Self-employed retirement plans Little Rock, AR. The independence of running your own company in Little Rock, AR is one of the best aspects of being self-employed. However, this freedom sometimes brings with potential drawbacks, particularly when it comes to retirement savings, since you don't have the benefit of retirement programs through an employer. Only 13% of self-employed individuals have a workplace retirement plan, but many could benefit from understanding their retirement options. In addition to having a financially stable retirement, working with a financial advisor in Little Rock, AR to create your self-employed retirement plan delivers significant tax advantages that allow your business to grow and succeed.
Few Little Rock, AR investment consulting and retirement planning firms are as attuned to the requirements of small business owners better than Correct Capital. The father of our founder was a small business owner himself (learn more about our story here), and Correct Capital take pride in supporting entrepreneurs with their retirement planning needs. We recognize that your goals for your business and retirement aren’t limited to simple financial figures, and we work tirelessly to offer tailored solutions aligned with your vision. Keep reading to learn more 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 consult with a self-employed financial advisor in Little Rock, AR today.
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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 immediate benefits today. From flexible contributions to significant tax savings, partnering with a financial advisor in Little Rock, AR helps you create 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) provides the option to modify how much you save:
- Customizable Contributions: Save extra during profitable years and scale back when revenues are down, so that your plan works with your current income.
- Roth Options: A Roth Solo 401(k) lets you pay taxes on contributions now, enabling you to withdraw without tax penalties in the future—an advantageous choice if you believe your tax rate to be higher in the future.
Save Money on Taxes
Retirement plans for self-employed individuals offer powerful tax benefits:
- Tax-Deductible Contributions: Contributions to a Solo 401(k) shrink your tax liability, allowing you to keep more of your income.
- Tax-Deferred Growth: Your savings grow untaxed until withdrawn, which gives your money more time to grow.
- State-Specific Incentives: Based on your location, you may be eligible for extra deductions as a business owner. These regional 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 contributed a retirement plan, further reducing your tax bill even more.
Protect Your Savings With Smart Investments
Creating a stable future requires more than how much you save—it’s also linked to the way you invest:
- Diversified Portfolios: Distributing your investments across varied asset classes like stocks and bonds is a smart way to mitigate financial risk while continuing to build your savings.
- Emergency Back-Up: Pairing your retirement plan with a business emergency fund ensures you don’t using your retirement funds during challenging periods and incurring penalties.
Plan for the Future of Your Little Rock, AR Business
Retirement planning also helps you think through 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 don’t transfer with the business. These accounts can provide the reliable income you’ll need later on. Keep in mind that while selling your business results in a capital gain, retirement plan contributions are capped at annual limits (e.g., up to $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 helps lower the taxes you are required to pay when you sell your business.
- Succession Planning: For those winding down or handing over their business, your retirement accounts provide financial security as you make this shift. You can also seek advice from a financial advisor with expertise in succession and retirement planning to reduce taxes associated with the transaction.
With the proper savings strategy, you can take control of 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?
Time is one of the most important factors for building your retirement fund. Starting early not only helps you grow a bigger financial cushion but also minimizes the stress of catching up later in life. This is why it makes sense to begin today:
The Cost of Waiting
Delaying your retirement savings may cause a major impact on the amount you’ll have when you retire. The biggest reason is compound interest—the powerful process where your investments grow, and those returns, then, generate even more returns. The greater time span your money has to grow, the more significant the benefit 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 puts away $7,500 annually to catch up.
By age 65, using a projected 7% annual return:
- Alex contributes $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
Small, consistent savings contributed over time can lead to substantial growth. Take a look at this scenario showing the effect 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: Contributing the same $200 per month leaves you with only $235,412.97* by age 65—a gap of over $260,000, all because of a 10-year delay.
The earlier you begin, the less you need to save each year to reach your retirement goals.
*The figures provided in this example are based on estimates derived from NerdWallet’s Compound Interest Calculator, based on a 7% annual return. These calculations involved multiplying yearly deposits by the years contributed. The scenarios provided are for illustrative purposes only and are not a promise of future results. Your individual results may differ due to elements like market conditions, fees, and individual circumstances. Be sure to speak with a financial advisor for guidance tailored to your needs.
Take Control of Your Financial Future
If you’re self-employed in Little Rock, AR, it might seem easier to prioritize reinvesting in your business instead of saving for retirement. Even so, beginning a plan now enables you to:
- Take advantage of tax-deferred growth or withdrawals without taxes later on.
- Benefit from adjustable savings that change with your income.
- Build a financial cushion that ensures stability, no matter how your business evolves.
Getting started now, the less you’ll have to worry about making up for lost time later in life. Saving for retirement now means managing your financial future and giving yourself the opportunity to concentrate on your goals—both for your golden years and your Little Rock, AR business.
