Self-employed retirement plans Naperville, IL. The flexibility of running your own company in Naperville, IL offers many benefits of having a self-directed career. That said, this independence sometimes brings with a lack of security, notably 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, yet countless would be better off understanding their retirement options. In addition to having a more comfortable retirement, seeking advice from a financial advisor in Naperville, IL to set up your self-employed retirement plan offers significant tax advantages that help you to move your business forward.
Few Naperville, IL wealth management and retirement planning firms are as attuned to the requirements of self-employed individuals quite like 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 supporting entrepreneurs with their retirement planning needs. We understand that your goals for your business and retirement aren’t limited to just monetary concerns, and we work tirelessly to offer customized solutions to meet your unique goals. Continue exploring to find out about your self-employed retirement plan options in Naperville, IL, or reach out to Correct Capital at 877-930-401k or contact us online to speak with a small business financial advisor in Naperville, IL today.
Why Naperville, IL Self-Employed Individuals Should Have a Retirement Plan
Retirement plans for self-employed individuals are essential for preparing you for the future, they also provide tangible benefits today. From flexible contributions to considerable tax savings, partnering with a financial advisor in Naperville, IL allows you to customize your retirement plan to suit your individual circumstances.
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: Set aside more during successful years and cut back when revenues are down, so that your plan works with your cash flow.
- Roth Options: Choosing a Roth Solo 401(k) lets you settle taxes at the time of contribution, allowing you to withdraw your savings tax-free down the road—a wise move if you expect your tax rate to be higher in the future.
Save Money on Taxes
Plans designed for the self-employed deliver valuable tax benefits:
- Tax-Deductible Contributions: Contributions to a Solo 401(k) lower your taxable income, so you can keep more of your earnings.
- 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: In some states, you might access additional credits as a sole proprietor. These local incentives make these plans even more valuable.
- Retirement Savings Contributions Credit (Saver’s Credit): Eligible individuals can apply for a credit of up to 50% of the first $2,000 contributed a retirement plan, helping to lower your tax bill even more.
Protect Your Savings With Smart Investments
Creating a stable future isn’t only about how much you save—it’s also determined by your investment strategy:
- Diversified Portfolios: Allocating your investments across different stocks, bonds, and alternatives is a smart way to mitigate financial risk while continuing to build your savings.
- Emergency Back-Up: Combining your retirement strategy and a financial buffer for your business helps you avoid using your retirement funds during financial hardships and risking extra costs.
Plan for the Future of Your Naperville, IL Business
A thoughtful retirement strategy can assist you think through what’s next with your Naperville, IL business:
- Selling Your Business: When selling your business, plans like SEP IRAs or Solo 401(k)s stay in your name and don’t transfer with the business. These plans offer the financial stability you’ll need in the future. It’s important to note that while selling a business often leads to a capital gain, deposits into these plans are capped at annual limits (e.g., up to $7,000 for IRAs or a maximum of $70,000 for Solo 401(k)s, with catch-up contributions, according to plan rules).
- Minimizing Taxes: Making the most of retirement savings minimizes the taxes you’ll owe when you pass on your business.
- Succession Planning: Whether you’re transferring ownership, your retirement accounts provide the funds you need as you make this shift. You may also work with a financial advisor experienced in both succession and retirement strategies to help with taxes on the sale.
With the best-fit retirement strategy, you gain control over your financial future, reduce your tax burden, and build a secure foundation for both your retirement and your business goals.
Why Start a Self-Employed Retirement Plan in Naperville, IL Now?
There’s no denying that time is one of the most valuable assets when it comes to saving for retirement. Starting early not only allows you to build a bigger financial cushion but also lowers the stress of playing catch-up as you get older. Here’s why it pays to take action now:
The Cost of Waiting
Waiting to start your retirement fund may cause a substantial impact on the amount you’ll have when you reach retirement age. The primary reason is compound interest—the powerful process where your investments grow, and those returns, subsequently, earn even more returns. The more time your money has to grow, the greater the benefit of compounding.
