Self-employed retirement plans Modesto, CA. The freedom of being your own boss in Modesto, CA is one of the best aspects of working for yourself. However, this independence can come with certain challenges, particularly in terms of retirement savings, as you don't have access to a workplace retirement plan. Only 13% of self-employed individuals have a workplace retirement plan, yet countless would be better off looking into other possibilities. In addition to enjoying a more comfortable retirement, working with a financial advisor in Modesto, CA to create your self-employed retirement plan offers significant tax advantages that allow both you and your business to thrive.
Few Modesto, CA wealth management and retirement planning firms are as attuned to the requirements of entrepreneurs as well as Correct Capital. The father of our founder was a small business owner himself (learn more about our story here), and Correct Capital are deeply experienced in supporting entrepreneurs with their retirement planning needs. We know that your goals for your business and retirement extend well past just monetary concerns, and we are dedicated to offer tailored solutions that reflect your objectives. Continue exploring to find out about your self-employed retirement plan options in Modesto, CA, or give us a call at Correct Capital at 877-930-401k or contact us online to speak with a entrepreneurial financial advisor in Modesto, CA today.
Schedule a Meeting With an Advisor Today
Correct Capital Wealth Management's office is physically located in St. Louis, MO, but we serve clients throughout the United States in both personal financial planning and corporate retirement plans.
Schedule a 15-Minute Introductory Call
Why Modesto, CA Self-Employed Individuals Should Have a Retirement Plan
Retirement plans for self-employed individuals not only prepare you for the future, they also offer tangible benefits today. Offering flexibility in contributions to significant tax savings, working with a financial advisor in Modesto, CA helps you design your retirement plan to align with your specific needs.
Flexibility That Fits Your Income
When your earnings vary from year to year, a plan like a SEP IRA or Solo 401(k) gives you the option to modify how much you save:
- Customizable Contributions: Save extra during successful years and reduce savings when income is lower, so that your plan aligns with your cash flow.
- Roth Options: A Roth Solo 401(k) lets you settle taxes at the time of contribution, enabling you to withdraw tax-free later—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 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 earnings.
- Tax-Deferred Growth: Your savings grow untaxed until withdrawn, providing your money more time to compound.
- State-Specific Incentives: Based on your location, you might access extra deductions as a business owner. These state-level incentives help make these plans even more beneficial.
- Retirement Savings Contributions Credit (Saver’s Credit): Qualified participants can claim a tax credit of up to 50% of the first $2,000 contributed 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: Allocating your investments across varied stocks, bonds, and other assets serves to minimize exposure to risk while helping to grow your nest egg.
- Emergency Back-Up: Combining your retirement strategy and a financial buffer for your business ensures you don’t dipping into savings during financial hardships and incurring penalties.
Plan for the Future of Your Modesto, CA Business
Preparing for retirement can assist you plan ahead for what’s next with your Modesto, CA business:
- Selling Your Business: For those considering a sale, accounts such as SEP IRAs or Solo 401(k)s stay in your name and are not part of the sale. These savings ensure the reliable income you’ll need in the future. Remember that while the sale of a business usually creates a capital gain, contributions to retirement accounts are subject to yearly maximums (e.g., as much as $7,000 for IRAs or up to $70,000 for Solo 401(k)s, including catch-up contributions, depending on plan details).
- Minimizing Taxes: Strategically planning your contributions minimizes the taxes you might face when you transfer your business.
- Succession Planning: For those winding down or handing over their business, your nest egg provide a stable foundation through the transition. You can also work with a financial advisor with expertise in succession and retirement planning to reduce taxes associated with the transaction.
With the right retirement plan, you can take control of your financial future, cut down your tax obligations, and create a secure foundation for both your retirement and your business goals.
Why Start a Self-Employed Retirement Plan in Modesto, CA Now?