Types of Self-Employed Retirement Plans
There are several retirement savings options designed for those working for themselves in Little Rock, AR, each providing its own benefits and trade-offs. A financial advisor can help you understand the benefits and drawbacks of each choice and identify the one most suitable for your needs. Typically, your self-employed retirement plan options in Little Rock, AR are:
Traditional or Roth IRA
Plan Overview: IRAs, or Individual Retirement Accounts, are long-term savings plans that include key tax perks. In a traditional IRA, contributions are typically tax-deductible, and investment earnings grow tax-deferred, 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 not taxed. In both types of accounts, withdrawals don’t incur penalties provided you are at least 59½.
Eligibility: Unlike 401(k)s, which are employer-sponsored, IRAs, including traditional and Roth options are available to anyone with an earned income.
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: The Simplified Employee Pension IRA serves as a retirement savings option that permits entrepreneurs to save a percentage of their net business profits. Contributions must come from 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, it's required to contribute the same amount for them as you do for yourself. You may choose to contribute a flat-dollar amount or a percentage of wages to employee accounts. A SEP IRA works well for entrepreneurs facing fluctuating revenue streams. Compared to other retirement options, SEP IRAs don’t have costly startup or administrative fees.
SEPs function like traditional IRAs, where the contributions are tax-deferred and withdrawals are taxed as income.
Eligibility: Employers of any type, including self-employed individuals can set up 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
If you’re self-employed, the amount eligible to be contributed 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 savings option for the self-employed intended for businesses without employees or if the only employee is your spouse. These plans operate much like standard 401(k) plans, and let you make contributions as both an employee or an employer with pre-tax money. This offers more savings compared to SEPs or IRAs; however, the increased savings potential often come with more limited investment options. 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: 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: 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-employment income, up 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 individuals aged 60-63 in 2025.
- Contributions as an employer (as an employer) cannot exceed 25% of your net self-employment income, which is defined as 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 if you're over age 50 (as of 2025), $81,250 for individuals turning 60-63 in 2025.
Individual Defined Benefit Plan
Plan Overview: A defined benefit plan offers a structured retirement solution that provides a fixed, predetermined benefit to business owners upon retirement. In contrast to the plans discussed earlier, investment returns don’t affect the payout, but lets individuals clearly understand exactly how much they'll have in retirement. This strategy is ideal for higher-income entrepreneurs who want to save a large amount for retirement and can commit to making substantial contributions. Contributions offer tax-deferred growth, and withdrawals are taxable as income in retirement.
Eligibility: Self-employed professionals running an owner-only business or with less than five employees can open an individual defined benefit plan, but it's generally recommended for people above age 50 who earn at least $250,000 a year. Generally, good candidates for defined benefit plans include:
- Entrepreneurs who desire to contribute 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
- Entrepreneurs over age 40 who desire to "catch up" or boost savings within a short timeframe
Contribution Limits: The maximum allowable contribution must be determined by an actuary using your income, age, and retirement goals. Allowable contributions change annually.
The Importance of a Financial Advisor in Little Rock, AR for Your Self-Employed Retirement Plan
A financial advisor in Little Rock, AR experienced with retirement plans for the self-employed is an essential partner for entrepreneurs. They offer the knowledge to assist understand the intricacies of saving for retirement and craft a personalized approach that reflects your aspirations. An expert in your area will evaluate your financial situation, 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 includes:
- Help you choose a plan that suits your unique requirements
- Tailor the plan to your specific situation even further
- Adopt a written plan as required by IRS rules
- Organize a trust plan to manage your assets
- Ensure you comprehend the plan's terms
- Track and fine-tune your plan to keep it aligned with your goals
- Deliver continuous support and financial insights to help you navigate your retirement journey
- Maximize what you receive in retirement by maximizing your social security benefits
Self-Employed Retirement Plans in Little Rock, AR: Correct Capital's Process
Entrepreneurs in Little Rock, AR who don’t have the time or expertise to manage their self-employed retirement plan independently may end up overwhelmed when faced with their options. With Correct Capital, our Little Rock, AR financial advisors take on the majority of your savings plan setup for you, and strive to ensure meeting your future savings targets as hassle-free as possible for you. We can help you get set 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 determine if our services align for you and your business. This initial call allows us to get a sense of your goals with zero commitment or extensive time commitment on your part.
- Gather Information: Should we agree to proceed, we'll request information, including whether you have employees, your current financial situation, and your retirement goals. This enables us to craft a personalized strategy that aligns with your goals.
- Review Your Plan: When we finalize a plan using the information you provide, we'll sit down with you and go over your plan in detail to ensure you understand it and explain its fit to your circumstances.
- Implementation and Monitoring: When we finalize on your plan, we'll implement the necessary steps so you can start saving. Over the course of our partnership, we'll have regular meetings and monitor your plan to make sure it remains aligned with your goals.
Our Little Rock, AR financial advisors and retirement plan consultants act as fiduciary advisors, meaning 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:
- 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
You don't see your business as "just a business", and your Little Rock, AR financial advisors should provide more than just good financial guidance. With Correct Capital, we focus on building a relationship with our clients and their businesses to deliver personalized self-employed retirement plans. To every client in Little Rock, AR, we provide our I.O.U. promise: all of the advice you get from us will be independent, objective, and unbiased. To begin on your self-employment retirement plan, reach out to Correct Capital at 877-930-401k or contact us online.
