Self-employed retirement plans Louisville, KY. The flexibility of being your own boss in Louisville, KY is one of the best aspects of being self-employed. Even so, this flexibility often comes with potential drawbacks, notably regarding building your retirement fund, since you don't have access to a workplace retirement plan. Only 13% of self-employed individuals have a workplace retirement plan, although many should consider exploring their options. In addition to having a more comfortable retirement, seeking advice from a financial advisor in Louisville, KY to establish your self-employed retirement plan can provide significant tax advantages that help both you and your business to thrive.
Few Louisville, KY financial advisory and retirement planning firms understand the needs of small business owners 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 we are deeply experienced in helping businesses with their retirement planning needs. We recognize that your business and retirement aspirations aren’t limited to basic numbers, and we strive to provide customized solutions to meet your unique goals. Continue exploring to find out about your self-employed retirement plan options in Louisville, KY, 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 Louisville, KY today.
Why Louisville, KY Self-Employed Individuals Should Have a Retirement Plan
Retirement plans for self-employed individuals help prepare you for the future, they also provide immediate benefits today. From flexible contributions to significant tax savings, consulting a financial advisor in Louisville, KY allows you to design your retirement plan to fit your unique financial situation.
Flexibility That Fits Your Income
If your income changes annually, a plan like a SEP IRA or Solo 401(k) provides the option to modify how much you save:
- Customizable Contributions: Contribute more during high-income years and reduce savings when your earnings dip, ensuring your plan works with your cash flow.
- Roth Options: A Roth Solo 401(k) lets you handle taxes upfront, so you can withdraw your savings tax-free down the road—a wise move if you expect your tax rate will increase in the future.
Save Money on Taxes
Retirement plans for self-employed individuals deliver significant tax benefits:
- Tax-Deductible Contributions: Contributions to a SEP IRA lower your taxable income, so you can keep more of your earnings.
- Tax-Deferred Growth: You won't pay taxes on investment growth until you withdraw it, giving your money more time to grow.
- State-Specific Incentives: In some states, you might access additional credits as a self-employed individual. These local incentives help 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 put into a retirement plan, helping to lower 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: Allocating your investments across different stocks, bonds, and alternatives can help reduce risk while still growing your nest egg.
- Emergency Back-Up: Pairing your retirement plan with a financial buffer for your business prevents you from dipping into savings during financial hardships and facing tax penalties.
Plan for the Future of Your Louisville, KY Business
Preparing for retirement enables you to prepare for what’s next with your Louisville, KY business:
- Selling Your Business: For those considering a sale, accounts such as SEP IRAs or Solo 401(k)s remain your personal assets and won’t be included in the sale. These accounts ensure the steady income you’ll need during retirement. Keep in mind that while the sale of a business usually creates a capital gain, contributions to retirement accounts are capped at annual limits (e.g., up to $7,000 for IRAs or up to $70,000 for Solo 401(k)s, with catch-up contributions, based on plan compensation).
- Minimizing Taxes: Using retirement contributions wisely helps lower the taxes you are required to pay when you transfer your business.
- Succession Planning: If you’re passing the business on, your nest egg offer financial security through the transition. You may also partner with a financial advisor with expertise in succession and retirement planning to help with taxes associated with the transaction.
With the proper savings strategy, you can take control of your financial future, reduce your tax burden, and establish a secure foundation for both your retirement and your business goals.
Why Start a Self-Employed Retirement Plan in Louisville, KY Now?
Time remains one of the most valuable assets for building your retirement fund. Starting early not only helps you grow a more substantial retirement fund but also reduces the financial burden of playing catch-up as you get older. This is why it makes sense to begin today:
The Cost of Waiting
Delaying your retirement savings may cause a significant impact on the savings you’ll have when you reach retirement age. The main reason is compound interest—the concept where your investments earn returns, and those returns, in turn, earn even more returns. The greater time span your money has to grow, the greater the benefit of compounding.
Example: Alex and Taylor are both entrepreneurs. Their shared goal is 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 bridge the gap.
By age 65, assuming 7% annual return:
- Alex contributes $180,000 and accumulates $691,184.39*.
- Taylor contributes $195,500 but only ends up with $474,367.78*.
How Early Contributions Grow
Regular, modest investments contributed over time may result in substantial growth. Consider this example showing the effect of consistent growth:
- Starting at age 25: Putting aside $200 per month in a retirement plan with an average annual return of 7%, you’ll end up with $497,303.29* by age 65.
- Starting at age 35: Investing the same $200 per month yields only $235,412.97* by age 65—a shortfall of over $260,000, just from a 10-year delay.
Starting sooner, the lower your annual savings needs each year to achieve your retirement goals.
*The figures provided in this example represent estimates calculated using NerdWallet’s Compound Interest Calculator, assuming a 7% annual return. Annual deposits were multiplied by the number of years to estimate total contributions. These examples are for illustrative purposes only and cannot predict actual future outcomes. Actual results may vary based on variables including 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
For self-employed individuals in Louisville, KY, it might seem easier to focus more on reinvesting in your business instead of saving for retirement. That said, beginning a plan now gives you the chance to:
- Benefit from tax-deferred growth or tax-free withdrawals later on.
- Enjoy adjustable savings that adapt to your cash flow.
- Create a financial cushion that ensures stability, no matter how your business develops.
The sooner you start, the less you’ll be required to worry about catching up later in life. Saving for retirement now means gaining control over your financial future and allowing yourself the ability to concentrate on your goals—both for your golden years and your Louisville, KY business.
