Self-employed retirement plans Memphis, TN. The independence of owning your own business in Memphis, TN is one of the best aspects of being self-employed. Even so, this independence sometimes brings with certain challenges, notably regarding planning for retirement, because you don't have access to retirement programs through an employer. Only 13% of self-employed individuals have a workplace retirement plan, but many would be better off exploring their options. In addition to achieving a more secure retirement, partnering with a financial advisor in Memphis, TN to create your self-employed retirement plan delivers significant tax advantages that enable your business to grow and succeed.
Few Memphis, TN investment consulting and retirement planning firms are as attuned to the requirements of small business owners as well as Correct Capital. The father of our founder was a small business owner himself (read more of our story here), and we take pride in assisting business owners in their retirement planning needs. We recognize that your goals for your business and retirement aren’t limited to simple financial figures, and we are dedicated to create tailored solutions that reflect your objectives. Read on to discover about your self-employed retirement plan options in Memphis, TN, or give us a call at Correct Capital at 877-930-401k or contact us online to consult with a small business financial advisor in Memphis, TN today.
Schedule a Meeting With an Advisor Today
Correct Capital Wealth Management's office is physically located in St. Louis, MO, but we serve clients throughout the United States in both personal financial planning and corporate retirement plans.
Schedule a 15-Minute Introductory Call
Why Memphis, TN Self-Employed Individuals Should Have a Retirement Plan
Retirement plans for self-employed individuals help prepare you for the future, they also deliver real benefits today. From flexible contributions to considerable tax savings, consulting a financial advisor in Memphis, TN allows you to customize your retirement plan to fit your specific needs.
Flexibility That Fits Your Income
For those with fluctuating income over time, a plan like a SEP IRA or Solo 401(k) provides the option to tailor how much you save:
- Customizable Contributions: Set aside more during profitable years and scale back when your earnings dip, so that your plan works with your cash flow.
- Roth Options: Choosing 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 expect your tax rate is likely to rise 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) reduce what you owe in taxes, helping you keep more of your hard-earned money.
- Tax-Deferred Growth: Investments grow tax-free until withdrawal, giving your money more time to grow.
- State-Specific Incentives: In some states, you might access additional credits as a business owner. These state-level incentives can make these plans even more advantageous.
- Retirement Savings Contributions Credit (Saver’s Credit): Those who meet the requirements can take advantage of 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
Building a secure retirement isn’t only about how much you save—it’s also determined by your investment strategy:
- Diversified Portfolios: Distributing your investments across varied stocks, bonds, and alternatives can help mitigate financial risk while continuing to build your retirement fund.
- Emergency Back-Up: Combining your retirement strategy and a dedicated business safety net helps you avoid using your retirement funds during financial hardships and risking extra costs.
Plan for the Future of Your Memphis, TN Business
A thoughtful retirement strategy enables you to prepare for what’s next with your Memphis, TN business:
- Selling Your Business: If you’re planning to sell, accounts such as SEP IRAs or Solo 401(k)s remain your personal assets and won’t be included in the sale. These savings offer the financial stability you’ll need later on. It’s important to note that while selling a business often leads to a capital gain, retirement plan contributions are subject to yearly maximums (e.g., a maximum of $7,000 for IRAs or a maximum of $70,000 for Solo 401(k)s, including catch-up contributions, depending on plan details).
- Minimizing Taxes: Using retirement contributions wisely can reduce the taxes you might face when you pass on your business.
- Succession Planning: For those winding down or handing over their business, your nest egg offer a stable foundation as you make this shift. You might want to partner with a financial advisor who specializes in succession planning and retirement accounts to help with taxes during the sale.
With the proper savings strategy, you gain control over your financial future, lower your tax bill, and build a solid base for both your retirement and your business goals.
Why Start a Self-Employed Retirement Plan in Memphis, TN Now?
