Self-employed retirement plans Minneapolis, MN. The independence of being your own boss in Minneapolis, MN is one of the best aspects of being self-employed. However, this independence can come with certain challenges, particularly when it comes to planning for retirement, because you don't have access to a workplace retirement plan. Only 13% of self-employed individuals have a workplace retirement plan, although many could benefit from looking into other possibilities. In addition to having a financially stable retirement, working with a financial advisor in Minneapolis, MN to set up your self-employed retirement plan can provide significant tax advantages that enable both you and your business to thrive.
Few Minneapolis, MN investment consulting and retirement planning firms are as attuned to the requirements of self-employed individuals as well as Correct Capital. Our founder's father was a small business owner himself (check out our story here), and Correct Capital take pride in assisting business owners in their retirement planning needs. We know that your goals for your business and retirement extend well past basic numbers, and we are dedicated to provide personalized solutions that reflect your objectives. Read on to discover about your self-employed retirement plan options in Minneapolis, MN, or give us a call at Correct Capital at 877-930-401k or contact us online to talk to 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 not only prepare you for the future, they also deliver real benefits today. Offering flexibility in contributions to significant tax savings, partnering with a financial advisor in Minneapolis, MN allows you to design your retirement plan to align with your unique financial situation.
Flexibility That Fits Your Income
When your earnings vary over time, a plan like a SEP IRA or Solo 401(k) provides the freedom to adjust how much you save:
- Customizable Contributions: Contribute more during high-income years and cut back when your earnings dip, so that your plan works with your cash flow.
- Roth Options: Opting for a Roth Solo 401(k) lets you pay taxes on contributions now, allowing you to withdraw your savings tax-free down the road—a smart decision if you expect your tax rate to be higher in the future.
Save Money on Taxes
Plans designed for the self-employed provide valuable tax benefits:
- Tax-Deductible Contributions: Contributions to a SIMPLE IRA shrink your tax liability, helping you keep more of your hard-earned money.
- Tax-Deferred Growth: You won't pay taxes on investment growth until you withdraw it, providing your money more time to accumulate.
- State-Specific Incentives: Based on your location, you could qualify for additional deductions as a self-employed individual. These local incentives can make these plans even more beneficial.
- Retirement Savings Contributions Credit (Saver’s Credit): Eligible individuals can apply for 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
Creating a stable future goes beyond just how much you save—it’s also determined by your investment strategy:
- Diversified Portfolios: Distributing your investments across varied stocks, bonds, and alternatives is a smart way to reduce risk while helping to grow your savings.
- Emergency Back-Up: Pairing your retirement plan with a dedicated business safety net ensures you don’t using your retirement funds during tough times and risking extra costs.
Plan for the Future of Your Minneapolis, MN Business
Retirement planning also helps you prepare for what’s next with your Minneapolis, MN business:
- Selling Your Business: If you’re planning to sell, accounts such as SEP IRAs or Solo 401(k)s remain yours and don’t transfer with the business. These accounts can provide the steady income you’ll need during retirement. Remember that while selling your business results in a capital gain, contributions to retirement accounts are restricted by contribution limits (e.g., up to $7,000 for IRAs or a maximum of $70,000 for Solo 401(k)s, with 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: If you’re passing the business on, your retirement accounts provide a stable foundation as you make this shift. You might want to partner with a financial advisor with expertise in succession and retirement planning to reduce taxes on the sale.
With the right retirement plan, you can take control of your financial future, reduce your tax burden, and create a solid base for both your retirement and your business goals.
Why Start a Self-Employed Retirement Plan in Minneapolis, MN Now?
Time remains one of the most important resources for building your retirement fund. Beginning sooner rather than later not only helps you grow a more substantial retirement fund but also lowers the stress of saving aggressively in the future. Here’s why it pays to take action now:
The Cost of Waiting
Delaying your retirement savings can have a substantial impact on the savings you’ll have when you reach retirement age. The main reason is compound interest—the concept where your investments earn returns, and those returns, then, generate even more returns. The greater time span your money has to grow, the greater the benefit of this compounding process.