Types of Self-Employed Retirement Plans
There are several retirement savings options designed for self-employed individuals in Louisville, KY, each providing its own benefits and trade-offs. A financial advisor can help you evaluate the pros and cons of each option and determine the one best suited for your unique situation. Typically, your self-employed retirement plan options in Louisville, KY consist of:
Traditional or Roth IRA
Plan Overview: Individual Retirement Accounts (IRAs), as explained here, represent financial tools for retirement that provide key tax perks. In a conventional IRA, contributions are typically tax-deductible, and earnings grow without immediate taxation, but retirement distributions are subject to income tax. 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 don’t incur penalties if you are at least 59½.
Eligibility: Unlike 401(k)s, which are employer-sponsored, traditional and Roth IRAs are accessible for individuals with taxable earnings.
Contribution Limits: For 2025, annual contribution limits for IRAs remain $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 contribute a percentage of their net earnings. Contributions must come from an employer, so, as a sole proprietor, you (the employee) would not be able to contribute more than 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. It's your choice whether to contribute a flat-dollar amount or a percentage of wages to employee accounts. SEP IRAs is a good option for businesses that experience cycles of high revenue and low revenue. Compared to other retirement options, SEP IRAs are free of expensive setup or ongoing fees.
SEPs work like conventional IRAs, where contributions are made with pre-tax money and money withdrawn is subject to income tax.
Eligibility: Any employer, including the self-employed can open 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 allowable contribution is based on a special calculation.
Solo 401(k)
Plan Overview: Solo 401(k)s, sometimes referred to as an Individual 401(k) or one-participant 401(k) plan, is a savings option for the self-employed intended for companies that have no employees or when the sole employee is your spouse. This type of plan are similar to employer-sponsored 401(k) plans, and let you make contributions as both the employer and the employee with pre-tax money. This offers more savings versus SEPs or IRAs; however, the extra savings options 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: Only business owners and their spouses can set up and contribute to a solo 401(k).
Contribution Limits: For self-employed individuals 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 for those aged 50 and above, or $34,750 for individuals aged 60-63 in 2025.
- Employer profit-sharing contributions (as an employer) must not surpass 25% of your adjusted self-employment income, which is your net profit minus half of your self-employment tax and the employee contributions 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: A defined benefit plan is a retirement option that delivers a set amount to business owners upon retirement. As opposed to defined contribution plans, a defined benefit plan doesn't fluctuate based on investment returns, but lets individuals clearly understand what they'll get in retirement. This plan is ideal for high-earning professionals who want to save a significant sum for retirement and can commit to making sizeable contributions. Contributions grow tax-free until withdrawal, and withdrawals are taxable as income during retirement.
Eligibility: Entrepreneurs running an owner-only business or with a small staff of under five are eligible to open an individual defined benefit plan, but it's typically suggested for those over 50 who make $250,000 or more annually. In most cases, good candidates for defined benefit plans include:
- Partners or owners who desire to contribute more than $70,000 (or $77,500 for those aged 50+)
- Companies already contributing 3-4% and are willing to do more
- Companies with proven consistent profit patterns
- Partners or owners over age 40 who wish to accelerate savings or boost savings within a short timeframe
Contribution Limits: The cap on contributions requires calculation from an actuary using your financial situation, age, and savings targets. Allowable contributions are adjusted each year.
The Importance of a Financial Advisor in Louisville, KY for Your Self-Employed Retirement Plan
A financial advisor in Louisville, KY specialized in self-employed retirement plans serves as an essential partner for entrepreneurs. They have the expertise to help understand the intricacies of saving for retirement and craft a customized plan that reflects your aspirations. Your advisor in Louisville, KY will assess where you stand financially, 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 features:
- Guide you in choosing a plan that best fits your needs and goals
- Further adapt the plan to your specific situation even further
- Create a written plan that complies with IRS regulations
- Arrange a trust plan for assets
- Ensure you comprehend the plan's terms
- Track and fine-tune your plan when necessary
- Provide ongoing education and advice as you continue on the road to retirement
- Maximize what you receive in retirement by maximizing your social security benefits
Self-Employed Retirement Plans in Louisville, KY: Correct Capital's Process
Self-employed individuals in Louisville, KY who aren’t equipped with the time or understanding to manage their own retirement planning themselves may end up overwhelmed as they look at their available plans. Through our team at Correct Capital, our Louisville, KY financial advisors take on the bulk of your retirement planning for you, and strive to ensure 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 just four steps:
- Schedule a Call: A quick 20-minute call is all it takes, a member of our advisor team can determine if our services align for you and your business. This brief introduction helps us understand what you're looking for with no pressure or extensive time commitment on your part.
- Gather Information: If we both decide to move forward, we'll request information, including your employee count, your current financial situation, and your retirement goals. This enables us to craft a tailored approach that aligns with your goals.
- Review Your Plan: After we put together a plan based on the information you provide, we'll schedule a meeting and go over your plan step by step to ensure you understand it and understand how it best correlates to your needs.
- Implementation and Monitoring: After we agree on your plan, we'll put everything in place so you can begin contributing. Over the course of our partnership, we'll meet with you and monitor your plan to make sure it remains aligned with your goals.
Our Louisville, KY financial advisors and retirement plan consultants serve as fiduciary advisors, which means they are legally and ethically bound to prioritize your needs above all else.
Other financial advisory services we offer in Louisville, KY include:
- 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
- High-Net-Worth Wealth Management
Call Correct Capital for Your Self-Employed Retirement Plan in Louisville, KY
Your business isn't "just a business" to you, and your Louisville, KY financial advisors need to offer more than basic financial recommendations. With Correct Capital, we focus on building a relationship with our clients and their businesses to create customized self-employed retirement plans. All our clients in Louisville, KY benefit from our I.O.U. promise: everything we recommend will be independent, objective, and unbiased. To begin on your self-employment retirement plan, contact Correct Capital now at 877-930-401k or contact us online.
