Self-employed retirement plans Moreno Valley, CA. The freedom of being your own boss in Moreno Valley, CA is one of the best aspects of being self-employed. Even so, this flexibility sometimes brings with certain challenges, especially when it comes to building your retirement fund, because you don't have access to retirement programs through an employer. Only 13% of self-employed individuals have a workplace retirement plan, but many would be better off exploring their options. In addition to enjoying a more secure retirement, partnering with a financial advisor in Moreno Valley, CA to set up your self-employed retirement plan offers significant tax advantages that help your business to grow and succeed.
Few Moreno Valley, CA financial advisory and retirement planning firms understand the needs of small business owners as well as Correct Capital. The father of our founder was a small business owner himself (check out our story here), and we have a rich history of assisting business owners in their retirement planning needs. We recognize that your professional and personal aspirations extend well past just monetary concerns, and we work tirelessly to provide personalized solutions aligned with your vision. Continue exploring to find out 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 talk to a self-employed 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 provide real benefits today. Offering flexibility in contributions to considerable tax savings, working with a financial advisor in Moreno Valley, CA allows you to create your retirement plan to fit your unique financial situation.
Flexibility That Fits Your Income
For those with fluctuating income from year to year, a plan like a SEP IRA or Solo 401(k) offers the flexibility to adjust how much you save:
- Customizable Contributions: Save extra during high-income years and cut back when revenues are down, ensuring your plan fits your financial situation.
- Roth Options: Opting for a Roth Solo 401(k) lets you pay taxes on contributions now, allowing you to withdraw without tax penalties in the future—a smart decision if you expect your tax rate to be higher in the future.
Save Money on Taxes
Retirement plans for self-employed individuals 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: You won't pay taxes on investment growth until you withdraw it, giving your money more time to grow.
- State-Specific Incentives: Depending on where you live, you may be eligible for extra tax breaks as a sole proprietor. These regional incentives help make these plans even more beneficial.
- Retirement Savings Contributions Credit (Saver’s Credit): Those who meet the requirements can claim a tax 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 isn’t only about how much you save—it’s also linked to the way you invest:
- Diversified Portfolios: Allocating your investments across a mix of stocks, bonds, and alternatives serves to reduce risk while helping to grow your savings.
- Emergency Back-Up: Supplementing your retirement savings with a financial buffer for your business ensures you don’t using your retirement funds during challenging periods and risking extra costs.
Plan for the Future of Your Moreno Valley, CA Business
Retirement planning can assist you think through what’s next with your Moreno Valley, CA business:
- Selling Your Business: If you’re planning to sell, accounts such as SEP IRAs or Solo 401(k)s remain your personal assets and won’t be included in the sale. These plans ensure the steady income you’ll need in the future. It’s important to note that while selling your business results in a capital gain, retirement plan contributions are capped at annual limits (e.g., up to $7,000 for IRAs or as much as $70,000 for Solo 401(k)s, factoring in catch-up contributions, depending on plan details).
- Minimizing Taxes: Strategically planning your contributions can reduce the taxes you are required to pay when you pass on your business.
- Succession Planning: For those winding down or handing over their business, your nest egg ensure a stable foundation as you make this shift. You may also seek advice from a financial advisor who specializes in succession planning and retirement accounts to reduce taxes on the sale.
With the best-fit retirement strategy, you manage your financial future, reduce your tax burden, and create a secure foundation for both your retirement and your business goals.
Why Start a Self-Employed Retirement Plan in Moreno Valley, CA Now?
Time remains one of the most valuable assets when it comes to saving for retirement. Getting a head start not only allows you to build a bigger financial cushion but also minimizes the financial burden of playing catch-up as you get older. Here’s why it makes sense to begin today:
The Cost of Waiting
Waiting to start your retirement fund may cause a substantial impact on the total you’ll have when you stop working. The biggest reason is compound interest—the powerful process where your investments earn returns, and those returns, in turn, generate even more returns. The longer your money has to grow, the larger the effect of this compounding process.
Example: Alex and Taylor are both self-employed professionals. They each aim 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 make up for lost time.
By age 65, with an assumption of 7% annual return:
- Alex contributes $180,000 and achieves a total of $691,184.39*.
- Taylor invests $195,500 but achieves a total of only $474,367.78*.
How Early Contributions Grow
Even modest contributions invested steadily often create substantial growth. Here’s a simple scenario showing the power of compound interest:
- Starting at age 25: By investing $200 per month in a retirement plan with an expected yearly growth rate of 7%, you’ll end up with $497,303.29* by age 65.
- Starting at age 35: Investing the same $200 per month would result in only $235,412.97* by age 65—a gap of over $260,000, simply due to a 10-year delay.
The earlier you begin, the lower your annual savings needs each year to meet your retirement goals.
*The figures provided in this example are based on estimates generated with NerdWallet’s Compound Interest Calculator, based on a 7% annual return. Annual deposits were multiplied by the number of years to estimate total contributions. These examples are intended as illustrative examples and cannot predict actual future outcomes. Outcomes may change due to factors such as market conditions, fees, and your unique situation. Be sure to speak with a financial advisor for custom recommendations.
Take Control of Your Financial Future
If you’re self-employed in Moreno Valley, CA, it is often the case that you put more emphasis on reinvesting in your business rather than saving for retirement. That said, initiating a plan now enables you to:
- Leverage tax-free future growth or withdrawals without taxes later on.
- Enjoy contribution flexibility that change with your income.
- Create a financial cushion that offers peace of mind, no matter how your business evolves.
Starting early, the less you’ll be required to worry about making up for lost time later in life. Saving for retirement now means managing your financial future and creating for yourself the freedom to focus on your goals—both for your retirement years and your Moreno Valley, CA business.
