Self-employed retirement plans Newport News, VA. The independence of being your own boss in Newport News, VA offers many benefits of working for yourself. That said, this freedom sometimes brings with a lack of security, notably when it comes to planning for retirement, as you don't have access to employer-sponsored retirement plans. Only 13% of self-employed individuals have a workplace retirement plan, but many would be better off looking into other possibilities. In addition to having a financially stable retirement, working with a financial advisor in Newport News, VA to establish your self-employed retirement plan can provide significant tax advantages that enable your business to grow and succeed.
Few Newport News, VA wealth management and retirement planning firms understand the needs of entrepreneurs quite like Correct Capital. The father of our founder was a small business owner himself (check out our story here), and we are deeply experienced in supporting entrepreneurs with their retirement planning needs. We know that your business and retirement aspirations extend well past just monetary concerns, and we are dedicated to create personalized solutions that reflect your objectives. Continue exploring to find out about your self-employed retirement plan options in Newport News, VA, or call Correct Capital at 877-930-401k or contact us online to consult with a entrepreneurial financial advisor in Newport News, VA today.
Why Newport News, VA Self-Employed Individuals Should Have a Retirement Plan
Retirement plans for self-employed individuals help prepare you for the future, they also offer real benefits today. With customizable contribution options to considerable tax savings, partnering with a financial advisor in Newport News, VA allows you to create your retirement plan to fit your individual circumstances.
Flexibility That Fits Your Income
For those with fluctuating income annually, a plan like a SEP IRA or Solo 401(k) provides the freedom to adjust how much you save:
- Customizable Contributions: Contribute more during high-income years and cut back when income is lower, so that your plan aligns with your current income.
- Roth Options: Choosing a Roth Solo 401(k) lets you handle taxes upfront, so you can withdraw without tax penalties in the future—a wise move if you anticipate your tax rate is likely to rise in the future.
Save Money on Taxes
Self-employed retirement plans offer significant tax benefits:
- Tax-Deductible Contributions: Contributions to a SEP IRA reduce what you owe in taxes, helping you keep more of your income.
- Tax-Deferred Growth: Investments grow tax-free until withdrawal, providing your money more time to accumulate.
- State-Specific Incentives: Depending on where you live, you might access additional tax breaks as a self-employed individual. These state-level incentives can make these plans even more valuable.
- 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, cutting down 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: Allocating your investments across a mix of asset classes like stocks and bonds serves to minimize exposure to risk while still growing your retirement fund.
- Emergency Back-Up: Pairing your retirement plan with a business emergency fund helps you avoid dipping into savings during financial hardships and risking extra costs.
Plan for the Future of Your Newport News, VA Business
A thoughtful retirement strategy enables you to think through what’s next with your Newport News, VA 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 accounts offer the reliable income you’ll need later on. Keep in mind that while selling a business often leads to a capital gain, deposits into these plans are capped at annual limits (e.g., as much as $7,000 for IRAs or up to $70,000 for Solo 401(k)s, factoring in catch-up contributions, based on plan compensation).
- Minimizing Taxes: Strategically planning your contributions minimizes the taxes you are required to pay when you sell your business.
- Succession Planning: If you’re passing the business on, your retirement accounts offer financial security as you make this shift. You might want to partner with a financial advisor with expertise in succession and retirement planning to reduce taxes during the sale.
With the right retirement plan, you can take control of your financial future, cut down your tax obligations, and create a secure foundation for both your retirement and your business goals.
Why Start a Self-Employed Retirement Plan in Newport News, VA Now?
There’s no denying that time is one of the most important factors in retirement planning. Beginning sooner rather than later not only allows you to build a bigger financial cushion but also minimizes the pressure of saving aggressively in the future. Here’s why it makes sense to begin today:
The Cost of Waiting
Delaying your retirement savings could lead to a significant impact on the total you’ll have when you reach retirement age. The primary reason is compound interest—the powerful process where your investments grow, and those returns, then, accumulate even more returns. The longer your money has to grow, the greater the benefit of this compounding process.
