Self-employed retirement plans Memphis, TN. The flexibility of being your own boss in Memphis, TN is one of the best aspects of working for yourself. However, this independence sometimes brings with certain challenges, especially regarding retirement savings, since you don't have the benefit of a workplace retirement plan. Only 13% of self-employed individuals have a workplace retirement plan, yet countless would be better off understanding their retirement options. In addition to enjoying a more secure retirement, working with a financial advisor in Memphis, TN to create your self-employed retirement plan can provide significant tax advantages that allow both you and your business to thrive.
Few Memphis, TN wealth management and retirement planning firms truly grasp the challenges faced by small business owners quite like Correct Capital. Our founder's father was a small business owner himself (learn more about our story here), and Correct Capital are deeply experienced in helping businesses with their retirement planning needs. We recognize that your goals for your business and retirement extend well past basic numbers, and we strive to offer tailored solutions that reflect your objectives. Read on to discover about your self-employed retirement plan options in Memphis, TN, or call Correct Capital at 877-930-401k or contact us online to speak with a entrepreneurial financial advisor in Memphis, TN today.
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 offer immediate benefits today. With customizable contribution options to substantial tax savings, working with a financial advisor in Memphis, TN allows you to design your retirement plan to align with your unique financial situation.
Flexibility That Fits Your Income
When your earnings vary from year to year, a plan like a SEP IRA or Solo 401(k) provides the flexibility to modify how much you save:
- Customizable Contributions: Save extra during high-income years and scale back when revenues are down, ensuring your plan aligns with your cash flow.
- Roth Options: Choosing a Roth Solo 401(k) lets you handle taxes upfront, so you can withdraw without tax penalties in the future—a smart decision if you expect your tax rate to be higher in the future.
Save Money on Taxes
Self-employed retirement plans offer valuable tax benefits:
- Tax-Deductible Contributions: Contributions to a SEP IRA reduce what you owe in taxes, helping you keep more of your earnings.
- Tax-Deferred Growth: Your savings grow untaxed until withdrawn, giving your money more time to compound.
- State-Specific Incentives: In some states, you might access state-specific deductions as a sole proprietor. These local incentives 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 contributed a retirement plan, helping to lower your tax bill even more.
Protect Your Savings With Smart Investments
Building a secure retirement goes beyond just how much you save—it’s also about how you invest:
- Diversified Portfolios: Distributing your investments across different stocks, bonds, and alternatives can help reduce risk while still growing your savings.
- Emergency Back-Up: Pairing your retirement plan with a dedicated business safety net helps you avoid using your retirement funds during tough times and facing tax penalties.
Plan for the Future of Your Memphis, TN Business
A thoughtful retirement strategy enables you to think through what’s next with your Memphis, TN business:
- Selling Your Business: When selling your business, accounts such as SEP IRAs or Solo 401(k)s stay in your name and won’t be included in the sale. These savings can provide the steady income you’ll need during retirement. Keep in mind that while selling your business results in a capital gain, contributions to retirement accounts are subject to yearly maximums (e.g., up to $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: Making the most of retirement savings can reduce the taxes you’ll owe when you transfer your business.
- Succession Planning: Whether you’re transferring ownership, your retirement savings ensure financial security through the transition. You may also partner with a financial advisor experienced in both succession and retirement strategies to help with taxes on the sale.
With the proper savings strategy, you can take control of your financial future, reduce your tax burden, 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 is one of the most important resources when it comes to saving for retirement. Starting early not only lets you accumulate a bigger financial cushion but also reduces the financial burden of catching up later in life. This is why it makes sense to begin today:
The Cost of Waiting
Putting off saving for retirement can have a significant impact on the savings you’ll have when you reach retirement age. The primary reason is compound interest—the concept where your investments earn returns, and those returns, then, earn even more returns. The longer your money has to grow, the greater the benefit of this compounding process.
Example: Two individuals, Alex and Taylor are both self-employed individuals. Both of them want to save $500,000 for retirement by age 65:
- Alex begins contributing $5,000 annually at age 30.
- Taylor delays savings until age 40 but puts away $7,500 annually to catch up.
By age 65, assuming 7% annual return:
- Alex contributes $180,000 and achieves a total of $691,184.39*.
- Taylor invests $195,500 but accumulates just $474,367.78*.
How Early Contributions Grow
Regular, modest investments made consistently can lead to significant growth. Here’s a simple scenario showing the impact of consistent growth:
- Starting at age 25: If you invest $200 per month in a retirement plan with an expected yearly growth rate of 7%, you’ll accumulate $497,303.29* by age 65.
- Starting at age 35: Saving the same $200 per month yields only $235,412.97* by age 65—a shortfall of over $260,000, simply due to a 10-year delay.
The earlier you begin, the lower your annual savings needs each year to achieve your retirement goals.
*The figures provided in this example represent estimates generated with NerdWallet’s Compound Interest Calculator, assuming a 7% annual return. These calculations involved multiplying yearly deposits by the years contributed. These examples are for illustrative purposes only and cannot predict actual future outcomes. Outcomes may change based on elements like market conditions, fees, and personal factors. Always consult a financial advisor for custom recommendations.
Take Control of Your Financial Future
If you’re self-employed in Memphis, TN, it is often the case that you focus more on reinvesting in your business rather than saving for retirement. However, initiating a plan now enables you to:
- Leverage growth that is tax-deferred or tax-free withdrawals down the road.
- Enjoy adjustable savings that align with your income.
- Build a safety net that provides security, no matter how your business evolves.
