Self-employed retirement plans Memphis, TN. The flexibility of being your own boss in Memphis, TN is one of the best aspects of being self-employed. Even so, this freedom can come with potential drawbacks, notably when it comes to 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, although many could benefit from understanding their retirement options. In addition to enjoying a financially stable retirement, partnering with a financial advisor in Memphis, TN to establish your self-employed retirement plan can provide significant tax advantages that help both you and your business to thrive.
Few Memphis, TN investment consulting and retirement planning firms understand the needs of small business owners as well as Correct Capital. Our founder's father was a small business owner himself (learn more about our story here), and we are deeply experienced in assisting business owners in their retirement planning needs. We understand that your business and retirement aspirations aren’t limited to basic numbers, and we strive to offer personalized solutions to meet your unique goals. 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 talk to a small business financial advisor in Memphis, TN today.
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Why Memphis, TN Self-Employed Individuals Should Have a Retirement Plan
Retirement plans for self-employed individuals not only prepare you for the future, they also deliver tangible benefits today. From flexible contributions to significant tax savings, consulting a financial advisor in Memphis, TN allows you to design your retirement plan to align with your individual circumstances.
Flexibility That Fits Your Income
If your income changes over time, a plan like a SEP IRA or Solo 401(k) gives you the option to tailor how much you save:
- Customizable Contributions: Set aside more during profitable years and cut back when revenues are down, ensuring your plan aligns with your cash flow.
- Roth Options: A Roth Solo 401(k) lets you pay taxes on contributions now, so you can withdraw tax-free later—a smart decision if you expect your tax rate to be higher in the future.
Save Money on Taxes
Self-employed retirement plans deliver powerful tax benefits:
- Tax-Deductible Contributions: Contributions to a SIMPLE IRA 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: In some states, you may be eligible for state-specific credits as a sole proprietor. These local incentives make these plans even more beneficial.
- Retirement Savings Contributions Credit (Saver’s Credit): Qualified participants can take advantage of a credit of up to 50% of the first $2,000 they contribute a retirement plan, cutting down 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 determined by your investment strategy:
- Diversified Portfolios: Distributing your investments across a mix of asset classes like stocks and bonds is a smart way to reduce risk while continuing to build your nest egg.
- Emergency Back-Up: Pairing your retirement plan with a financial buffer for your business helps you avoid using your retirement funds during challenging periods and risking extra costs.
Plan for the Future of Your Memphis, TN Business
Preparing for retirement enables you to prepare for 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 don’t transfer with the business. These plans ensure the financial stability you’ll need later on. Remember that while selling your business results in a capital gain, contributions to retirement accounts are capped at annual limits (e.g., up to $7,000 for IRAs or a maximum of $70,000 for Solo 401(k)s, factoring in catch-up contributions, according to plan rules).
- Minimizing Taxes: Making the most of retirement savings helps lower the taxes you are required to pay when you pass on your business.
- Succession Planning: For those winding down or handing over their business, your retirement accounts provide financial security during the change. You may also seek advice from a financial advisor who specializes in succession planning and retirement accounts to reduce 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 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 valuable resources when it comes to saving for retirement. Getting a head start not only allows you to build a more substantial retirement fund but also minimizes the financial burden of playing catch-up as you get older. Here’s why it pays to take action now:
The Cost of Waiting
Putting off saving for retirement can have a substantial impact on the amount you’ll have when you stop working. The main reason is compound interest—the financial principle where your investments grow, and those returns, then, generate even more returns. The greater time span your money has to grow, the greater the benefit of this growth.
Example: Two individuals, Alex and Taylor are both self-employed professionals. They each aim to save $500,000 for retirement by age 65:
- Alex starts saving $5,000 annually at age 30.
- Taylor postpones starting contributions to age 40 but saves $7,500 annually to catch up.
By age 65, using a projected 7% annual return:
- Alex contributes $180,000 and accumulates $691,184.39*.
- Taylor puts in $195,500 but accumulates just $474,367.78*.
How Early Contributions Grow
Small, consistent savings made consistently can lead to substantial growth. Here’s a simple scenario showing the power of compound interest:
- Starting at age 25: If you invest $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: Contributing the same $200 per month would result in only $235,412.97* by age 65—a difference of over $260,000, simply due to a 10-year delay.
Starting sooner, the less you need to save each year to achieve your retirement goals.
*These calculations represent 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. This information is meant to provide general guidance and do not guarantee future performance. Actual results may vary 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 can be tempting to prioritize reinvesting in your business over saving for retirement. That said, beginning a plan now gives you the chance to:
- Take advantage of growth that is tax-deferred or withdrawals without taxes down the road.
- Benefit from flexible contributions that change with your income.
- Create a safety net that ensures stability, no matter how your business develops.
Starting early, the less you’ll need to worry about playing catch-up later in life. Building your retirement savings today means taking control of your financial future and creating for yourself the freedom to turn your attention to your goals—both for your golden years and your Memphis, TN business.
