Self-employed retirement plans Newark, NJ. The freedom of owning your own business in Newark, NJ offers many benefits of having a self-directed career. Even so, this independence can come with a lack of security, especially regarding planning for retirement, because 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 more secure retirement, working with a financial advisor in Newark, NJ to establish your self-employed retirement plan offers significant tax advantages that enable your business to grow and succeed.
Few Newark, NJ financial advisory and retirement planning firms truly grasp the challenges faced by self-employed individuals as well as Correct Capital. The father of our founder was a small business owner himself (learn more about our story here), and our firm are deeply experienced in assisting business owners in their retirement planning needs. We know that your goals for your business and retirement aren’t limited to simple financial figures, and we work tirelessly to provide customized solutions that reflect your objectives. Continue exploring to find out about your self-employed retirement plan options in Newark, NJ, or reach out to Correct Capital at 877-930-401k or contact us online to consult with a small business financial advisor in Newark, NJ today.
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Why Newark, NJ Self-Employed Individuals Should Have a Retirement Plan
Retirement plans for self-employed individuals help prepare you for the future, they also provide real benefits today. Offering flexibility in contributions to considerable tax savings, consulting a financial advisor in Newark, NJ allows you to design your retirement plan to align with your individual circumstances.
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 option to tailor how much you save:
- Customizable Contributions: Set aside more during high-income years and scale back when income is lower, ensuring your plan aligns with your current income.
- Roth Options: Opting for a Roth Solo 401(k) lets you settle taxes at the time of contribution, so you can withdraw your savings tax-free down the road—an advantageous choice if you anticipate your tax rate to be higher in the future.
Save Money on Taxes
Plans designed for the self-employed deliver significant tax benefits:
- Tax-Deductible Contributions: Contributions to a SIMPLE IRA reduce what you owe in taxes, helping you keep more of your income.
- Tax-Deferred Growth: Your savings grow untaxed until withdrawn, providing your money more time to accumulate.
- State-Specific Incentives: In some states, you might access state-specific tax breaks 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 contributed a retirement plan, further reducing your tax bill even more.
Protect Your Savings With Smart Investments
Building a secure retirement isn’t only about how much you save—it’s also determined by your investment strategy:
- Diversified Portfolios: Allocating your investments across varied asset classes like stocks and bonds is a smart way to reduce risk while still growing your retirement fund.
- Emergency Back-Up: Supplementing your retirement savings with a financial buffer for your business ensures you don’t tapping into your nest egg during tough times and facing tax penalties.
Plan for the Future of Your Newark, NJ Business
Retirement planning also helps you think through what’s next with your Newark, NJ business:
- Selling Your Business: If you’re planning to sell, accounts such as SEP IRAs or Solo 401(k)s remain yours and are not part of the sale. These savings ensure the financial stability you’ll need in the future. It’s important to note that while selling your business results in a capital gain, deposits into these plans 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, based on plan compensation).
- Minimizing Taxes: Using retirement contributions wisely helps lower the taxes you are required to pay when you transfer your business.
- Succession Planning: Whether you’re transferring ownership, your nest egg ensure a stable foundation as you make this shift. You may also work with a financial advisor with expertise in succession and retirement planning to minimize tax burdens associated with the transaction.
With the best-fit retirement strategy, you manage your financial future, lower your tax bill, and build a strong framework for both your retirement and your business goals.
Why Start a Self-Employed Retirement Plan in Newark, NJ Now?
Time is one of the most crucial assets when it comes to saving for retirement. Getting a head start not only helps you grow a larger nest egg but also minimizes the financial burden of playing catch-up as you get older. The following are reasons why it pays to take action now:
The Cost of Waiting
Putting off saving for retirement may cause a major impact on the total you’ll have when you stop working. The biggest reason is compound interest—the powerful process where your investments grow, and those returns, in turn, earn even more returns. The greater time span your money has to grow, the greater the impact of this compounding process.
Example: Alex and Taylor are both self-employed individuals. Both of them want to save $500,000 for retirement by age 65:
- Alex starts saving $5,000 annually at age 30.
- Taylor waits until age 40 but saves $7,500 annually to bridge the gap.
By age 65, assuming 7% annual return:
- Alex contributes $180,000 and accumulates $691,184.39*.
- Taylor invests $195,500 but achieves a total of only $474,367.78*.
How Early Contributions Grow
Small, consistent savings made consistently may result in significant growth. Consider this example showing the effect of consistent growth:
- Starting at age 25: If you invest $200 per month in a retirement plan with an expected yearly growth rate of 7%, you’ll grow to approximately $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 shortfall of over $260,000, just from a 10-year delay.
The earlier you begin, the less effort required each year to achieve your retirement goals.
*The figures provided in this example represent estimates calculated using NerdWallet’s Compound Interest Calculator, based on 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 do not guarantee future performance. Actual results may vary depending on factors such as market conditions, fees, and personal factors. Always consult a financial advisor for guidance tailored to your needs.
Take Control of Your Financial Future
If you’re self-employed in Newark, NJ, it can be tempting to focus more on reinvesting in your business instead of saving for retirement. That said, beginning a plan now gives you the chance to:
- Take advantage of tax-free future growth or withdrawals without taxes later on.
- Benefit from contribution flexibility that align with your earnings.
- Build a safety net that provides security, no matter how your business evolves.
The sooner you start, the less you’ll need to worry about catching up later in life. Taking steps toward your retirement goals today means gaining control over your financial future and allowing yourself the ability to turn your attention to your goals—both for your retirement years and your Newark, NJ business.