The sooner you start, the less you’ll need to worry about making up for lost time later in life. Taking steps toward your retirement goals today means taking control of your financial future and creating for yourself the freedom to concentrate on your objectives—both for your retirement years and your Memphis, TN business.
Types of Self-Employed Retirement Plans
Multiple retirement savings options available for those working for themselves in Memphis, TN, each with its own pros and cons. A financial advisor will guide you to understand the pros and cons of each choice and choose the one ideal for your unique situation. Generally speaking, your self-employed retirement plan options in Memphis, TN consist of:
Traditional or Roth IRA
Plan Overview: Individual Retirement Accounts (IRAs), as explained here, represent financial tools for retirement that include distinct tax benefits. In a traditional IRA, the money you contribute is often tax-deductible, and returns grow free of current taxes, but money taken out during retirement are taxed as income. In contrast, with Roth IRAs, you contribute are made with after-tax income, but eligible distributions during retirement, including earnings, are tax-free. In both accounts, withdrawals don’t incur penalties if you are at least 59½.
Eligibility: Unlike 401(k)s, which are employer-sponsored, both traditional and Roth IRAs are open to those with a source of income.
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: A Simplified Employee Pension (SEP) IRA serves as a retirement savings option that enables self-employed individuals to contribute a percentage of their net earnings. Contributions are strictly employer contributions an employer, so, as a independent business owner, you (the employee) cannot make additional contributions beyond the 25% you (the employer) have designated. If you have employees, you must contribute the same amount for them as you do for yourself. You may choose to contribute a set monetary value or a percentage of wages to employee accounts. SEP IRAs may be ideal for companies with cycles of high revenue and low revenue. In contrast to some alternatives, SEP IRAs don’t have costly startup or administrative fees.
SEPs operate like conventional IRAs, where the contributions are tax-deferred 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 are the lesser 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: Solo 401(k)s, also called an Individual 401(k) or one-participant 401(k) plan, is a retirement savings plan intended for businesses without employees or when the sole employee is your spouse. Solo 401(k)s operate much like 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 increased savings potential may be offset by more constrained investment avenues. 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: Solo 401(k)s are available solely to 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 have the ability to make two types of contributions:
- Employee contributions 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 adjusted self-employment income, which is calculated as net profits less 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: Defined benefit plans is a retirement option that provides a set amount to entrepreneurs upon retirement. As opposed to defined contribution plans, investment returns don’t affect the payout, but enables participants to determine exactly how much they'll receive in retirement. This strategy is ideal for wealthier professionals who want to save a substantial amount for retirement and can commit to making substantial contributions. Contributions grow tax-free until withdrawal, and withdrawals are taxable as income in retirement.
Eligibility: Any self-employed individual running an owner-only business or with less than five employees may establish an individual defined benefit plan, but it's generally advised for people above age 50 who generate a minimum of $250,000 yearly. Typically, good candidates for defined benefit plans include:
- Entrepreneurs who want to invest more than $70,000 (or $77,500 for those aged 50+)
- Companies already contributing 3-4% with plans to contribute more
- Businesses with proven consistent profit patterns
- Entrepreneurs over age 40 who aim to quickly build retirement savings or boost savings within a short timeframe
Contribution Limits: The contribution limit is calculated by an actuary based on your financial situation, age, and savings targets. Allowable contributions are updated yearly.
The Importance of a Financial Advisor in Memphis, TN for Your Self-Employed Retirement Plan
A financial advisor in Memphis, TN specialized in self-employed retirement plans serves as an important asset for self-employed individuals. They bring the skills needed to navigate the complexities of retirement planning and craft a customized plan that reflects your aspirations. A financial advisor in Memphis, TN will review your finances, understand your risk tolerance, and help you in choosing wisely about saving and investing for retirement. Included in what we do for you involves:
- Guide you in choosing a plan that suits your unique requirements
- Tailor the plan to fit you personally even further
- Formalize a plan in writing that complies with IRS regulations
- Set up an asset trust plan
- Make sure you understand the plan's terms
- Review and modify your plan when necessary
- Offer continued financial education and guidance throughout your retirement planning process
- Increase your retirement income by maximizing your social security benefits
Self-Employed Retirement Plans in Memphis, TN: Correct Capital's Process
Entrepreneurs in Memphis, TN who aren’t equipped with the time or understanding to handle their own retirement planning independently often feel overwhelmed when faced with their choices. With Correct Capital, our Memphis, TN financial advisors handle the lion's share of your retirement planning for you, working to make meeting your future savings targets 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: In just 20 minutes, a member of our advisor team can help understand if we're suited to your needs for you and your business. This short conversation lets us get a sense of your goals with no obligation 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 present financial standing, and your future objectives. This enables us to craft a personalized strategy that aligns with your goals.
- Review Your Plan: Once we've developed a plan from the information you provide, we'll meet with you and discuss your plan thoroughly to make sure it's clear and show how it aligns with your goals.
- Implementation and Monitoring: Once we've agreed on your plan, we'll put everything in place so you can start saving. As time goes on, we'll have regular meetings and track your progress to ensure it stays suited to your needs.
Our Memphis, TN financial advisors and retirement plan consultants act 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 Memphis, TN 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 Memphis, TN
You don't see your business as "just a business", and your Memphis, TN financial advisors need to offer 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. We offer all our Memphis, TN clients our I.O.U. promise: everything we recommend will be independent, objective, and unbiased. To get started on your self-employment retirement plan, call Correct Capital today at 877-930-401k or contact us online.
