Self-employed retirement plans Minneapolis, MN. The independence of owning your own business in Minneapolis, MN is one of the greatest advantages of working for yourself. That said, this freedom often comes with a lack of security, particularly regarding building your retirement fund, since you don't have the option of retirement programs through an employer. Only 13% of self-employed individuals have a workplace retirement plan, although many should consider looking into other possibilities. In addition to enjoying a more secure retirement, partnering with a financial advisor in Minneapolis, MN to set up your self-employed retirement plan offers significant tax advantages that enable you to move your business forward.
Few Minneapolis, MN financial advisory and retirement planning firms are as attuned to the requirements of self-employed individuals quite like Correct Capital. The father of our founder was a small business owner himself (read more of our story here), and our firm are deeply experienced in assisting business owners in their retirement planning needs. We understand that your business and retirement aspirations extend well past simple financial figures, and we strive to provide customized solutions to meet your unique goals. Keep reading to learn more about your self-employed retirement plan options in Minneapolis, MN, or call Correct Capital at 877-930-401k or contact us online to speak with a self-employed financial advisor in Minneapolis, MN today.
Why Minneapolis, MN Self-Employed Individuals Should Have a Retirement Plan
Retirement plans for self-employed individuals are essential for preparing you for the future, they also deliver immediate benefits today. Offering flexibility in contributions to considerable tax savings, consulting a financial advisor in Minneapolis, MN allows you to create your retirement plan to fit your individual circumstances.
Flexibility That Fits Your Income
For those with fluctuating income annually, a plan like a SEP IRA or Solo 401(k) gives you the flexibility to tailor how much you save:
- Customizable Contributions: Contribute more during high-income years and cut back when revenues are down, so that your plan fits your financial situation.
- Roth Options: A Roth Solo 401(k) lets you pay taxes on contributions now, enabling you to withdraw tax-free later—a smart decision if you expect your tax rate will increase in the future.
Save Money on Taxes
Plans designed for the self-employed deliver powerful tax benefits:
- Tax-Deductible Contributions: Contributions to a SEP IRA reduce what you owe in taxes, allowing you to keep more of your income.
- Tax-Deferred Growth: Investments grow tax-free until withdrawal, providing your money more time to grow.
- State-Specific Incentives: Based on your location, you may be eligible for extra credits as a business owner. These regional 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, further reducing 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 linked to the way you invest:
- Diversified Portfolios: Allocating your investments across varied stocks, bonds, and alternatives is a smart way to mitigate financial risk while continuing to build your retirement fund.
- Emergency Back-Up: Pairing your retirement plan with a business emergency fund ensures you don’t tapping into your nest egg during tough times and incurring penalties.
Plan for the Future of Your Minneapolis, MN Business
Retirement planning enables you to think through what’s next with your Minneapolis, MN business:
- Selling Your Business: For those considering a sale, accounts such as SEP IRAs or Solo 401(k)s remain yours and don’t transfer with the business. These accounts ensure 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 capped at annual limits (e.g., up to $7,000 for IRAs or as much as $70,000 for Solo 401(k)s, with catch-up contributions, according to plan rules).
- Minimizing Taxes: Making the most of retirement savings can reduce the taxes you’ll owe when you sell your business.
- Succession Planning: If you’re passing the business on, your retirement accounts ensure financial security during the change. You may also seek advice from 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, 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 Minneapolis, MN Now?
Time is one of the most valuable assets in retirement planning. Getting a head start not only helps you grow a more substantial retirement fund but also minimizes the stress of playing catch-up as you get older. This is why it pays to take action now:
The Cost of Waiting
Delaying your retirement savings may cause a major impact on the amount you’ll have when you retire. The primary reason is compound interest—the powerful process where your investments earn returns, and those returns, in turn, earn even more returns. The longer your money has to grow, the greater the impact of compounding.
Example: Taylor and Alex are both self-employed professionals. 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 puts away $7,500 annually to catch up.
By age 65, using a projected 7% annual return:
- Alex puts in $180,000 and ends up with $691,184.39*.
- Taylor contributes $195,500 but only ends up with $474,367.78*.
How Early Contributions Grow
Small, consistent savings made consistently often create substantial growth. Take a look at this scenario showing the effect of compounding:
- Starting at age 25: If you invest $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 leaves you with 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 meet your retirement goals.
*The figures provided in this example represent estimates calculated using NerdWallet’s Compound Interest Calculator, based on a 7% annual return. The contributions were calculated by multiplying the annual deposit amount by the total number of years contributions were made. This information is meant to provide general guidance and cannot predict actual future outcomes. Your individual results may differ depending 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
If you’re self-employed in Minneapolis, MN, it is often the case that you prioritize reinvesting in your business over saving for retirement. Even so, beginning a plan now gives you the chance to:
- Benefit from growth that is tax-deferred or withdrawals without taxes later on.
- Enjoy contribution flexibility that adapt to your income.
- Build a financial cushion that offers peace of mind, no matter how your business changes.
Getting started now, the less you’ll be required 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 turn your attention to your goals—both for your golden years and your Minneapolis, MN business.
