Self-employed retirement plans Miami, FL. The independence of running your own company in Miami, FL offers many benefits of being self-employed. That said, this flexibility can come with potential drawbacks, notably when it comes to building your retirement fund, as you don't have access to employer-sponsored retirement plans. Only 13% of self-employed individuals have a workplace retirement plan, although many could benefit from looking into other possibilities. In addition to achieving a more secure retirement, working with a financial advisor in Miami, FL to establish your self-employed retirement plan delivers significant tax advantages that help you to move your business forward.
Few Miami, FL wealth management and retirement planning firms are as attuned to the requirements of entrepreneurs quite like Correct Capital. The father of our founder was a small business owner himself (learn more about our story here), and we take pride in helping businesses with their retirement planning needs. We recognize that your goals for your business and retirement extend well past simple financial figures, and we strive to create tailored solutions to meet your unique goals. Continue exploring to find out about your self-employed retirement plan options in Miami, FL, or call Correct Capital at 877-930-401k or contact us online to consult with a small business financial advisor in Miami, FL today.
Why Miami, FL Self-Employed Individuals Should Have a Retirement Plan
Retirement plans for self-employed individuals not only prepare you for the future, they also provide tangible benefits today. From flexible contributions to substantial tax savings, working with a financial advisor in Miami, FL allows you to design your retirement plan to fit your specific needs.
Flexibility That Fits Your Income
If your income changes from year to year, a plan like a SEP IRA or Solo 401(k) provides the option to tailor how much you save:
- Customizable Contributions: Save extra during profitable years and cut back when revenues are down, so that your plan fits your cash flow.
- Roth Options: Opting for a Roth Solo 401(k) lets you handle taxes upfront, enabling you to withdraw without tax penalties in the future—an advantageous choice if you expect your tax rate to be higher in the future.
Save Money on Taxes
Plans designed for the self-employed offer powerful tax benefits:
- Tax-Deductible Contributions: Contributions to a SIMPLE IRA lower your taxable income, 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: Depending on where you live, you could qualify for state-specific tax breaks as a business owner. These state-level incentives make these plans even more valuable.
- Retirement Savings Contributions Credit (Saver’s Credit): Eligible individuals can apply for a 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
Creating a stable future isn’t only about how much you save—it’s also determined by your investment strategy:
- Diversified Portfolios: Distributing your investments across varied asset classes like stocks and bonds serves to minimize exposure to risk while continuing to build your savings.
- Emergency Back-Up: Pairing your retirement plan with a business emergency fund helps you avoid dipping into savings during tough times and incurring penalties.
Plan for the Future of Your Miami, FL Business
A thoughtful retirement strategy also helps you prepare for what’s next with your Miami, FL business:
- Selling Your Business: If you’re planning to sell, plans like SEP IRAs or Solo 401(k)s remain yours and are not part of the sale. These accounts offer the steady income you’ll need during retirement. It’s important to note that while the sale of a business usually creates a capital gain, contributions to retirement accounts are restricted by contribution limits (e.g., a maximum of $7,000 for IRAs or a maximum of $70,000 for Solo 401(k)s, including catch-up contributions, according to plan rules).
- Minimizing Taxes: Strategically planning your contributions can reduce the taxes you might face when you sell your business.
- Succession Planning: For those winding down or handing over their business, your retirement savings provide financial security during the change. You may also partner with a financial advisor with expertise in succession and retirement planning to reduce taxes during the sale.
With the proper savings strategy, you can take control of your financial future, reduce your tax burden, and create a secure foundation for both your retirement and your business goals.
Why Start a Self-Employed Retirement Plan in Miami, FL Now?
Time remains one of the most crucial assets for building your retirement fund. Getting a head start not only allows you to build a larger nest egg but also lowers the pressure of playing catch-up as you get older. Here’s why it is beneficial to start now:
The Cost of Waiting
Waiting to start your retirement fund could lead to a major impact on the savings you’ll have when you reach retirement age. The main reason is compound interest—the financial principle where your investments generate earnings, and those returns, subsequently, accumulate even more returns. The longer your money has to grow, the greater the effect of compounding.
Example: Alex and Taylor are both self-employed individuals. Their shared goal is 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, with an assumption of 7% annual return:
- Alex puts in $180,000 and ends up with $691,184.39*.
- Taylor invests $195,500 but achieves a total of only $474,367.78*.
How Early Contributions Grow
Small, consistent savings contributed over time can lead to significant growth. Here’s a simple scenario showing the power of consistent growth:
- Starting at age 25: By investing $200 per month in a retirement plan with an projected return of 7%, you’ll accumulate $497,303.29* by age 65.
- Starting at age 35: Saving the same $200 per month would result in only $235,412.97* by age 65—a gap of over $260,000, all because of a 10-year delay.
Starting sooner, the lower your annual savings needs each year to reach your retirement goals.
*The numbers shown in this scenario are estimates generated with 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. This information is for illustrative purposes only and are not a promise of future results. Your individual results may differ depending on factors such as market conditions, fees, and personal factors. 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 Miami, FL, it is often the case that you prioritize reinvesting in your business rather than saving for retirement. That said, initiating a plan now allows you to:
- Take advantage of growth that is tax-deferred or penalty-free withdrawals in the future.
- Take advantage of adjustable savings that align with your cash flow.
- Build a safety net that offers peace of mind, no matter how your business changes.
The sooner you start, the less you’ll have to worry about catching up later in life. Saving for retirement now means taking control of your financial future and allowing yourself the opportunity to concentrate on your dreams—both for your golden years and your Miami, FL business.
