Self-employed retirement plans Moreno Valley, CA. The freedom of owning your own business in Moreno Valley, CA offers many benefits of being self-employed. That said, this freedom can come with potential drawbacks, especially in terms of planning for retirement, because you don't have the benefit of retirement programs through an employer. Only 13% of self-employed individuals have a workplace retirement plan, but many could benefit from exploring their options. In addition to enjoying a financially stable retirement, seeking advice from a financial advisor in Moreno Valley, CA to establish your self-employed retirement plan offers significant tax advantages that allow your business to grow and succeed.
Few Moreno Valley, CA financial advisory and retirement planning firms are as attuned to the requirements of entrepreneurs quite like Correct Capital. Our founder's father was a small business owner himself (check out our story here), and we take pride in supporting entrepreneurs with their retirement planning needs. We understand that your business and retirement aspirations aren’t limited to simple financial figures, and we strive to offer tailored solutions that reflect your objectives. Read on to discover about your self-employed retirement plan options in Moreno Valley, CA, or give us a call at Correct Capital at 877-930-401k or contact us online to consult with a small business financial advisor in Moreno Valley, CA today.
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Why Moreno Valley, CA Self-Employed Individuals Should Have a Retirement Plan
Retirement plans for self-employed individuals help prepare you for the future, they also offer real benefits today. From flexible contributions to substantial tax savings, working with a financial advisor in Moreno Valley, CA helps you design your retirement plan to suit your unique financial situation.
Flexibility That Fits Your Income
If your income changes annually, a plan like a SEP IRA or Solo 401(k) offers the option to modify how much you save:
- Customizable Contributions: Set aside more during successful years and cut back when income is lower, ensuring your plan aligns with your financial situation.
- Roth Options: Opting for a Roth Solo 401(k) lets you settle taxes at the time of contribution, enabling you to withdraw without tax penalties in the future—a smart decision if you believe 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 SIMPLE IRA lower your taxable income, helping you keep more of your income.
- Tax-Deferred Growth: You won't pay taxes on investment growth until you withdraw it, providing your money more time to compound.
- State-Specific Incentives: Depending on where you live, you may be eligible for additional credits as a self-employed individual. These regional incentives make these plans even more valuable.
- 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, 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: Allocating your investments across varied stocks, bonds, and other assets can help reduce risk while still growing your retirement fund.
- Emergency Back-Up: Supplementing your retirement savings with a dedicated business safety net ensures you don’t dipping into savings during challenging periods and risking extra costs.
Plan for the Future of Your Moreno Valley, CA Business
Retirement planning also helps you prepare for what’s next with your Moreno Valley, CA business:
- Selling Your Business: For those considering a sale, retirement accounts like SEP IRAs and Solo 401(k)s remain your personal assets and won’t be included in the sale. These savings ensure the financial stability you’ll need later on. Keep in mind 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 up to $70,000 for Solo 401(k)s, including catch-up contributions, according to plan rules).
- Minimizing Taxes: Using retirement contributions wisely minimizes the taxes you might face when you sell your business.
- Succession Planning: Whether you’re transferring ownership, your nest egg ensure the funds you need through the transition. You can also work with a financial advisor who specializes in succession planning and retirement accounts to help with taxes during the sale.
With the right retirement plan, you gain control over your financial future, reduce your tax burden, and establish a secure foundation for both your retirement and your business goals.
Why Start a Self-Employed Retirement Plan in Moreno Valley, CA Now?
There’s no denying that time is one of the most valuable resources in retirement planning. Getting a head start not only allows you to build a bigger financial cushion but also reduces the stress of saving aggressively in the future. This is why it makes sense to begin today:
The Cost of Waiting
Putting off saving for retirement can have a major 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, in turn, earn even more returns. The longer your money has to grow, the greater the benefit of this compounding process.
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 delays savings until age 40 but contributes $7,500 annually to bridge the gap.