Types of Self-Employed Retirement Plans
Multiple retirement savings options available for entrepreneurs in Minneapolis, MN, each providing its own benefits and trade-offs. A financial advisor will guide you to understand the benefits and drawbacks of each choice and identify the one ideal for your unique situation. Typically, your self-employed retirement plan options in Minneapolis, MN include:
Traditional or Roth IRA
Plan Overview: IRAs, or Individual Retirement Accounts, are long-term savings plans that provide distinct tax benefits. In a traditional IRA, you can usually deduct your contributions from taxable income, and earnings grow without immediate taxation, but retirement distributions are subject to income tax. In contrast, Roth IRAs require contributions from post-tax earnings, but eligible distributions during retirement, including earnings, are not taxed. In both types of accounts, withdrawals don’t incur penalties provided you are at least 59½.
Eligibility: Unlike 401(k)s, which are employer-sponsored, both traditional and Roth IRAs are available to anyone 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: SEP IRAs is a retirement plan that allows entrepreneurs to contribute a percentage of their net earnings. Contributions must come from an employer, so, as a self-employed individual, you (the employee) would not be able to contribute above 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. 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 entrepreneurs facing fluctuating revenue streams. Compared to other retirement options, SEP IRAs are free of the high fees associated with starting or maintaining other plans.
SEPs function like traditional 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 open 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 amount eligible to be contributed 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 savings option for the self-employed designed for companies that have no employees or where the only employee is a spouse. These plans 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 provides more savings than SEPs or IRAs; however, the additional opportunities may be offset 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: Solo 401(k)s are available solely to business owners and their spouses are eligible to open and contribute to a solo 401(k).
Contribution Limits: As a self-employed individual with a solo 401(k) plan, you are allowed to make two types of contributions:
- Deferrals as an employee of up to 100% of your self-employment income, capped at the annual contribution limit. In 2025, those limits are $23,500, or $31,000 if you're over 50, or $34,750 for individuals aged 60-63 in 2025.
- Profit-sharing contributions (as an employer) are limited to 25% of your net 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 if you're over age 50 (as of 2025), $81,250 for individuals turning 60-63 in 2025.
Individual Defined Benefit Plan
Plan Overview: Defined benefit plans offers a structured retirement solution that delivers a pre-established payout to business owners upon retirement. In contrast to the plans discussed earlier, investment returns don’t affect the payout, but lets individuals clearly understand the precise amount they'll have in retirement. This option is ideal for high-earning professionals who are focused on saving a significant sum for retirement and can commit to making substantial contributions. Contributions offer tax-deferred growth, and withdrawals incur taxes as income in retirement.
Eligibility: Entrepreneurs running an owner-only business or with less than five employees may establish an individual defined benefit plan, but it's generally advised for those over 50 who earn at least $250,000 a year. Generally, good candidates for defined benefit plans are:
- Entrepreneurs who want to invest more than $70,000 (or $77,500 for individuals 50 and older)
- Businesses currently investing 3-4% but are open to increasing contributions
- Companies showing consistent profit patterns
- Business leaders over age 40 who desire to "catch up" or accelerate the retirement savings
Contribution Limits: The cap on contributions must be determined by an actuary determined by your earnings, age, and retirement objectives. Limits on contributions are updated yearly.
The Importance of a Financial Advisor in Minneapolis, MN for Your Self-Employed Retirement Plan
A financial advisor in Minneapolis, MN specialized in self-employed retirement plans can be an invaluable resource for those working for themselves. They have the expertise to help navigate the complexities of retirement planning and craft a customized plan that matches your objectives. An expert in your area will evaluate your financial situation, determine how much risk you’re comfortable with, and guide you in choosing wisely about saving and investing for retirement. A key part of what we do for you includes:
- Help you choose a plan that suits your unique requirements
- Further adapt the plan to fit you personally even further
- Formalize a plan in writing in accordance with IRS guidelines
- Organize a trust plan to manage your assets
- Help you understand the plan's terms
- Track and fine-tune your plan as needed
- Offer continued financial education and guidance as you continue on the road to retirement
- Increase your retirement income by maximizing your social security benefits
Self-Employed Retirement Plans in Minneapolis, MN: Correct Capital's Process
Minneapolis, MN business owners who aren’t equipped with the time or understanding to manage their retirement savings strategy on their own can become overwhelmed as they look at their options. With Correct Capital, our Minneapolis, MN financial advisors handle the majority of your retirement strategy for you, and strive to ensure meeting your financial objectives as easy as possible for you. We will guide you in creating your self-employed retirement plan in four simple steps:
- Schedule a Call: A quick 20-minute call is all it takes, 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: Once we mutually decide to continue, we'll request information, including whether you have employees, your present financial standing, and your long-term savings targets. This enables us to craft a personalized strategy suited specifically for your needs.
- Review Your Plan: After we put together a plan from the information you provide, we'll sit down with you and discuss your plan in detail 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 set everything up so you can start saving. As time goes on, we'll check in and review your strategy to keep it tailored to your evolving circumstances.
Our Minneapolis, MN financial advisors and retirement plan consultants are fiduciary advisors, meaning they are required by law and ethical standards to act in your best interest.
Other financial advisory services we offer in Minneapolis, MN include:
- Family Wealth Planning
- 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
Call Correct Capital for Your Self-Employed Retirement Plan in Minneapolis, MN
Your business isn't "just a business" to you, and your Minneapolis, MN financial advisors need to offer more than simply sound financial advice. Correct Capital takes pride in, we make it a priority to understand our clients and their businesses to deliver customized self-employed retirement plans. To every client in Minneapolis, MN, we provide our I.O.U. promise: all guidance we provide 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.
