Self-employed retirement plans Newport News, VA. The independence of owning your own business in Newport News, VA is one of the best aspects of having a self-directed career. Even so, this flexibility sometimes brings with certain challenges, especially in terms of retirement savings, since you don't have access to retirement programs through an employer. Only 13% of self-employed individuals have a workplace retirement plan, although many should consider looking into other possibilities. In addition to having a financially stable retirement, seeking advice from a financial advisor in Newport News, VA to set up your self-employed retirement plan can provide significant tax advantages that allow you to move your business forward.
Few Newport News, VA wealth management and retirement planning firms truly grasp the challenges faced by entrepreneurs as well as Correct Capital. The father of our founder was a small business owner himself (read more of our story here), and Correct Capital take pride in assisting business owners in their retirement planning needs. We recognize that your goals for your business and retirement go far beyond simple financial figures, and we are dedicated to provide customized solutions that reflect your objectives. Read on to discover about your self-employed retirement plan options in Newport News, VA, or give us a call at Correct Capital at 877-930-401k or contact us online to consult with a entrepreneurial financial advisor in Newport News, VA today.
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Why Newport News, VA 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. With customizable contribution options to significant tax savings, partnering with a financial advisor in Newport News, VA enables you to customize your retirement plan to suit your individual circumstances.
Flexibility That Fits Your Income
If your income changes from year to year, a plan like a SEP IRA or Solo 401(k) provides the flexibility to modify how much you save:
- Customizable Contributions: Save extra during high-income years and reduce savings when income is lower, so that your plan fits your financial situation.
- Roth Options: 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—an advantageous choice if you believe 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 SEP IRA shrink your tax liability, so you can keep more of your hard-earned money.
- Tax-Deferred Growth: Your savings grow untaxed until withdrawn, which gives your money more time to compound.
- State-Specific Incentives: In some states, you might access additional deductions as a business owner. These state-level incentives make these plans even more advantageous.
- Retirement Savings Contributions Credit (Saver’s Credit): Those who meet the requirements 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
Creating a stable future goes beyond just how much you save—it’s also linked to the way you invest:
- Diversified Portfolios: Distributing your investments across varied asset classes like stocks and bonds serves to minimize exposure to risk while helping to grow your nest egg.
- Emergency Back-Up: Pairing your retirement plan with a dedicated business safety net ensures you don’t dipping into savings during tough times and incurring penalties.
Plan for the Future of Your Newport News, VA Business
Preparing for retirement can assist you think through what’s next with your Newport News, VA business:
- Selling Your Business: For those considering a sale, plans like SEP IRAs or Solo 401(k)s remain your personal assets and are not part of the sale. These plans offer the financial stability you’ll need later on. Keep in mind that while the sale of a business usually creates a capital gain, retirement plan contributions are subject to yearly maximums (e.g., up to $7,000 for IRAs or up to $70,000 for Solo 401(k)s, with catch-up contributions, based on plan compensation).
- Minimizing Taxes: Making the most of retirement savings minimizes the taxes you might face when you sell your business.
- Succession Planning: If you’re passing the business on, your retirement savings ensure a stable foundation during the change. You may also seek advice from a financial advisor who specializes in succession planning and retirement accounts to reduce taxes during the sale.
With the proper savings 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 Newport News, VA Now?
Time remains one of the most important resources when it comes to saving for retirement. Starting early not only allows you to build a more substantial retirement fund but also reduces the stress of catching up later in life. This is why it pays to take action now:
The Cost of Waiting
Waiting to start your retirement fund could lead to a substantial impact on the amount you’ll have when you retire. The biggest reason is compound interest—the powerful process where your investments generate earnings, and those returns, subsequently, earn even more returns. The longer your money has to grow, the more significant the impact of this compounding process.
Example: Alex and Taylor are both entrepreneurs. Both of them want to save $500,000 for retirement by age 65:
- Alex initiates savings of $5,000 annually at age 30.
- Taylor delays savings until age 40 but saves $7,500 annually to catch up.
By age 65, assuming 7% annual return:
- Alex puts in $180,000 and achieves a total of $691,184.39*.
- Taylor contributes $195,500 but achieves a total of only $474,367.78*.
How Early Contributions Grow
Even modest contributions made consistently may result in substantial growth. Here’s a simple scenario showing the effect 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 grow to approximately $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, all because of a 10-year delay.
The earlier you begin, the less effort required each year to achieve your retirement goals.
*These calculations are based on estimates generated with NerdWallet’s Compound Interest Calculator, with the assumption of a 7% annual return. These calculations involved multiplying yearly deposits by the years contributed. These examples are intended as illustrative examples and cannot predict actual future outcomes. Outcomes may change depending on elements like market conditions, fees, and your unique situation. We recommend consulting a financial advisor for personalized advice.
Take Control of Your Financial Future
As a self-employed person in Newport News, VA, it can be tempting to put more emphasis on reinvesting in your business instead of saving for retirement. Even so, beginning a plan now allows you to:
- Leverage tax-deferred growth or tax-free withdrawals in the future.
- Take advantage of contribution flexibility that change with your income.
- Build a safety net that provides security, no matter how your business changes.
Starting early, the less you’ll need to worry about making up for lost time later in life. Saving for retirement now means gaining control over your financial future and allowing yourself the freedom to focus on your dreams—both for your golden years and your Newport News, VA business.
