Self-employed retirement plans New York City, NY. The freedom of running your own company in New York City, NY is one of the greatest advantages of having a self-directed career. However, this freedom can come with a lack of security, notably when it comes to retirement savings, as you don't have the option of employer-sponsored retirement plans. Only 13% of self-employed individuals have a workplace retirement plan, but many would be better off exploring their options. In addition to having a financially stable retirement, partnering with a financial advisor in New York City, NY to create your self-employed retirement plan can provide significant tax advantages that help you to move your business forward.
Few New York City, NY wealth management and retirement planning firms are as attuned to the requirements of small business owners better than Correct Capital. The father of our founder was a small business owner himself (read more of our story here), and we take pride in helping businesses with their retirement planning needs. We recognize that your business and retirement aspirations go far beyond basic numbers, and we strive to offer customized solutions to meet your unique goals. Read on to discover about your self-employed retirement plan options in New York City, NY, or call Correct Capital at 877-930-401k or contact us online to speak with a entrepreneurial financial advisor in New York City, NY today.
Why New York City, NY Self-Employed Individuals Should Have a Retirement Plan
Retirement plans for self-employed individuals help prepare you for the future, they also provide tangible benefits today. From flexible contributions to considerable tax savings, partnering with a financial advisor in New York City, NY allows you to design your retirement plan to align with your unique financial situation.
Flexibility That Fits Your Income
For those with fluctuating income over time, a plan like a SEP IRA or Solo 401(k) offers the freedom to tailor how much you save:
- Customizable Contributions: Save extra during high-income years and reduce savings when revenues are down, so your plan fits your financial situation.
- Roth Options: Choosing a Roth Solo 401(k) lets you handle taxes upfront, so you can withdraw without tax penalties in the future—an advantageous choice if you expect your tax rate to be higher in the future.
Save Money on Taxes
Retirement plans for self-employed individuals offer significant tax benefits:
- Tax-Deductible Contributions: Contributions to a SEP IRA shrink your tax liability, helping you keep more of your earnings.
- Tax-Deferred Growth: Investments grow tax-free until withdrawal, providing your money more time to grow.
- State-Specific Incentives: In some states, you could qualify for state-specific credits as a business owner. These state-level 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 they contribute 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 linked to the way you invest:
- Diversified Portfolios: Distributing your investments across different asset classes like stocks and bonds can help mitigate financial risk while helping to grow your savings.
- Emergency Back-Up: Combining your retirement strategy and a financial buffer for your business prevents you from using your retirement funds during tough times and incurring penalties.
Plan for the Future of Your New York City, NY Business
Retirement planning can assist you plan ahead for what’s next with your New York City, NY business:
- Selling Your Business: When selling your business, retirement accounts like SEP IRAs and Solo 401(k)s stay in your name and won’t be included in the sale. These savings ensure the steady income you’ll need during retirement. Keep in mind that while the sale of a business usually creates a capital gain, contributions to retirement accounts are capped at annual limits (e.g., as much as $7,000 for IRAs or a maximum of $70,000 for Solo 401(k)s, with catch-up contributions, based on plan compensation).
- Minimizing Taxes: Strategically planning your contributions minimizes the taxes you are required to pay when you pass on your business.
- Succession Planning: Whether you’re transferring ownership, your retirement accounts ensure a stable foundation through the transition. You may also seek advice from a financial advisor experienced in both succession and retirement strategies to minimize tax burdens on the sale.
With the proper savings strategy, you manage your financial future, lower your tax bill, and create a strong framework for both your retirement and your business goals.
Why Start a Self-Employed Retirement Plan in New York City, NY Now?
Time is one of the most crucial assets in retirement planning. Getting a head start not only lets you accumulate a larger nest egg but also reduces the financial burden of catching up later in life. Here’s why it is beneficial to start now:
The Cost of Waiting
Putting off saving for retirement could lead to a significant impact on the amount you’ll have when you reach retirement age. The biggest reason is compound interest—the concept where your investments earn returns, and those returns, then, earn even more returns. The greater time span your money has to grow, the more significant the benefit of compounding.
Example: Taylor and Alex are both entrepreneurs. They each aim to save $500,000 for retirement by age 65:
- Alex begins contributing $5,000 annually at age 30.
- Taylor waits until age 40 but contributes $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
Regular, modest investments invested steadily often create impressive growth. Consider this example showing the impact of consistent growth:
- Starting at age 25: If you invest $200 per month in a retirement plan with an projected return of 7%, you’ll end up with $497,303.29* by age 65.
- Starting at age 35: Investing 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.
Starting sooner, the lower your annual savings needs each year to meet your retirement goals.
*These calculations represent estimates derived from NerdWallet’s Compound Interest Calculator, with the assumption of a 7% annual return. The contributions were calculated by multiplying the annual deposit amount by the total number of years contributions were made. This information is intended as illustrative examples and do not guarantee future performance. Actual results may vary due to variables including market conditions, fees, and personal factors. Be sure to speak with a financial advisor for personalized advice.
Take Control of Your Financial Future
As a self-employed person in New York City, NY, it might seem easier to put more emphasis on reinvesting in your business over saving for retirement. Even so, initiating a plan now enables you to:
- Take advantage of tax-free future growth or penalty-free withdrawals down the road.
- Enjoy contribution flexibility that adapt to your cash flow.
- Create a long-term safety measure that offers peace of mind, no matter how your business changes.