Types of Self-Employed Retirement Plans
A variety of retirement savings options open for self-employed individuals in Miami, FL, each providing its own benefits and trade-offs. A financial advisor can help you evaluate the benefits and drawbacks of each plan and choose the one most suitable for your circumstances. In most cases, your self-employed retirement plan options in Miami, FL consist of:
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, you can usually deduct your contributions from taxable income, and returns grow free of current taxes, but money taken out during retirement are subject to income tax. In contrast, with Roth IRAs, you contribute using income already taxed, but eligible distributions during retirement, including earnings, are not taxed. In both accounts, withdrawals come without penalties as long as you are at least 59½.
Eligibility: Unlike plans linked to your job, 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: The Simplified Employee Pension IRA offers a way to save for retirement that allows self-employed individuals to save a percentage of their net business profits. Contributions are strictly employer contributions an employer, so, as a sole proprietor, you (the employee) cannot make additional contributions beyond the 25% you (the employer) already contributed. If you have employees, you must 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. SEP IRAs works well for companies with fluctuating revenue streams. In contrast to some alternatives, SEP IRAs don’t have expensive setup or ongoing fees.
SEPs operate like standard IRAs, where contributions are made with pre-tax money and money withdrawn is subject to income tax.
Eligibility: Employers of any type, including self-employed individuals can establish 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
For self-employed individuals, the allowable contribution 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 retirement savings plan intended for businesses with no employees or if the only employee is your spouse. This type of plan function similarly to traditional employer-managed 401(k) plans, and allow you to contribute as both an employer and an employee with pre-tax money. This offers more savings compared to SEPs or IRAs; however, the extra savings options often come with more restricted investment choices. In a solo 401(k) plan, 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: For self-employed individuals with a solo 401(k) plan, you are allowed to make two types of contributions:
- Employee contributions of up to 100% of your earned income from self-employment, capped at the annual contribution limit. The contribution limits for 2025 include $23,500, or $31,000 if you are 50 or older, or $34,750 if you attain age 60-63 in 2025.
- Contributions as an employer (as an employer) are limited to 25% of your net earnings from self-employment, which is calculated as net profits less half of your self-employment tax and the deferrals you made.
Your combined contributions must not surpass $70,000, or $77,500 for individuals aged 50+ (for 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 fixed, predetermined benefit to business owners upon retirement. In contrast to the plans discussed earlier, a defined benefit plan doesn't fluctuate based on investment returns, but enables participants to determine the precise amount they'll receive in retirement. This strategy is ideal for high-earning professionals who are focused on saving a significant sum for retirement and are willing to make larger deposits. Contributions are tax deferred, and withdrawals are taxable as income upon retirement.
Eligibility: Any self-employed individual managing a one-person company or with a small staff of under five are eligible to open an individual defined benefit plan, but it's typically suggested for people above age 50 who earn at least $250,000 a year. Typically, good candidates for defined benefit plans are:
- Entrepreneurs who aim to deposit more than $70,000 (or $77,500 if over age 50)
- Companies already contributing 3-4% but are open to increasing contributions
- Businesses that have demonstrated consistent profit patterns
- Entrepreneurs over age 40 who wish to accelerate savings or increase their retirement contributions rapidly
Contribution Limits: The maximum allowable contribution must be determined by an actuary determined by your income, age, and retirement goals. Allowable contributions change annually.
The Importance of a Financial Advisor in Miami, FL for Your Self-Employed Retirement Plan
Partnering with an advisor in Miami, FL focused on self-employed retirement strategies is an invaluable resource for entrepreneurs. They bring the skills needed to understand the intricacies of saving for retirement and develop a tailored strategy that matches your objectives. A financial advisor in Miami, FL will assess where you stand financially, identify your risk preferences, and assist you in selecting the best options 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
- Further adapt the plan to fit you personally even further
- Create a written plan in accordance with IRS guidelines
- Organize a trust plan to manage your assets
- Make sure you understand the plan's terms
- Monitor and adjust your plan when necessary
- Provide ongoing education and advice to help you navigate your retirement journey
- Boost your retirement earnings by optimizing your social security benefits
Self-Employed Retirement Plans in Miami, FL: Correct Capital's Process
Miami, FL business owners who aren’t equipped with the time or understanding to handle their self-employed retirement plan themselves may end up overwhelmed by their available plans. With Correct Capital, our Miami, FL financial advisors manage the lion's share of your retirement planning for you, working to make meeting your retirement goals as straightforward as possible for you. We are here to assist you in setting up your self-employed retirement plan in a quick, four-step process:
- Schedule a Call: It only takes 20 minutes, a member of our advisor team can help understand if we're a good fit for you and your business. This short conversation lets us understand what you're looking for with no obligation or significant effort on your part.
- Gather Information: Once we mutually decide to continue, we'll gather information, including your employee count, your existing financial picture, and your future objectives. This allows us to put together a tailored approach designed just for you.
- Review Your Plan: When we finalize a plan based on the information you provide, we'll schedule a meeting and review your plan step by step to make sure it's clear and understand how it best correlates to your needs.
- Implementation and Monitoring: Once we've agreed on your plan, we'll implement the necessary steps so you can begin contributing. Throughout our relationship, we'll check in and review your strategy to make sure it remains aligned with your goals.
Our Miami, FL financial advisors and retirement plan consultants act 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 Miami, FL 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 Miami, FL
Your business isn't "just a business" to you, and your Miami, FL financial advisors should provide more than simply sound financial advice. With Correct Capital, we make it a priority to understand our clients and their businesses to create customized self-employed retirement plans. To every client in Miami, FL, we provide our I.O.U. promise: everything we recommend will be independent, objective, and unbiased. To get started on your self-employment retirement plan, reach out to Correct Capital at 877-930-401k or contact us online.