Types of Self-Employed Retirement Plans
A variety of retirement savings options designed for self-employed individuals in Newport News, VA, each with its own benefits and trade-offs. A financial advisor will guide you to learn about the pros and cons of each choice and choose the one best suited for your unique situation. Typically, your self-employed retirement plan options in Newport News, VA include:
Traditional or Roth IRA
Plan Overview: IRAs, or Individual Retirement Accounts, are retirement savings vehicles that include specific tax advantages. In a traditional IRA, the money you contribute is often tax-deductible, and investment earnings grow tax-deferred, but money taken out during retirement are taxable. In contrast, with Roth IRAs, you contribute using income already taxed, but retirement withdrawals that qualify, including earnings, are exempt from taxes. In both types of 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 taxable earnings.
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: The Simplified Employee Pension IRA offers a way to save for retirement that enables self-employed individuals to contribute a percentage of their net earnings. Contributions can only be made by an employer, so, as a self-employed individual, you (the employee) are limited to contributions from the employer role above 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. It's your choice whether to contribute a set monetary value or a percentage of wages to employee accounts. A SEP IRA works well for businesses that experience periods of inconsistent earnings. Compared to other retirement options, SEP IRAs don’t have costly startup or administrative fees.
SEPs function like standard IRAs, where the contributions are tax-deferred and retirement distributions are taxable.
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 contribution you can make is based on a special calculation.
Solo 401(k)
Plan Overview: The Solo 401(k), also called an Individual 401(k) or one-participant 401(k) plan, is a savings option for the self-employed intended for businesses with no employees or where the only employee is a spouse. Solo 401(k)s operate much like employer-sponsored 401(k) plans, and allow you to contribute as both the employer and the employee with pre-tax money. This provides more savings compared to SEPs or IRAs; however, the additional opportunities 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 are allowed 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 for those aged 50 and above, or $34,750 for individuals aged 60-63 in 2025.
- Employer profit-sharing contributions (as an employer) must not surpass 25% of your net earnings from self-employment, which is your net profit minus half of your self-employment tax and the elective deferrals you made.
Total contributions are capped at $70,000, or $77,500 for those aged 50 and older (for 2025), $81,250 for those aged 60-63 in 2025.
Individual Defined Benefit Plan
Plan Overview: A defined benefit plan represents a type of retirement plan that provides a pre-established payout to entrepreneurs upon retirement. As opposed to defined contribution plans, a defined benefit plan doesn't fluctuate based on investment returns, but enables participants to determine the precise amount they'll get in retirement. This strategy is best suited for wealthier entrepreneurs who aim to accumulate a substantial amount for retirement and are willing to make sizeable contributions. Contributions grow tax-free until withdrawal, and withdrawals are taxed as income in retirement.
Eligibility: Entrepreneurs managing a one-person company or with less than five employees are eligible to open an individual defined benefit plan, but it's most commonly advised for individuals aged 50+ who earn at least $250,000 a year. Typically, good candidates for defined benefit plans are:
- Entrepreneurs who desire to contribute more than $70,000 (or $77,500 if over age 50)
- Organizations that already put in 3-4% but are open to increasing contributions
- Organizations that have demonstrated consistent profit patterns
- Entrepreneurs over age 40 who desire to "catch up" or accelerate the retirement savings
Contribution Limits: The cap on contributions 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 Newport News, VA for Your Self-Employed Retirement Plan
Partnering with an advisor in Newport News, VA experienced with retirement plans for the self-employed can be an important asset for entrepreneurs. They offer the knowledge to assist understand the intricacies of saving for retirement and craft a customized plan that aligns with your goals. A financial advisor in Newport News, VA will review your finances, identify your risk preferences, and assist you in choosing wisely about saving and investing for retirement. Part of what we do for you includes:
- Help you choose a plan that aligns with your objectives and circumstances
- Further adapt the plan to your specific situation even further
- Adopt a written plan that complies with IRS regulations
- Arrange a trust plan for assets
- Help you understand the plan's terms
- Track and fine-tune your plan when necessary
- Offer continued financial education and guidance to help you navigate your retirement journey
- Boost your retirement earnings by optimizing your social security benefits
Self-Employed Retirement Plans in Newport News, VA: Correct Capital's Process
Entrepreneurs in Newport News, VA who lack the time, interest, or knowledge to manage their own retirement planning themselves may end up overwhelmed when faced with their options. With Correct Capital, our Newport News, VA financial advisors take on the majority of your retirement planning for you, to help make meeting your financial objectives as straightforward as possible for you. We will guide you in creating your self-employed retirement plan in a quick, four-step process:
- Schedule a Call: In just 20 minutes, a member of our advisor team can determine if our services align for you and your business. This brief introduction helps us learn about your needs with no obligation or major time investment on your part.
- Gather Information: If we both decide to move forward, we'll request information, including your employee count, your current financial situation, and your retirement goals. This helps us create a custom plan designed just for you.
- Review Your Plan: Once we've developed a plan from the information you provide, we'll schedule a meeting and discuss your plan in detail 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. As time goes on, we'll meet with you and track your progress to keep it tailored to your evolving circumstances.
Our Newport News, VA financial advisors and retirement plan consultants are fiduciary advisors, which means they are committed by law and ethics to act in your best interest.
Other financial advisory services we offer in Newport News, VA 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 Newport News, VA
To you, your business is more than "just a business", and your Newport News, VA financial advisors should provide more than simply sound financial advice. Correct Capital takes pride in, we focus on building a relationship with our clients and their businesses to deliver tailored self-employed retirement plans. We offer all our Newport News, VA clients our I.O.U. promise: everything we recommend 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.