Time remains one of the most crucial factors in retirement planning. Beginning sooner rather than later not only helps you grow a more substantial retirement fund but also lowers the pressure of saving aggressively in the future. This is why it pays to take action now:
The Cost of Waiting
Delaying your retirement savings can have a significant impact on the amount you’ll have when you stop working. The biggest reason is compound interest—the powerful process where your investments generate earnings, and those returns, subsequently, earn even more returns. The longer your money has to grow, the greater the impact of this compounding process.
Example: Taylor and Alex are both self-employed individuals. Their shared goal is 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 contributes $180,000 and accumulates $691,184.39*.
- Taylor contributes $195,500 but accumulates just $474,367.78*.
How Early Contributions Grow
Regular, modest investments contributed over time may result in significant growth. Consider this example showing the power 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 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 difference of over $260,000, all because of a 10-year delay.
Saving early, the less effort required each year to achieve your retirement goals.
*The figures provided in this example are based on estimates derived from NerdWallet’s Compound Interest Calculator, with the assumption of a 7% annual return. Annual deposits were multiplied by the number of years to estimate total contributions. These examples are meant to provide general guidance and cannot predict actual future outcomes. Actual results may vary 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
For self-employed individuals in Memphis, TN, it might seem easier to prioritize reinvesting in your business instead of saving for retirement. Even so, initiating a plan now enables you to:
- Benefit from tax-free future growth or tax-free withdrawals later on.
- Benefit from adjustable savings that adapt to your cash flow.
- Create a financial cushion that ensures stability, no matter how your business develops.
Getting started now, the less you’ll need to worry about playing catch-up later in life. Saving for retirement now means managing your financial future and creating for yourself the ability to focus on your goals—both for your retirement years and your Memphis, TN business.
Types of Self-Employed Retirement Plans
A variety of retirement savings options designed for those working for themselves in Memphis, TN, each with its own advantages and considerations. A financial advisor is available to help you evaluate the pros and cons of each option and choose the one best suited for your needs. Typically, your self-employed retirement plan options in Memphis, TN include:
Traditional or Roth IRA
Plan Overview: IRAs, or Individual Retirement Accounts, are retirement savings vehicles that offer specific tax advantages. In a traditional IRA, the money you contribute is often tax-deductible, and investment earnings grow tax-deferred, but retirement distributions are taxable. In contrast, Roth IRAs require contributions are made with after-tax income, but retirement withdrawals that qualify, including earnings, are not taxed. In both accounts, withdrawals are penalty-free as long as 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 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: A Simplified Employee Pension (SEP) IRA serves as a retirement savings option that allows self-employed individuals to save a percentage of their net business profits. Contributions are strictly employer contributions an employer, so, as a self-employed individual, you (the employee) are limited to contributions from the employer role beyond the 25% you (the employer) allocate. If you have employees, it's required to contribute the same amount for them as you do for yourself. It's your choice whether to contribute a fixed dollar figure or a percentage of wages to employee accounts. SEP IRAs may be ideal for businesses that experience fluctuating revenue streams. Unlike other plans, SEP IRAs are free of costly startup or administrative fees.
SEPs work like conventional IRAs, where you contribute pre-tax dollars and withdrawals are taxed as income.
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
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 self-employed retirement plan designed for businesses with no employees or if the only employee is your spouse. This type of plan operate much like 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 than SEPs or IRAs; however, the additional opportunities often come with more restricted investment choices. Using a solo 401(k), you can make either traditional or Roth deferrals, which have the same tax benefits as their IRA contribution counterparts.
Eligibility: This plan is exclusively for business owners and their spouses may establish and contribute to a solo 401(k).
Contribution Limits: If you are self-employed with a solo 401(k) plan, you can make two types of contributions:
- Deferrals as an employee of up to 100% of your self-employed earnings, up to the annual contribution limit. For 2025, the limits will be $23,500, or $31,000 if you are 50 or older, or $34,750 for individuals aged 60-63 in 2025.