Types of Self-Employed Retirement Plans
A variety of retirement savings options designed for entrepreneurs in Memphis, TN, each providing its own advantages and considerations. A financial advisor will guide you to learn about the advantages and disadvantages of each option and determine the one most suitable for your needs. Generally speaking, your self-employed retirement plan options in Memphis, TN include:
Traditional or Roth IRA
Plan Overview: IRAs, or Individual Retirement Accounts, are financial tools for retirement that include key tax perks. In a conventional IRA, contributions are typically tax-deductible, and returns grow free of current taxes, but withdrawals in retirement are taxable. In contrast, with Roth IRAs, you contribute using income already taxed, but eligible distributions during retirement, including earnings, are not taxed. In both cases, withdrawals are penalty-free if you are at least 59½.
Eligibility: Unlike 401(k)s, which are employer-sponsored, traditional and Roth IRAs are open to those with a source of income.
Contribution Limits: For 2025, annual contribution limits for IRAs are capped at $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 is a retirement plan that permits those who are self-employed to contribute a percentage of their net earnings. Contributions are strictly employer contributions an employer, so, as a self-employed individual, you (the employee) would not be able to contribute more than 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 fixed dollar figure or a percentage of wages to employee accounts. A SEP IRA is a good option for companies with periods of inconsistent earnings. Unlike other plans, SEP IRAs lack costly startup or administrative fees.
SEPs work like traditional IRAs, where you contribute pre-tax dollars and withdrawals are taxed as income.
Eligibility: Any employer, including the self-employed can establish a SEP.
Contribution Limits: Contribution limits for employees in a SEP IRA must not exceed:
- 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: A Solo 401(k) plan, sometimes referred to as an Individual 401(k) or one-participant 401(k) plan, is a retirement savings plan designed for businesses with no employees or when the sole employee is your spouse. These plans function similarly to standard 401(k) plans, and let you make contributions as both an employer and an employee with pre-tax money. This provides more savings versus SEPs or IRAs; however, the extra savings options can be balanced by 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: As a self-employed individual with a solo 401(k) plan, you can 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 for those aged 50 and above, or $34,750 for individuals aged 60-63 in 2025.
- Contributions as an employer (as an employer) are limited to 25% of your net self-employment income, which is defined as net profit minus half of your self-employment tax and the deferrals you made.
Total contributions are capped at $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: Defined benefit plans is a retirement option that provides a fixed, predetermined benefit to self-employed individuals upon retirement. In contrast to the plans discussed earlier, investment returns don’t affect the payout, but lets individuals clearly understand what they'll have in retirement. This plan is ideal for wealthier self-employed individuals who aim to accumulate a substantial amount for retirement and can commit to making larger deposits. Contributions grow tax-free until withdrawal, and withdrawals incur taxes as income upon 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 most commonly suggested for people above age 50 who make $250,000 or more annually. Typically, good candidates for defined benefit plans include:
- Entrepreneurs who aim to deposit more than $70,000 (or $77,500 for those aged 50+)
- Companies already contributing 3-4% and are willing to do more
- Companies that have demonstrated consistent profit patterns
- Business leaders over age 40 who wish to accelerate savings or boost savings within a short timeframe
Contribution Limits: The contribution limit is calculated by an actuary based on your earnings, age, and retirement objectives. Contribution limits change annually.
The Importance of a Financial Advisor in Memphis, TN for Your Self-Employed Retirement Plan
Partnering with an advisor in Memphis, TN experienced with retirement plans for the self-employed serves as an essential partner for those working for themselves. They have the expertise to help understand the intricacies of saving for retirement and craft a customized plan that reflects your aspirations. A financial advisor in Memphis, TN will review your finances, identify your risk preferences, and help you in choosing wisely about saving and investing for retirement. Included in what we do for you includes:
- Guide you in choosing a plan that best fits your needs and goals
- Further adapt the plan to your needs even further
- Adopt a written plan that complies with IRS regulations
- Set up an asset trust plan
- Make sure you understand the plan's terms
- Review and modify your plan to keep it aligned with your goals
- Deliver continuous support and financial insights as you continue on the road to retirement
- Boost your retirement earnings by maximizing your social security benefits
Self-Employed Retirement Plans in Memphis, TN: Correct Capital's Process
Entrepreneurs in Memphis, TN who don’t have the time or expertise to oversee their self-employed retirement plan themselves often feel overwhelmed when faced with their options. With Correct Capital, our Memphis, TN financial advisors manage the majority of your savings plan setup for you, working to make meeting your financial objectives as hassle-free as possible for you. We will guide you in creating 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 a good fit for you and your business. This brief introduction lets us get a sense of your goals with zero commitment or major time investment on your part.
- Gather Information: Once we mutually decide to continue, we'll ask for information, including your employee count, your existing financial picture, and your future objectives. This allows us to put together a personalized strategy suited specifically for your needs.
- Review Your Plan: When we finalize a plan from the information you provide, we'll schedule a meeting and review 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 implement the necessary steps so you can initiate your savings journey. Throughout our relationship, we'll meet with you and review your strategy to keep it tailored to your evolving circumstances.
Our Memphis, TN financial advisors and retirement plan consultants are fiduciary advisors, which means they are committed by law and ethics to do what's in your best interest.
Other financial advisory services we offer in Memphis, TN include:
- Independent Financial Advisor
- Roth Conversion
- Investment Management
- 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
You don't see your business as "just a business", and your Memphis, TN financial advisors must deliver more than basic financial recommendations. With Correct Capital, we take the time to get to know our clients and their businesses to create customized self-employed retirement plans. All our clients in Memphis, TN 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.