Example: Alex and Taylor 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 make up for lost time.
By age 65, with an assumption of 7% annual return:
- Alex contributes $180,000 and accumulates $691,184.39*.
- Taylor puts in $195,500 but only ends up with $474,367.78*.
How Early Contributions Grow
Small, consistent savings invested steadily may result in substantial growth. Consider this example showing the power of consistent growth:
- 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: Contributing the same $200 per month yields only $235,412.97* by age 65—a difference of over $260,000, simply due to a 10-year delay.
Saving early, the lower your annual savings needs each year to meet your retirement goals.
*These calculations are estimates derived from 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 cannot predict actual future outcomes. Outcomes may change due to elements like market conditions, fees, and personal factors. Always consult a financial advisor for custom recommendations.
Take Control of Your Financial Future
As a self-employed person in Naperville, IL, it can be tempting to prioritize reinvesting in your business over saving for retirement. However, initiating a plan now allows you to:
- Benefit from growth that is tax-deferred or tax-free withdrawals down the road.
- Benefit from contribution flexibility that align with your cash flow.
- Establish a financial cushion that provides security, no matter how your business develops.
Starting early, the less you’ll have to worry about catching up later in life. Taking steps toward your retirement goals today means taking control of your financial future and creating for yourself the ability to focus on your dreams—both for your future retirement and your Naperville, IL business.
Types of Self-Employed Retirement Plans
A variety of retirement savings options available for those working for themselves in Naperville, IL, each providing its own pros and cons. A financial advisor is available to help you evaluate the advantages and disadvantages of each plan and determine the one ideal for your needs. In most cases, your self-employed retirement plan options in Naperville, IL consist of:
Traditional or Roth IRA
Plan Overview: IRAs, or Individual Retirement Accounts, are financial tools for retirement that include key tax perks. In a standard IRA, the money you contribute is often tax-deductible, and earnings grow without immediate taxation, but withdrawals in retirement are taxable. In contrast, Roth IRAs require 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 as long as you are at least 59½.
Eligibility: While many retirement plans, such as 401(k)s, are tied to employment, traditional and Roth IRAs are accessible for individuals with a source of income.
Contribution Limits: For 2025, annual contribution limits for IRAs remain $7,000, or $8,000 for those aged 50+.
Simplified Employee Pension Plan (SEP IRA)
Plan Overview: SEP IRAs is a retirement plan that enables self-employed individuals to set aside a portion of their self-employment income. Contributions must come from an employer, so, as a self-employed individual, you (the employee) would not be able to contribute above the 25% you (the employer) have designated. If you have employees, it's required to 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 works well for entrepreneurs facing periods of inconsistent earnings. Unlike other plans, SEP IRAs are free of expensive setup or ongoing fees.
SEPs work like traditional IRAs, where the contributions are tax-deferred and retirement distributions are taxable.
Eligibility: Employers of any type, including self-employed individuals can set up a SEP.
Contribution Limits: Contribution limits for employees in a SEP IRA are the lesser of:
- 25% of compensation, or
- $70,000 for 2025
If you’re self-employed, the contribution you can make is based on a special calculation.
Solo 401(k)
Plan Overview: Solo 401(k)s, also called an Individual 401(k) or one-participant 401(k) plan, is a retirement savings plan meant for companies that have no employees or where the only employee is a spouse. This type of plan operate much like standard 401(k) plans, and let you make contributions as both an employer and an employee with pre-tax money. This allows for more savings compared to 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: Solo 401(k)s are available solely to 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 are allowed to make two types of contributions:
- Deferrals as an employee of up to 100% of your self-employed earnings, subject to the annual contribution limit. In 2025, those limits are $23,500, or $31,000 for those aged 50 and above, or $34,750 for individuals aged 60-63 in 2025.
- Profit-sharing contributions (as an employer) must not surpass 25% of your net self-employment income, which is defined as net profit minus half of your self-employment tax and the deferrals you made.