Types of Self-Employed Retirement Plans
There are several retirement savings options open for entrepreneurs in Moreno Valley, CA, each providing its own pros and cons. A financial advisor is available to help you understand the pros and cons of each plan and determine the one most suitable for your needs. In most cases, your self-employed retirement plan options in Moreno Valley, CA are:
Traditional or Roth IRA
Plan Overview: Individual Retirement Accounts (IRAs), as explained here, represent long-term savings plans that offer key tax perks. In a conventional IRA, the money you contribute is often tax-deductible, and earnings grow without immediate taxation, but money taken out during retirement are taxed as income. In contrast, Roth IRAs require contributions using income already taxed, but retirement withdrawals that qualify, including earnings, are tax-free. In both accounts, withdrawals come without penalties if you are at least 59½.
Eligibility: Unlike plans linked to your job, traditional and Roth IRAs are accessible for individuals with a source of 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 permits 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) cannot make additional contributions above the 25% you (the employer) already contributed. If you have employees, you must 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. This type of plan is a good option for businesses that experience periods of inconsistent earnings. Compared to other retirement options, SEP IRAs lack the high fees associated with starting or maintaining other plans.
SEPs operate like standard IRAs, where you contribute pre-tax dollars and money withdrawn is subject to income tax.
Eligibility: Any employer, including the self-employed 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 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 self-employed retirement plan meant for companies that have no employees or where the only employee is a spouse. This type of plan operate much like employer-sponsored 401(k) plans, and allow you to contribute as both an employee or an employer with pre-tax money. This provides more savings than SEPs or IRAs; however, the increased savings potential may be offset by more constrained investment avenues. In a solo 401(k) plan, 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 are eligible to open and contribute to a solo 401(k).
Contribution Limits: If you are self-employed with a solo 401(k) plan, you have the ability to make two types of contributions:
- Deferrals as an employee of up to 100% of your self-employment income, up to the annual contribution limit. For 2025, the limits will be $23,500, or $31,000 if you're over 50, or $34,750 if you attain age 60-63 in 2025.
- Employer profit-sharing contributions (as an employer) must not surpass 25% of your adjusted self-employment income, which is your net profit minus 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 (in 2025), $81,250 if you attain age 60-63 in 2025.
Individual Defined Benefit Plan
Plan Overview: A defined benefit plan represents a type of retirement plan that delivers 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 exactly how much they'll receive in retirement. This plan is recommended for high-earning entrepreneurs who aim to accumulate a large amount for retirement and can commit to making sizeable contributions. Contributions grow tax-free until withdrawal, and withdrawals are taxable as income upon retirement.
Eligibility: Entrepreneurs operating a solo business or employing fewer than five people may establish an individual defined benefit plan, but it's typically recommended for people above age 50 who make $250,000 or more annually. Typically, good candidates for defined benefit plans are:
- Entrepreneurs who want to invest more than $70,000 (or $77,500 for those aged 50+)
- Businesses currently investing 3-4% and are willing to do more
- Companies that have demonstrated consistent profit patterns
- Entrepreneurs over age 40 who wish to accelerate savings or accelerate the retirement savings
Contribution Limits: The cap on contributions is calculated by an actuary based on your earnings, age, and retirement objectives. Contribution limits are adjusted each year.
The Importance of a Financial Advisor in Moreno Valley, CA for Your Self-Employed Retirement Plan
Working with a financial advisor in Moreno Valley, CA specialized in self-employed retirement plans can be an essential partner for entrepreneurs. They offer the knowledge to assist understand the intricacies of saving for retirement and develop a tailored strategy that reflects your aspirations. Your advisor in Moreno Valley, CA will review your finances, identify your risk preferences, and help you in selecting the best options about saving and investing for retirement. Included in what we do for you includes:
- Help you choose a plan that aligns with your objectives and circumstances
- Tailor the plan to fit you personally even further
- Adopt a written plan that complies with IRS regulations
- Set up an asset trust plan
- 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 to help you navigate your retirement journey
- Boost your retirement earnings by maximizing your social security benefits
Self-Employed Retirement Plans in Moreno Valley, CA: Correct Capital's Process
Entrepreneurs in Moreno Valley, CA who don’t have the time or expertise to handle their self-employed retirement plan independently may end up overwhelmed when faced with their choices. With Correct Capital, our Moreno Valley, CA financial advisors manage the lion's share of your retirement planning for you, to help make meeting your retirement goals as hassle-free as possible for you. We will guide you in creating your self-employed retirement plan in four simple steps:
- Schedule a Call: In just 20 minutes, a member of our advisor team can determine if we're suited to your needs for you and your business. This brief introduction lets us understand what you're looking for with no obligation or major time investment on your part.
- Gather Information: If we both decide to move forward, we'll ask for information, including whether you have employees, your existing financial picture, and your long-term savings targets. This helps us create a tailored approach designed just for you.
- Review Your Plan: Once we've developed a plan based on the information you provide, we'll meet with you and go over your plan thoroughly to make sure it's clear and explain its fit to your circumstances.
- Implementation and Monitoring: Once we've agreed on your plan, we'll implement the necessary steps so you can start saving. Throughout our relationship, we'll meet with you and monitor your plan to make sure it remains aligned with your goals.
Our Moreno Valley, CA financial advisors and retirement plan consultants are fiduciary advisors, which means they are legally and ethically bound to do what's in your best interest.
Other financial advisory services we offer in Moreno Valley, CA include:
- 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 Moreno Valley, CA
Your business isn't "just a business" to you, and your Moreno Valley, CA financial advisors need to offer more than basic financial recommendations. With Correct Capital, we take the time to get to know 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 begin on your self-employment retirement plan, reach out to Correct Capital at 877-930-401k or contact us online.