Example: 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 contributes $7,500 annually to bridge the gap.
By age 65, using a projected 7% annual return:
- Alex invests $180,000 and achieves a total of $691,184.39*.
- Taylor puts in $195,500 but only ends up with $474,367.78*.
How Early Contributions Grow
Small, consistent savings contributed over time often create substantial growth. Consider this example showing the power of compounding:
- Starting at age 25: Putting aside $200 per month in a retirement plan with an projected return of 7%, you’ll end up with $497,303.29* by age 65.
- Starting at age 35: Contributing the same $200 per month leaves you with only $235,412.97* by age 65—a shortfall of over $260,000, all because of a 10-year delay.
Saving early, the less you need to save each year to reach your retirement goals.
*The numbers shown in this scenario are based on 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. The scenarios provided are for illustrative purposes only and are not a promise of future results. Your individual results may differ due to factors such as market conditions, fees, and your unique situation. We recommend consulting a financial advisor for guidance tailored to your needs.
Take Control of Your Financial Future
As a self-employed person in Minneapolis, MN, it might seem easier to put more emphasis on reinvesting in your business over saving for retirement. That said, starting a plan now gives you the chance to:
- Take advantage of tax-free future growth or tax-free withdrawals down the road.
- Benefit from flexible contributions that change with your cash flow.
- Establish a safety net that offers peace of mind, no matter how your business develops.
Getting started now, the less you’ll have to worry about catching up later in life. Taking steps toward your retirement goals today means gaining control over your financial future and giving yourself the freedom to turn your attention to your goals—both for your retirement years and your Minneapolis, MN business.
Types of Self-Employed Retirement Plans
There are several retirement savings options open for self-employed individuals in Minneapolis, MN, each providing its own pros and cons. A financial advisor is available to help you learn about the benefits and drawbacks of each option and identify the one best suited for your circumstances. In most cases, your self-employed retirement plan options in Minneapolis, MN are:
Traditional or Roth IRA
Plan Overview: IRAs, or Individual Retirement Accounts, are financial tools for retirement that offer distinct tax benefits. In a conventional IRA, the money you contribute is often tax-deductible, and investment earnings grow tax-deferred, but money taken out during retirement are subject to income tax. In contrast, Roth IRAs require contributions are made with after-tax income, but qualified withdrawals in retirement, including earnings, are not taxed. In both cases, withdrawals don’t incur penalties as long as you are at least 59½.
Eligibility: Unlike plans linked to your job, traditional and Roth IRAs are open to those with taxable earnings.
Contribution Limits: For 2025, annual contribution limits for IRAs are set at $7,000, or $8,000 for those aged 50+.
Simplified Employee Pension Plan (SEP IRA)
Plan Overview: The Simplified Employee Pension IRA serves as a retirement savings option that enables those who are self-employed to set aside a portion of their self-employment income. Contributions must come from an employer, so, as a sole proprietor, you (the employee) are limited to contributions from the employer role more than the 25% you (the employer) already contributed. If you have employees, you are obligated to contribute the same amount for them as you do for yourself. It's your choice whether to contribute a set monetary value or a percentage of wages to employee accounts. This type of plan is a good option for businesses that experience cycles of high revenue and low revenue. Unlike other plans, SEP IRAs are free of expensive setup or ongoing fees.
SEPs function like traditional IRAs, where contributions are made with pre-tax money and retirement distributions are taxable.
Eligibility: Any employer, including the self-employed can establish a SEP.
Contribution Limits: Contribution limits for employees in a SEP IRA are the lesser of:
- 25% of compensation, or
- $70,000 for 2025
As a self-employed person, 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 retirement savings plan designed for businesses with no employees or where the only employee is a spouse. Solo 401(k)s function similarly to employer-sponsored 401(k) plans, and enable contributions as both an employee or an employer with pre-tax money. This allows for more savings versus SEPs or IRAs; however, the extra savings options often come with 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: This plan is exclusively for business owners and their spouses are eligible to open and contribute to a solo 401(k).