Time remains one of the most crucial assets in retirement planning. Beginning sooner rather than later not only helps you grow a more substantial retirement fund but also reduces the pressure of playing catch-up as you get older. The following are reasons why it makes sense to begin today:
The Cost of Waiting
Putting off saving for retirement may cause a significant impact on the savings you’ll have when you stop working. The biggest reason is compound interest—the concept where your investments generate earnings, and those returns, then, earn even more returns. The longer your money has to grow, the larger 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 begins contributing $5,000 annually at age 30.
- Taylor postpones starting contributions to age 40 but puts away $7,500 annually to make up for lost time.
By age 65, assuming 7% annual return:
- Alex puts in $180,000 and achieves a total of $691,184.39*.
- Taylor puts in $195,500 but accumulates just $474,367.78*.
How Early Contributions Grow
Regular, modest investments contributed over time often create significant growth. Take a look at this scenario showing the effect of consistent growth:
- Starting at age 25: Putting aside $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: Contributing the same $200 per month yields only $235,412.97* by age 65—a shortfall of over $260,000, all because of a 10-year delay.
The earlier you begin, the less effort required each year to reach 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. The scenarios provided are intended as illustrative examples and are not a promise of future results. Outcomes may change based on elements like market conditions, fees, and your unique situation. Always consult a financial advisor for personalized advice.
Take Control of Your Financial Future
If you’re self-employed in Modesto, CA, it is often the case that you put more emphasis on reinvesting in your business rather than saving for retirement. That said, starting a plan now allows you to:
- Benefit from tax-deferred growth or penalty-free withdrawals in the future.
- Benefit from flexible contributions that change with your cash flow.
- Build a financial cushion that offers peace of mind, no matter how your business evolves.
Getting started now, the less you’ll need to worry about catching up later in life. Building your retirement savings today means taking control of your financial future and creating for yourself the ability to concentrate on your dreams—both for your golden years and your Modesto, CA business.
Types of Self-Employed Retirement Plans
There are several retirement savings options designed for self-employed individuals in Modesto, CA, each providing its own pros and cons. A financial advisor will guide you to learn about the benefits and drawbacks of each choice and determine the one most suitable for your circumstances. In most cases, your self-employed retirement plan options in Modesto, CA include:
Traditional or Roth IRA
Plan Overview: IRAs, or Individual Retirement Accounts, are long-term savings plans that offer key tax perks. In a traditional IRA, contributions are typically tax-deductible, and returns grow free of current taxes, but withdrawals in retirement are taxable. In contrast, Roth IRAs require contributions using income already taxed, but eligible distributions during retirement, including earnings, are exempt from taxes. In both types of accounts, withdrawals come without penalties provided you are at least 59½.
Eligibility: Unlike 401(k)s, which are employer-sponsored, traditional and Roth IRAs are available to anyone with an earned income.
Contribution Limits: For 2025, annual contribution limits for IRAs are set at $7,000, or $8,000 if you're 50 or older.
Simplified Employee Pension Plan (SEP IRA)
Plan Overview: The Simplified Employee Pension IRA serves as a retirement savings option that enables self-employed individuals to save a percentage of their net business profits. Contributions are strictly employer contributions an employer, so, as a independent business owner, you (the employee) are limited to contributions from the employer role beyond the 25% you (the employer) allocate. If you have employees, you must contribute the same amount for them as you do for yourself. You may choose to contribute a flat-dollar amount or a percentage of wages to employee accounts. SEP IRAs may be ideal for entrepreneurs facing fluctuating revenue streams. In contrast to some alternatives, SEP IRAs lack costly startup or administrative fees.
SEPs work like standard IRAs, where you contribute pre-tax dollars and withdrawals are taxed as income.
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
As a self-employed person, the amount eligible to be contributed 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 companies that have no employees or when the sole employee is your spouse. This type of plan function similarly to traditional employer-managed 401(k) plans, and let you make contributions as both an employee or an employer with pre-tax money. This provides more savings than SEPs or IRAs; however, the increased savings potential often come with more constrained investment avenues. With this type of plan, you can make either traditional or Roth deferrals, which share 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 have the ability to make two types of contributions:
- Elective deferrals (as an employee) of up to 100% of your self-employed earnings, capped at the annual contribution limit. The contribution limits for 2025 include $23,500, or $31,000 if you're over 50, or $34,750 for those who turn 60-63 in 2025.