Types of Self-Employed Retirement Plans
Multiple retirement savings options designed for self-employed individuals in Newark, NJ, each with its own advantages and considerations. A financial advisor is available to help you evaluate the pros and cons of each choice and choose the one best suited for your circumstances. Typically, your self-employed retirement plan options in Newark, NJ include:
Traditional or Roth IRA
Plan Overview: IRAs, or Individual Retirement Accounts, are financial tools for retirement that provide specific tax advantages. In a conventional IRA, contributions are typically tax-deductible, and investment earnings grow tax-deferred, but retirement distributions are taxable. In contrast, Roth IRAs require contributions using income already taxed, but qualified withdrawals in retirement, including earnings, are not taxed. In both cases, withdrawals are penalty-free provided 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 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 allows self-employed individuals to contribute a percentage of their net earnings. Contributions are strictly employer contributions an employer, so, as a independent business owner, you (the employee) cannot make additional contributions beyond the 25% you (the employer) allocate. If you have employees, it's required to contribute the same amount for them as you do for yourself. You have the flexibility to contribute a fixed dollar figure or a percentage of wages to employee accounts. SEP IRAs may be ideal for entrepreneurs facing periods of inconsistent earnings. Compared to other retirement options, SEP IRAs lack the high fees associated with starting or maintaining other plans.
SEPs work like conventional IRAs, where contributions are made with pre-tax money and withdrawals are taxed as income.
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
For self-employed individuals, the allowable contribution is based on a special calculation.
Solo 401(k)
Plan Overview: The Solo 401(k), commonly known as an Individual 401(k) or one-participant 401(k) plan, is a retirement savings plan designed for businesses without employees or where the only employee is a spouse. Solo 401(k)s operate much like standard 401(k) plans, and allow you to contribute as both an employer and an employee with pre-tax money. This provides more savings than SEPs or IRAs; however, the extra savings options often come with more constrained investment avenues. In a solo 401(k) plan, you can make either traditional or Roth deferrals, which offer 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 are allowed to make two types of contributions:
- Deferrals as an employee of up to 100% of your earned income from self-employment, subject to the annual contribution limit. For 2025, the limits will be $23,500, or $31,000 if you are 50 or older, or $34,750 for those who turn 60-63 in 2025.
- Profit-sharing contributions (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 elective deferrals you made.
Your combined contributions must not surpass $70,000, or $77,500 for individuals aged 50+ (as of 2025), $81,250 for those aged 60-63 in 2025.
Individual Defined Benefit Plan
Plan Overview: The defined benefit plan represents a type of retirement plan that guarantees a set amount to entrepreneurs upon retirement. As opposed to defined contribution plans, this plan is not influenced by market performance, but enables participants to determine exactly how much they'll have in retirement. This plan is ideal for higher-income professionals who aim to accumulate a substantial amount for retirement and are prepared to contribute substantial contributions. Contributions are tax deferred, and withdrawals are taxed as income upon retirement.
Eligibility: Any self-employed individual managing a one-person company or employing fewer than five people are eligible to open 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 include:
- Partners or owners who desire to contribute more than $70,000 (or $77,500 for those aged 50+)
- Businesses currently investing 3-4% but are open to increasing contributions
- Organizations showing consistent profit patterns
- Entrepreneurs 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 using your financial situation, age, and savings targets. Limits on contributions change annually.
The Importance of a Financial Advisor in Newark, NJ for Your Self-Employed Retirement Plan
Working with a financial advisor in Newark, NJ focused on self-employed retirement strategies serves as an invaluable resource for those working for themselves. They have the expertise to help guide you through the challenges of retirement planning and design a tailored strategy that reflects your aspirations. 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. Part of what we do for you features:
- Guide you in choosing a plan that best fits your needs and goals
- Customize the plan to your specific situation even further
- Create a written plan as required by IRS rules
- Set up an asset trust plan
- Ensure you comprehend the plan's terms
- Review and modify your plan as needed
- Deliver continuous support and financial insights throughout your retirement planning process
- Maximize what you receive in retirement by making the most of your social security
Self-Employed Retirement Plans in Newark, NJ: Correct Capital's Process
Newark, NJ business owners who aren’t equipped with the time or understanding to handle their own retirement planning on their own often feel overwhelmed when faced with their available plans. At Correct Capital, our Newark, NJ financial advisors handle the lion's share of your retirement strategy for you, working to make meeting your retirement goals as easy as possible for you. We are here to assist you in setting 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 will assess if we're a good fit for you and your business. This brief introduction helps us understand what you're looking for with no pressure or significant effort on your part.
- Gather Information: If we both decide to move forward, we'll request information, including how many employees you have (if any), your current financial situation, and your long-term savings targets. This enables us to craft a tailored approach that aligns with your goals.
- Review Your Plan: When we finalize a plan from the information you provide, we'll sit down with you and review your plan step by step to help you fully grasp it and understand how it best correlates to your needs.
- Implementation and Monitoring: After we agree on your plan, we'll implement the necessary steps so you can begin contributing. As time goes on, we'll have regular meetings and track your progress to keep it tailored to your evolving circumstances.
Our Newark, NJ financial advisors and retirement plan consultants serve as fiduciary advisors, meaning they are required by law and ethical standards to prioritize your needs above all else.
Other financial advisory services we offer in Newark, NJ 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 Newark, NJ
Your business isn't "just a business" to you, and your Newark, NJ financial advisors need to offer more than just good financial guidance. At Correct Capital, we focus on building a relationship with our clients and their businesses to provide tailored self-employed retirement plans. To every client in Newark, NJ, we provide our I.O.U. promise: all of the advice you get from us will be independent, objective, and unbiased. To get started on your self-employment retirement plan, reach out to Correct Capital at 877-930-401k or contact us online.