The sooner you start, the less you’ll be required to worry about playing catch-up later in life. Saving for retirement now means taking control of your financial future and creating for yourself the opportunity to concentrate on your goals—both for your golden years and your New York City, NY business.
Types of Self-Employed Retirement Plans
Multiple retirement savings options designed for those working for themselves in New York City, NY, each providing its own pros and cons. A financial advisor can help you learn about the pros and cons of each choice and identify the one ideal for your needs. Generally speaking, your self-employed retirement plan options in New York City, NY consist of:
Traditional or Roth IRA
Plan Overview: Individual Retirement Accounts (IRAs), as explained here, represent retirement savings vehicles that provide distinct tax benefits. In a traditional 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, with Roth IRAs, you contribute from post-tax earnings, but retirement withdrawals that qualify, including earnings, are exempt from taxes. In both cases, withdrawals don’t incur penalties if 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 for those aged 50+.
Simplified Employee Pension Plan (SEP IRA)
Plan Overview: SEP IRAs offers a way to save for retirement that permits 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 more than the 25% you (the employer) have designated. If you have employees, you are obligated to contribute the same amount for them as you do for yourself. You may choose to contribute a set monetary value or a percentage of wages to employee accounts. SEP IRAs may be ideal for companies with fluctuating revenue streams. Unlike other plans, SEP IRAs lack expensive setup or ongoing fees.
SEPs operate like standard 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 the lesser 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: A Solo 401(k) plan, also called an Individual 401(k) or one-participant 401(k) plan, is a self-employed retirement plan designed for companies that have no employees or if the only employee is your spouse. These plans function similarly to traditional employer-managed 401(k) plans, and let you make contributions as both the employer and the employee with pre-tax money. This offers more savings compared to SEPs or IRAs; however, the additional opportunities often come with more constrained investment avenues. With this type of 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 may establish 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:
- Employee contributions of up to 100% of your earned income from self-employment, up to the annual contribution limit. For 2025, the limits will be $23,500, or $31,000 for those aged 50 and above, or $34,750 for those who turn 60-63 in 2025.
- Contributions as an employer (as an employer) must not surpass 25% of your net self-employment income, which is your net profit minus half of your self-employment tax and the employee contributions you made.
Total contributions are capped at $70,000, or $77,500 if you're over age 50 (in 2025), $81,250 for individuals turning 60-63 in 2025.
Individual Defined Benefit Plan
Plan Overview: A defined benefit plan offers a structured retirement solution that delivers a fixed, predetermined benefit to self-employed individuals 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 option is recommended for higher-income professionals who are focused on saving a significant sum for retirement and are prepared to contribute sizeable contributions. Contributions are tax deferred, and withdrawals are taxable as income during retirement.
Eligibility: Any self-employed individual operating a solo business or employing fewer than five people may establish an individual defined benefit plan, but it's most commonly suggested for those over 50 who generate a minimum of $250,000 yearly. In most cases, good candidates for defined benefit plans tend to be:
- Entrepreneurs who want to invest more than $70,000 (or $77,500 if over age 50)
- Businesses currently investing 3-4% but are open to increasing contributions
- Companies showing consistent profit patterns
- Business leaders over age 40 who desire to "catch up" or boost savings within a short timeframe
Contribution Limits: The cap on contributions must be determined by an actuary using your income, age, and retirement goals. Contribution limits are updated yearly.
The Importance of a Financial Advisor in New York City, NY for Your Self-Employed Retirement Plan
A financial advisor in New York City, NY focused on self-employed retirement strategies serves as an important asset for self-employed individuals. They offer the knowledge to assist navigate the complexities of retirement planning and design a personalized approach that aligns with your goals. An expert in your area will evaluate your financial situation, determine how much risk you’re comfortable with, and help you in selecting the best options about saving and investing for retirement. A key part of what we do for you features:
- Help you choose a plan that suits your unique requirements
- Further adapt the plan to fit you personally even further
- Create a written plan that complies with IRS regulations
- Organize a trust plan to manage your assets
- 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 to help you navigate your retirement journey
- Increase your retirement income by maximizing your social security benefits
Self-Employed Retirement Plans in New York City, NY: Correct Capital's Process
Self-employed individuals in New York City, NY who don’t have the time or expertise to oversee their self-employed retirement plan on their own often feel overwhelmed by their options. Through our team at Correct Capital, our New York City, NY financial advisors take on the majority of your retirement strategy for you, to help make meeting your future savings targets as easy as possible for you. We can help you get set 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 help understand if our services align for you and your business. This short conversation helps us get a sense of your goals with no pressure or significant effort on your part.
- Gather Information: Should we agree to proceed, we'll request information, including how many employees you have (if any), your current financial situation, and your future objectives. This enables us to craft a tailored approach suited specifically for your needs.
- Review Your Plan: Once we've developed a plan from the information you provide, we'll meet with you and review your plan in detail 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 begin contributing. Throughout our relationship, we'll check in and track your progress to keep it tailored to your evolving circumstances.
Our New York City, NY financial advisors and retirement plan consultants act as 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 New York City, NY include:
- Independent Financial Advisor
- Roth Conversion
- 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 New York City, NY
Your business isn't "just a business" to you, and your New York City, NY financial advisors need to offer more than just good financial guidance. With Correct Capital, we take the time to get to know our clients and their businesses to deliver tailored self-employed retirement plans. To every client in New York City, NY, we provide our I.O.U. promise: everything we recommend 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.