- Employer profit-sharing contributions (as an employer) are limited to 25% of your adjusted self-employment income, which is your net profit minus half of your self-employment tax and the deferrals you made.
The total contribution cannot exceed $70,000, or $77,500 for those aged 50 and older (for 2025), $81,250 for individuals turning 60-63 in 2025.
Individual Defined Benefit Plan
Plan Overview: Defined benefit plans represents a type of retirement plan that provides a pre-established payout to self-employed individuals upon retirement. Unlike defined contribution plans mentioned above, investment returns don’t affect the payout, but lets individuals clearly understand what they'll receive in retirement. This plan is ideal for high-earning professionals who aim to accumulate a substantial amount for retirement and are willing to make sizeable contributions. Contributions offer tax-deferred growth, and withdrawals are taxed as income during retirement.
Eligibility: Entrepreneurs running an owner-only business or employing fewer than five people can open an individual defined benefit plan, but it's generally suggested for individuals aged 50+ who make $250,000 or more annually. In most cases, good candidates for defined benefit plans are:
- Partners or owners who want to invest more than $70,000 (or $77,500 for those aged 50+)
- Companies already contributing 3-4% but are open to increasing contributions
- Businesses showing consistent profit patterns
- Partners or owners over age 40 who aim to quickly build retirement savings or increase their retirement contributions rapidly
Contribution Limits: The contribution limit must be determined by an actuary using your earnings, age, and retirement objectives. Allowable contributions are adjusted each year.
The Importance of a Financial Advisor in Modesto, CA for Your Self-Employed Retirement Plan
Partnering with an advisor in Modesto, CA specialized in self-employed retirement plans can be an invaluable resource for entrepreneurs. They offer the knowledge to assist guide you through the challenges of retirement planning and craft a tailored strategy that aligns with your goals. Your advisor in Modesto, CA will review your finances, understand your risk tolerance, and guide you in choosing wisely about saving and investing for retirement. Part of what we do for you features:
- Assist in selecting a plan that suits your unique requirements
- Customize the plan to your needs even further
- Create a written plan that complies with IRS regulations
- Set up an asset trust plan
- Ensure you comprehend the plan's terms
- Monitor and adjust your plan to keep it aligned with your goals
- Offer continued financial education and guidance throughout your retirement planning process
- Increase your retirement income by making the most of your social security
Self-Employed Retirement Plans in Modesto, CA: Correct Capital's Process
Entrepreneurs in Modesto, CA who don’t have the time or expertise to handle their retirement savings strategy themselves can become overwhelmed when faced with their choices. At Correct Capital, our Modesto, CA financial advisors handle the lion's share of your retirement strategy for you, and strive to ensure meeting your retirement goals as hassle-free as possible for you. We can help you get set up your self-employed retirement plan in just four 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 allows us to learn about your needs with zero commitment or significant effort on your part.
- Gather Information: If we both decide to move forward, we'll gather information, including your employee count, your present financial standing, and your long-term savings targets. This allows us to put together a custom plan designed just for you.
- Review Your Plan: Once we've developed a plan based on the information you provide, we'll schedule a meeting and go over your plan thoroughly to make sure it's clear 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. As time goes on, we'll have regular meetings and monitor your plan to keep it tailored to your evolving circumstances.
Our Modesto, CA financial advisors and retirement plan consultants act as fiduciary advisors, which means they are committed by law and ethics to act in your best interest.
Other financial advisory services we offer in Modesto, CA include:
- 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 Modesto, CA
You don't see your business as "just a business", and your Modesto, CA financial advisors should provide more than simply sound financial advice. Correct Capital takes pride in, we take the time to get to know our clients and their businesses to deliver tailored self-employed retirement plans. To every client in Modesto, CA, we provide 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, call Correct Capital today at 877-930-401k or contact us online.