Total contributions are capped at $70,000, or $77,500 if you're over age 50 (in 2025), $81,250 for those aged 60-63 in 2025.
Individual Defined Benefit Plan
Plan Overview: Defined benefit plans is a retirement option that provides a fixed, predetermined benefit to entrepreneurs upon retirement. As opposed to defined contribution plans, investment returns don’t affect the payout, but allows self-employed individuals to know the precise amount they'll have in retirement. This strategy is best suited for high-earning entrepreneurs who aim to accumulate a large amount for retirement and can commit to making substantial contributions. Contributions offer tax-deferred growth, and withdrawals are taxable as income in retirement.
Eligibility: Self-employed professionals running an owner-only business or with less than five employees may establish an individual defined benefit plan, but it's most commonly suggested for those over 50 who earn at least $250,000 a year. Generally, good candidates for defined benefit plans tend to be:
- Entrepreneurs who desire to contribute more than $70,000 (or $77,500 if over age 50)
- Businesses currently investing 3-4% with plans to contribute more
- Organizations with proven consistent profit patterns
- Partners or owners over age 40 who desire to "catch up" or boost savings within a short timeframe
Contribution Limits: The maximum allowable contribution is calculated by an actuary determined by your financial situation, age, and savings targets. Limits on contributions are updated yearly.
The Importance of a Financial Advisor in Naperville, IL for Your Self-Employed Retirement Plan
A financial advisor in Naperville, IL focused on self-employed retirement strategies serves as an essential partner for entrepreneurs. They offer the knowledge to assist navigate the complexities of retirement planning and craft a tailored strategy that aligns with your goals. Your advisor in Naperville, IL 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:
- Assist in selecting a plan that best fits your needs and goals
- Further adapt the plan to fit you personally even further
- Adopt a written plan as required by IRS rules
- Arrange a trust plan for assets
- Help you understand the plan's terms
- Track and fine-tune your plan as needed
- Offer continued financial education and guidance as you continue on the road to retirement
- Increase your retirement income by optimizing your social security benefits
Self-Employed Retirement Plans in Naperville, IL: Correct Capital's Process
Entrepreneurs in Naperville, IL who don’t have the time or expertise to handle their own retirement planning themselves often feel overwhelmed as they look at their choices. At Correct Capital, our Naperville, IL financial advisors take on the bulk of your retirement planning for you, to help make meeting your future savings targets as hassle-free as possible for you. We can help you get set up your self-employed retirement plan in a quick, four-step process:
- 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 initial call allows us to understand what you're looking for with no pressure or significant effort on your part.
- Gather Information: Should we agree to proceed, we'll gather information, including your employee count, your current financial situation, and your future objectives. This enables us to craft a personalized strategy that aligns with your goals.
- Review Your Plan: When we finalize a plan using the information you provide, we'll sit down with you and discuss your plan thoroughly to help you fully grasp it and show how it aligns with your goals.
- Implementation and Monitoring: After we agree on your plan, we'll set everything up so you can begin contributing. Over the course of our partnership, we'll check in and monitor your plan to make sure it remains aligned with your goals.
Our Naperville, IL financial advisors and retirement plan consultants are fiduciary advisors, who are obligated to they are legally and ethically bound to act in your best interest.
Other financial advisory services we offer in Naperville, IL include:
- Comprehensive Financial Planning
- Retirement Income Planning
- Investment Planning
- Retirement Financial Planning
- Investment Management
- 401(k) Audit
- High-Net-Worth Wealth Management
- Retirement Planner
Call Correct Capital for Your Self-Employed Retirement Plan in Naperville, IL
To you, your business is more than "just a business", and your Naperville, IL financial advisors need to offer more than basic financial recommendations. Correct Capital takes pride in, we focus on building a relationship with our clients and their businesses to provide tailored self-employed retirement plans. To every client in Naperville, IL, we provide our I.O.U. promise: everything we recommend 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.