By age 65, assuming 7% annual return:
- Alex contributes $180,000 and accumulates $691,184.39*.
- Taylor puts in $195,500 but achieves a total of only $474,367.78*.
How Early Contributions Grow
Small, consistent savings invested steadily can lead to significant growth. Consider this example showing the impact of compounding:
- 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 leaves you with only $235,412.97* by age 65—a gap of over $260,000, just from a 10-year delay.
Saving early, the lower your annual savings needs each year to achieve your retirement goals.
*The numbers shown in this scenario represent estimates generated with NerdWallet’s Compound Interest Calculator, assuming 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 for illustrative purposes only and do not guarantee future performance. Outcomes may change based on variables including market conditions, fees, and personal factors. We recommend consulting a financial advisor for personalized advice.
Take Control of Your Financial Future
If you’re self-employed in Moreno Valley, CA, it can be tempting to put more emphasis on reinvesting in your business over saving for retirement. However, starting a plan now gives you the chance to:
- Take advantage of tax-deferred growth or withdrawals without taxes down the road.
- Take advantage of adjustable savings that change with your cash flow.
- Build a financial cushion that offers peace of mind, no matter how your business changes.
Starting early, the less you’ll need to worry about playing catch-up later in life. Taking steps toward your retirement goals today means managing your financial future and giving yourself the opportunity to concentrate on your dreams—both for your golden years and your Moreno Valley, CA business.
Types of Self-Employed Retirement Plans
Multiple retirement savings options available for those working for themselves in Moreno Valley, CA, each providing its own benefits and trade-offs. A financial advisor will guide you to understand the advantages and disadvantages of each option and identify the one ideal for your unique situation. In most cases, your self-employed retirement plan options in Moreno Valley, CA are:
Traditional or Roth IRA
Plan Overview: IRAs, or Individual Retirement Accounts, are financial tools for retirement that offer key tax perks. In a standard IRA, contributions are typically tax-deductible, and returns grow free of current taxes, but money taken out during retirement are subject to income tax. In contrast, Roth IRA contributions from post-tax earnings, but qualified withdrawals in retirement, including earnings, are exempt from taxes. In both types of accounts, withdrawals are penalty-free provided you are at least 59½.
Eligibility: Unlike plans linked to your job, both 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 if you qualify for catch-up contributions.
Simplified Employee Pension Plan (SEP IRA)
Plan Overview: The Simplified Employee Pension IRA offers a way to save for retirement that permits entrepreneurs to set aside a portion of their self-employment income. Contributions can only be made by an employer, so, as a independent business owner, you (the employee) are limited to contributions from the employer role above 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 fixed dollar figure or a percentage of wages to employee accounts. A SEP IRA may be ideal for businesses that experience fluctuating revenue streams. Unlike other plans, SEP IRAs don’t have costly startup or administrative fees.
SEPs operate like conventional IRAs, where contributions are made with pre-tax money and money withdrawn is subject to income tax.
Eligibility: Both employers and self-employed individuals can set up 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 allowable contribution is based on a special calculation.
Solo 401(k)
Plan Overview: Solo 401(k)s, sometimes referred to as an Individual 401(k) or one-participant 401(k) plan, is a savings option for the self-employed designed for businesses with no employees or where the only employee is a spouse. Solo 401(k)s are similar to employer-sponsored 401(k) plans, and allow you to contribute as both an employer and an employee with pre-tax money. This provides more savings compared to SEPs or IRAs; however, the extra savings options may be offset by 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: Only 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 can make two types of contributions:
- Deferrals as an employee of up to 100% of your self-employment income, subject to 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) cannot exceed 25% of your net earnings from self-employment, which is defined as net profit minus half of your self-employment tax and the elective deferrals you made.
The total contribution cannot exceed $70,000, or $77,500 for individuals aged 50+ (in 2025), $81,250 for individuals turning 60-63 in 2025.
