Self-employed retirement plans Moreno Valley, CA. The freedom of owning your own business in Moreno Valley, CA offers many benefits of having a self-directed career. Even so, this flexibility sometimes brings with certain challenges, particularly regarding 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 would be better off understanding their retirement options. In addition to enjoying a financially stable retirement, partnering with a financial advisor in Moreno Valley, CA to set up your self-employed retirement plan delivers significant tax advantages that enable you to move your business forward.
Few Moreno Valley, CA financial advisory and retirement planning firms truly grasp the challenges faced by self-employed individuals as well as Correct Capital. Our company’s founder grew up with a father who was a small business owner himself (check out our story here), and Correct Capital have a rich history of supporting entrepreneurs with their retirement planning needs. We understand that your professional and personal aspirations go far beyond basic numbers, and we are dedicated to provide customized solutions that reflect your objectives. Keep reading to learn more about your self-employed retirement plan options in Moreno Valley, CA, or call Correct Capital at 877-930-401k or contact us online to speak with a small business financial advisor in Moreno Valley, CA today.
Why Moreno Valley, 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. From flexible contributions to considerable tax savings, consulting a financial advisor in Moreno Valley, CA helps you create 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 flexibility to modify how much you save:
- Customizable Contributions: Save extra during profitable years and reduce savings when your earnings dip, so 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 anticipate your tax rate will increase in the future.
Save Money on Taxes
Self-employed retirement plans offer powerful tax benefits:
- Tax-Deductible Contributions: Contributions to a Solo 401(k) shrink your tax liability, helping you keep more of your earnings.
- Tax-Deferred Growth: Investments grow tax-free until withdrawal, giving your money more time to compound.
- State-Specific Incentives: Based on your location, you could qualify for additional deductions as a self-employed individual. These local incentives make these plans even more beneficial.
- Retirement Savings Contributions Credit (Saver’s Credit): Qualified participants can apply for a credit of up to 50% of the first $2,000 put into a retirement plan, further reducing your tax bill even more.
Protect Your Savings With Smart Investments
Planning for a safe retirement requires more than how much you save—it’s also linked to the way you invest:
- Diversified Portfolios: Spreading your investments across a mix of stocks, bonds, and alternatives serves to reduce risk while still growing your retirement fund.
- Emergency Back-Up: Pairing your retirement plan with a financial buffer for your business helps you avoid using your retirement funds during financial hardships and facing tax penalties.
Plan for the Future of Your Moreno Valley, CA Business
A thoughtful retirement strategy enables you to plan ahead for what’s next with your Moreno Valley, CA business:
- Selling Your Business: When selling your business, retirement accounts like SEP IRAs and Solo 401(k)s stay in your name and don’t transfer with the business. These accounts can provide the financial stability you’ll need during retirement. Remember that while the sale of a business usually creates a capital gain, retirement plan contributions are subject to yearly maximums (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: Using retirement contributions wisely helps lower the taxes you might face when you transfer your business.
- Succession Planning: If you’re passing the business on, your retirement savings offer the funds you need through the transition. You might want to work with a financial advisor who specializes in succession planning and retirement accounts to minimize tax burdens associated with the transaction.
With the proper savings strategy, you can take control of your financial future, lower your tax bill, and establish a strong framework for both your retirement and your business goals.
Why Start a Self-Employed Retirement Plan in Moreno Valley, CA Now?
Time is one of the most important assets in retirement planning. Beginning sooner rather than later not only allows you to build a more substantial retirement fund but also minimizes the financial burden of saving aggressively in the future. The following are reasons why it is beneficial to start now:
The Cost of Waiting
Delaying your retirement savings could lead to a substantial impact on the amount you’ll have when you reach retirement age. The main reason is compound interest—the powerful process where your investments generate earnings, and those returns, then, generate even more returns. The longer your money has to grow, the greater the benefit of this compounding process.
Example: Taylor and Alex are both self-employed individuals. Both of them want to save $500,000 for retirement by age 65:
- Alex initiates savings of $5,000 annually at age 30.
- Taylor postpones starting contributions to age 40 but saves $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 invests $195,500 but only ends up with $474,367.78*.
How Early Contributions Grow
Regular, modest investments invested steadily can lead to significant growth. Consider this example showing the power of consistent growth:
- Starting at age 25: Putting aside $200 per month in a retirement plan with an average annual return of 7%, you’ll grow to approximately $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 difference of over $260,000, just from a 10-year delay.
The earlier you begin, the less effort required each year to reach your retirement goals.
*These calculations 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. This information is for illustrative purposes only and are not a promise of future results. Outcomes may change based on elements like market conditions, fees, and your unique situation. We recommend consulting a financial advisor for custom recommendations.
Take Control of Your Financial Future
As a self-employed person in Moreno Valley, CA, it might seem easier to focus more on reinvesting in your business rather than saving for retirement. However, beginning a plan now allows you to:
- Benefit from tax-deferred growth or penalty-free withdrawals down the road.
- Benefit from flexible contributions that align with your cash flow.
- Build a long-term safety measure that provides security, no matter how your business develops.
Getting started now, the less you’ll have to worry about playing catch-up later in life. Saving for retirement now means taking control of your financial future and allowing yourself the freedom to concentrate on your dreams—both for your golden years and your Moreno Valley, CA business.
