000 for 2025
If you’re self-employed, 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 savings option for the self-employed meant for companies that have no employees or when the sole employee is your spouse. This type of plan are similar to traditional employer-managed 401(k) plans, and enable contributions as both the employer and the employee with pre-tax money. This provides more savings than SEPs or IRAs; however, the additional opportunities often come with more limited investment options. Using a solo 401(k), 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 may establish 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:
- Elective deferrals (as an employee) of up to 100% of your self-employed earnings, subject to the annual contribution limit. For 2025, the limits will be $23,500, or $31,000 if you're over 50, or $34,750 for those who turn 60-63 in 2025.
- Profit-sharing contributions (as an employer) cannot exceed 25% of your adjusted 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 if you attain age 60-63 in 2025.
Individual Defined Benefit Plan
Plan Overview: The defined benefit plan represents a type of retirement plan that delivers a fixed, predetermined benefit to entrepreneurs upon retirement. In contrast to the plans discussed earlier, investment returns don’t affect the payout, but allows self-employed individuals to know what they'll have in retirement. This option is best suited for high-earning entrepreneurs who are focused on saving a substantial amount for retirement and are prepared to contribute larger deposits. Contributions grow tax-free until withdrawal, and withdrawals incur taxes as income during retirement.
Eligibility: Self-employed professionals running an owner-only business or employing fewer than five people are eligible to open an individual defined benefit plan, but it's most commonly advised for those over 50 who generate a minimum of $250,000 yearly. In most cases, good candidates for defined benefit plans include:
- Partners or owners who want to invest more than $70,000 (or $77,500 if over age 50)
- Businesses currently investing 3-4% but are open to increasing contributions
- Businesses that have demonstrated consistent profit patterns
- Entrepreneurs over age 40 who wish to accelerate savings or accelerate the retirement savings
Contribution Limits: The contribution limit 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 Little Rock, AR for Your Self-Employed Retirement Plan
Partnering with an advisor in Little Rock, AR experienced with retirement plans for the self-employed is an important asset for entrepreneurs. They have the expertise to help understand the intricacies of saving for retirement and craft a tailored strategy that matches your objectives. Your advisor in Little Rock, AR 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. Part of what we do for you involves:
- Assist in selecting a plan that best fits your needs and goals
- Customize the plan to your needs even further
- Create a written plan in accordance with IRS guidelines
- Arrange a trust plan for assets
- Ensure you comprehend the plan's terms
- Review and modify your plan to keep it aligned with your goals
- Provide ongoing education and advice to help you navigate your retirement journey
- Increase your retirement income 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 lack the time, interest, or knowledge to oversee their self-employed retirement plan on their own may end up overwhelmed when faced with their choices. Through our team at Correct Capital, our Little Rock, AR financial advisors handle the lion's share of your retirement strategy for you, working to make meeting your retirement goals 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: A quick 20-minute call is all it takes, a member of our advisor team will assess if we're a good fit for you and your business. This short conversation lets us get a sense of your goals with no obligation or significant effort on your part.
- Gather Information: Once we mutually decide to continue, we'll gather information, including whether you have employees, your current financial situation, and your retirement goals. This allows us to put together a personalized strategy suited specifically for your needs.
- Review Your Plan: Once we've developed a plan based on the information you provide, we'll meet with you and go over your plan in detail to help you fully grasp it and explain its fit to your circumstances.
- Implementation and Monitoring: When we finalize on your plan, we'll set everything up so you can begin contributing. Over the course of our partnership, we'll have regular meetings and monitor your plan to keep it tailored to your evolving circumstances.
Our Little Rock, AR financial advisors and retirement plan consultants serve as fiduciary advisors, which means they are committed by law and ethics to act in your best interest.
Other financial advisory services we offer in Little Rock, AR include:
- Family Wealth Planning
- 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
Call Correct Capital for Your Self-Employed Retirement Plan in Little Rock, AR
You don't see your business as "just a business", and your Little Rock, AR financial advisors should provide more than basic financial recommendations. With Correct Capital, we take the time to get to know our clients and their businesses to provide tailored self-employed retirement plans. To every client in Little Rock, AR, we provide 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, contact Correct Capital now at 877-930-401k or contact us online.