- Profit-sharing contributions (as an employer) are limited to 25% of your net earnings from self-employment, 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 for individuals aged 50+ (in 2025), $81,250 if you attain age 60-63 in 2025.
Individual Defined Benefit Plan
Plan Overview: The defined benefit plan is a retirement option that guarantees a fixed, predetermined benefit to entrepreneurs upon retirement. Unlike defined contribution plans mentioned above, a defined benefit plan doesn't fluctuate based on investment returns, but allows self-employed individuals to know what they'll receive in retirement. This strategy is recommended for higher-income professionals who want to save a large amount for retirement and are willing to make substantial contributions. Contributions are tax deferred, and withdrawals are taxed as income upon retirement.
Eligibility: Self-employed professionals operating a solo business or with less than five employees are eligible to open an individual defined benefit plan, but it's generally advised for individuals aged 50+ who make $250,000 or more annually. Typically, good candidates for defined benefit plans tend to be:
- Entrepreneurs who aim to deposit more than $70,000 (or $77,500 for those aged 50+)
- Businesses currently investing 3-4% and are willing to do more
- Businesses with proven consistent profit patterns
- Business leaders over age 40 who desire to "catch up" or accelerate the retirement savings
Contribution Limits: The cap on contributions requires calculation from an actuary using your earnings, age, and retirement objectives. Allowable contributions are adjusted each year.
The Importance of a Financial Advisor in Memphis, TN for Your Self-Employed Retirement Plan
Working with a financial advisor in Memphis, TN specialized in self-employed retirement plans can be an essential partner 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 Memphis, TN will review your finances, understand your risk tolerance, and guide you in making informed decisions about saving and investing for retirement. Included in what we do for you features:
- Assist in selecting a plan that aligns with your objectives and circumstances
- Customize the plan to fit you personally even further
- Adopt a written plan that complies with IRS regulations
- Organize a trust plan to manage your assets
- Ensure you comprehend the plan's terms
- Review and modify your plan when necessary
- Provide ongoing education and advice to help you navigate your retirement journey
- Increase your retirement income by optimizing your social security benefits
Self-Employed Retirement Plans in Memphis, TN: Correct Capital's Process
Memphis, TN business owners who lack the time, interest, or knowledge to manage their self-employed retirement plan on their own often feel overwhelmed by their options. Through our team at Correct Capital, our Memphis, TN financial advisors manage the bulk of your retirement planning for you, and strive to ensure meeting your retirement goals as straightforward as possible for you. We can help you get set up your self-employed retirement plan in a quick, four-step process:
- Schedule a Call: In just 20 minutes, a member of our advisor team can help understand if our services align for you and your business. This short conversation allows us to understand what you're looking for with no obligation or significant effort on your part.
- Gather Information: If we both decide to move forward, we'll request information, including whether you have employees, your current financial situation, and your long-term savings targets. This allows us to put together a custom plan suited specifically for your needs.
- Review Your Plan: After we put together a plan based on the information you provide, we'll sit down with you and discuss your plan in detail to make sure it's clear and explain its fit to your circumstances.
- Implementation and Monitoring: When we finalize on your plan, we'll put everything in place so you can start saving. As time goes on, we'll have regular meetings and review your strategy to ensure it stays suited to your needs.
Our Memphis, TN financial advisors and retirement plan consultants serve as fiduciary advisors, which means they are required by law and ethical standards to act in your best interest.
Other financial advisory services we offer in Memphis, 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 Memphis, TN
To you, your business is more than "just a business", and your Memphis, TN financial advisors should provide more than simply sound financial advice. With Correct Capital, we take the time to get to know our clients and their businesses to provide personalized self-employed retirement plans. To every client in Memphis, TN, we provide our I.O.U. promise: all of the advice you get from us will be independent, objective, and unbiased. To get started on your self-employment retirement plan, contact Correct Capital now at 877-930-401k or contact us online.