Individual Defined Benefit Plan
Plan Overview: The defined benefit plan offers a structured retirement solution that guarantees a fixed, predetermined benefit to business owners upon retirement. Unlike defined contribution plans mentioned above, this plan is not influenced by market performance, but enables participants to determine what they'll get in retirement. This option is ideal for wealthier professionals who are focused on saving a large amount for retirement and can commit to making larger deposits. Contributions offer tax-deferred growth, and withdrawals are taxed as income in retirement.
Eligibility: Entrepreneurs managing a one-person company or with a small staff of under five can open an individual defined benefit plan, but it's most commonly advised for people above age 50 who make $250,000 or more annually. Typically, good candidates for defined benefit plans include:
- Partners or owners who want to invest more than $70,000 (or $77,500 for individuals 50 and older)
- Organizations that already put in 3-4% and are willing to do more
- Organizations with proven consistent profit patterns
- Entrepreneurs over age 40 who desire to "catch up" or accelerate the retirement savings
Contribution Limits: The maximum allowable contribution is calculated by an actuary based on your earnings, age, and retirement objectives. Contribution limits are updated yearly.
The Importance of a Financial Advisor in Moreno Valley, CA for Your Self-Employed Retirement Plan
Partnering with an advisor in Moreno Valley, CA experienced with retirement plans for the self-employed serves as an essential partner for those working for themselves. They offer the knowledge to assist understand the intricacies of saving for retirement and design a tailored strategy that reflects your aspirations. An expert in your area will assess where you stand financially, understand your risk tolerance, and assist you in selecting the best options about saving and investing for retirement. A key part of what we do for you features:
- Guide you in choosing a plan that best fits your needs and goals
- Tailor the plan to fit you personally even further
- Create a written plan as required by IRS rules
- Organize a trust plan to manage your assets
- Help you understand the plan's terms
- Track and fine-tune your plan when necessary
- Deliver continuous support and financial insights throughout your retirement planning process
- Increase your retirement income by optimizing your social security benefits
Self-Employed Retirement Plans in Moreno Valley, CA: Correct Capital's Process
Self-employed individuals in Moreno Valley, CA who don’t have the time or expertise to oversee their self-employed retirement plan themselves may end up overwhelmed when faced with their choices. Through our team at Correct Capital, our Moreno Valley, CA financial advisors manage the majority of your retirement strategy for you, and strive to ensure meeting your future savings targets as straightforward as possible for you. We can help you get set up your self-employed retirement plan in four simple steps:
- Schedule a Call: In just 20 minutes, a member of our advisor team will assess if our services align for you and your business. This brief introduction helps us learn about your needs with no obligation or major time investment on your part.
- Gather Information: Should we agree to proceed, we'll request information, including how many employees you have (if any), your present financial standing, and your future objectives. This allows us to put together a custom plan that aligns with your goals.
- Review Your Plan: Once we've developed a plan from the information you provide, we'll meet with you and discuss your plan thoroughly to help you fully grasp it and show how it aligns with your goals.
- Implementation and Monitoring: Once we've agreed on your plan, we'll implement the necessary steps so you can start saving. As time goes on, we'll have regular meetings and track your progress to keep it tailored to your evolving circumstances.
Our Moreno Valley, CA financial advisors and retirement plan consultants serve as fiduciary advisors, meaning they are required by law and ethical standards to act in your best interest.
Other financial advisory services we offer in Moreno Valley, 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 Moreno Valley, CA
You don't see your business as "just a business", and your Moreno Valley, CA financial advisors must deliver more than just good financial guidance. Correct Capital takes pride in, we make it a priority to understand our clients and their businesses to create customized self-employed retirement plans. We offer all our Moreno Valley, CA clients our I.O.U. promise: all guidance we provide will be independent, objective, and unbiased. To take the first step on your self-employment retirement plan, reach out to Correct Capital at 877-930-401k or contact us online.