Types of Self-Employed Retirement Plans
There are several retirement savings options available for entrepreneurs in Moreno Valley, CA, each providing its own pros and cons. A financial advisor will guide you to understand the pros and cons of each plan and determine the one best suited for your needs. In most cases, your self-employed retirement plan options in Moreno Valley, CA consist of:
Traditional or Roth IRA
Plan Overview: IRAs, or Individual Retirement Accounts, are long-term savings plans that include distinct tax benefits. In a standard IRA, the money you contribute is often tax-deductible, and earnings grow without immediate taxation, but retirement distributions are subject to income tax. In contrast, with Roth IRAs, you contribute are made with after-tax income, but qualified withdrawals in retirement, including earnings, are not taxed. In both types of accounts, withdrawals come without penalties provided you are at least 59½.
Eligibility: While many retirement plans, such as 401(k)s, are tied to employment, both traditional and Roth IRAs are accessible for individuals with an earned income.
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: SEP IRAs offers a way to save for retirement that enables 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 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. You have the flexibility to contribute a set monetary value or a percentage of wages to employee accounts. SEP IRAs is a good option for companies with periods of inconsistent earnings. Unlike other plans, SEP IRAs don’t have the high fees associated with starting or maintaining other plans.
SEPs operate like standard IRAs, where you contribute pre-tax dollars and withdrawals are taxed as income.
Eligibility: Both employers and self-employed individuals can open a SEP.
Contribution Limits: Contribution limits for employees in a SEP IRA must not exceed:
- 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, also called 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. This type of plan function similarly to standard 401(k) plans, and allow you to contribute as both the employer and the employee with pre-tax money. This allows for more savings than SEPs or IRAs; however, the increased savings potential can be balanced 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: Only 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 can make two types of contributions:
- Elective deferrals (as an employee) of up to 100% of your self-employment income, up 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) 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.
Total contributions are capped at $70,000, or $77,500 for those aged 50 and older (in 2025), $81,250 for those aged 60-63 in 2025.
Individual Defined Benefit Plan
Plan Overview: The defined benefit plan is a retirement option that delivers a pre-established payout to entrepreneurs upon retirement. As opposed to defined contribution plans, this plan is not influenced by market performance, but lets individuals clearly understand the precise amount they'll receive in retirement. This strategy is best suited for high-earning professionals who are focused on saving a substantial amount for retirement and are prepared to contribute substantial contributions. Contributions grow tax-free until withdrawal, and withdrawals incur taxes as income in retirement.
Eligibility: Self-employed professionals running an owner-only business or employing fewer than five people may establish an individual defined benefit plan, but it's most commonly suggested for people above age 50 who generate a minimum of $250,000 yearly. In most cases, good candidates for defined benefit plans are:
- Partners or owners who aim to deposit more than $70,000 (or $77,500 for those aged 50+)
- Companies already contributing 3-4% and are willing to do more
- Companies showing consistent profit patterns
- Business leaders over age 40 who desire to "catch up" or accelerate the retirement savings
Contribution Limits: The contribution limit requires calculation from an actuary determined by your earnings, age, and retirement objectives. Contribution limits change annually.
The Importance of a Financial Advisor in Moreno Valley, CA for Your Self-Employed Retirement Plan
Partnering with an advisor in Moreno Valley, CA focused on self-employed retirement strategies can be an important asset for those working for themselves. They offer the knowledge to assist understand the intricacies of saving for retirement and design a customized plan that aligns with your goals. Your advisor in Moreno Valley, CA will review your finances, identify your risk preferences, and help you in making informed decisions about saving and investing for retirement. Included in what we do for you includes:
- Guide you in choosing a plan that aligns with your objectives and circumstances
- Customize the plan to your needs even further
- Adopt a written plan as required by IRS rules
- Organize a trust plan to manage your assets
- Ensure you comprehend the plan's terms
- Review and modify your plan when necessary
- Offer continued financial education and guidance throughout your retirement planning process
- Maximize what you receive in retirement by optimizing your social security benefits
Self-Employed Retirement Plans in Moreno Valley, CA: Correct Capital's Process
Entrepreneurs in Moreno Valley, CA who lack the time, interest, or knowledge to oversee their own retirement planning on their own may end up overwhelmed by their available plans. At Correct Capital, our Moreno Valley, CA financial advisors handle the bulk of your retirement strategy for you, to help make meeting your future savings targets as hassle-free as possible for you. We are here to assist you in setting up 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 can determine if our services align for you and your business. This short conversation lets us learn about your needs with zero commitment or major time investment on your part.
- Gather Information: Once we mutually decide to continue, we'll request information, including your employee count, your existing financial picture, and your retirement goals. This helps us create a personalized strategy suited specifically for your needs.
- Review Your Plan: Once we've developed a plan using the information you provide, we'll meet with you and discuss your plan thoroughly to ensure you understand it and explain its fit to your circumstances.
- Implementation and Monitoring: Once we've agreed on your plan, we'll set everything up so you can initiate your savings journey. As time goes on, we'll meet with you and monitor your plan to ensure it stays suited to your needs.
Our Moreno Valley, 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 Moreno Valley, CA 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 Moreno Valley, CA
You don't see your business as "just a business", and your Moreno Valley, CA financial advisors need to offer more than just good financial guidance. With Correct Capital, we make it a priority to understand our clients and their businesses to deliver customized self-employed retirement plans. All our clients in Moreno Valley, CA benefit from 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, call Correct Capital today at 877-930-401k or contact us online.