Contribution Limits: For self-employed individuals with a solo 401(k) plan, you have the ability to make two types of contributions:
- Employee contributions of up to 100% of your earned income from self-employment, subject to the annual contribution limit. The contribution limits for 2025 include $23,500, or $31,000 for those aged 50 and above, or $34,750 for those who turn 60-63 in 2025.
- Employer profit-sharing contributions (as an employer) must not surpass 25% of your net earnings from self-employment, which is your net profit minus half of your self-employment tax and the elective deferrals you made.
Your combined contributions must not surpass $70,000, or $77,500 for those aged 50 and older (as of 2025), $81,250 for those aged 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, this plan is not influenced by market performance, but lets individuals clearly understand exactly how much they'll have in retirement. This option is best suited for wealthier professionals who aim to accumulate a substantial amount for retirement and can commit to making sizeable contributions. Contributions offer tax-deferred growth, and withdrawals are taxable as income in retirement.
Eligibility: Self-employed professionals managing a one-person company or with a small staff of under five can open an individual defined benefit plan, but it's generally suggested for individuals aged 50+ who earn at least $250,000 a year. Generally, good candidates for defined benefit plans are:
- Entrepreneurs who desire to contribute more than $70,000 (or $77,500 for those aged 50+)
- Organizations that already put in 3-4% with plans to contribute more
- Companies showing consistent profit patterns
- Business leaders over age 40 who wish to accelerate savings or boost savings within a short timeframe
Contribution Limits: The cap on contributions is calculated by an actuary using your income, age, and retirement goals. 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 experienced with retirement plans for the self-employed serves as an invaluable resource for entrepreneurs. They bring the skills needed to understand the intricacies of saving for retirement and design a customized plan that matches your objectives. Your advisor in Minneapolis, MN will evaluate your financial situation, determine how much risk you’re comfortable with, and assist you in choosing wisely about saving and investing for retirement. A key part of what we do for you includes:
- Assist in selecting a plan that best fits your needs and goals
- Customize the plan to your specific situation even further
- Formalize a plan in writing that complies with IRS regulations
- Organize a trust plan to manage your assets
- Help you understand the plan's terms
- Track and fine-tune your plan to keep it aligned with your goals
- Provide ongoing education and advice as you continue on the road to retirement
- Increase your retirement income by making the most of your social security
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 oversee their own retirement planning themselves often feel overwhelmed when faced with their available plans. Through our team at Correct Capital, our Minneapolis, MN financial advisors handle the majority of your savings plan setup for you, and strive to ensure meeting your retirement goals as straightforward as possible for you. We will guide you in creating your self-employed retirement plan in just four steps:
- Schedule a Call: A quick 20-minute call is all it takes, a member of our advisor team will assess if we're suited to your needs for you and your business. This initial call allows us to understand what you're looking for with no pressure or significant effort on your part.
- Gather Information: Once we mutually decide to continue, we'll ask for information, including how many employees you have (if any), your present financial standing, and your long-term savings targets. This helps us create a tailored approach designed just for you.
- Review Your Plan: After we put together a plan from the information you provide, we'll schedule a meeting and go over your plan in detail to make sure it's clear and explain its fit to your circumstances.
- Implementation and Monitoring: After we agree on your plan, we'll implement the necessary steps so you can initiate your savings journey. Over the course of our partnership, we'll check in and monitor your plan to keep it tailored to your evolving circumstances.
Our Minneapolis, MN financial advisors and retirement plan consultants serve as fiduciary advisors, who are obligated to they are required by law and ethical standards to do what's in your best interest.
Other financial advisory services we offer in Minneapolis, MN 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 Minneapolis, MN
You don't see your business as "just a business", and your Minneapolis, MN financial advisors need to offer more than basic financial recommendations. Correct Capital takes pride in, we take the time to get to know our clients and their businesses to create customized self-employed retirement plans. We offer all our Minneapolis, MN clients our I.O.U. promise: all of the advice you get from us 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.