Example: Two individuals, Alex and Taylor are both self-employed individuals. 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 puts away $7,500 annually to bridge the gap.
By age 65, assuming 7% annual return:
- Alex invests $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 made consistently may result in substantial growth. Consider this example showing the impact of compound interest:
- Starting at age 25: By investing $200 per month in a retirement plan with an average annual return of 7%, you’ll end up with $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 shortfall of over $260,000, all because of a 10-year delay.
Saving early, the less effort required each year to achieve your retirement goals.
*These calculations are based on estimates calculated using NerdWallet’s Compound Interest Calculator, assuming a 7% annual return. The contributions were calculated by multiplying the annual deposit amount by the total number of years contributions were made. The scenarios provided are meant to provide general guidance and are not a promise of future results. Actual results may vary due to variables including market conditions, fees, and individual circumstances. We recommend consulting a financial advisor for guidance tailored to your needs.
Take Control of Your Financial Future
If you’re self-employed in Newport News, VA, it is often the case that you prioritize reinvesting in your business instead of saving for retirement. That said, initiating a plan now allows you to:
- Leverage tax-free future growth or tax-free withdrawals down the road.
- Benefit from adjustable savings that align with your earnings.
- Create a safety net that offers peace of mind, no matter how your business develops.
Getting started now, the less you’ll need to worry about playing catch-up later in life. Saving for retirement now means managing your financial future and creating for yourself the ability to focus on your objectives—both for your retirement years and your Newport News, VA business.
Types of Self-Employed Retirement Plans
There are several retirement savings options open for self-employed individuals in Newport News, VA, each with its own pros and cons. A financial advisor is available to help you evaluate the pros and cons of each choice and choose the one most suitable for your circumstances. Generally speaking, your self-employed retirement plan options in Newport News, VA are:
Traditional or Roth IRA
Plan Overview: Individual Retirement Accounts (IRAs), as explained here, represent financial tools for retirement that include distinct tax benefits. In a conventional IRA, the money you contribute is often tax-deductible, and earnings grow without immediate taxation, but retirement distributions are taxable. In contrast, with Roth IRAs, you contribute using income already taxed, but qualified withdrawals in retirement, including earnings, are not taxed. 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 if you're 50 or older.
Simplified Employee Pension Plan (SEP IRA)
Plan Overview: The Simplified Employee Pension IRA is a retirement plan that allows entrepreneurs to save a percentage of their net business profits. Contributions are strictly employer contributions an employer, so, as a self-employed individual, you (the employee) would not be able to contribute above the 25% you (the employer) already contributed. If you have employees, you are obligated to contribute the same amount for them as you do for yourself. You have the flexibility to contribute a flat-dollar amount or a percentage of wages to employee accounts. SEP IRAs may be ideal for entrepreneurs facing cycles of high revenue and low revenue. In contrast to some alternatives, SEP IRAs don’t have costly startup or administrative fees.
SEPs work like standard IRAs, where contributions are made with pre-tax money 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 amount eligible to be contributed is based on a special calculation.
Solo 401(k)
Plan Overview: Solo 401(k)s, commonly known as an Individual 401(k) or one-participant 401(k) plan, is a savings option for the self-employed intended for businesses without employees or where the only employee is a spouse. These plans operate much like traditional employer-managed 401(k) plans, and allow you to contribute as both the employer and the employee with pre-tax money. This provides more savings than SEPs or IRAs; however, the additional opportunities can be balanced by 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 are eligible to open and contribute to a solo 401(k).
Contribution Limits: As a self-employed individual with a solo 401(k) plan, you are allowed to make two types of contributions:
- Employee contributions of up to 100% of your self-employment income, 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 if you attain age 60-63 in 2025.
- Employer profit-sharing contributions (as an employer) cannot exceed 25% of your adjusted self-employment income, which is defined as 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 (in 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 delivers a pre-established payout to entrepreneurs upon retirement. As opposed to defined contribution plans, investment returns don’t affect the payout, but enables participants to determine what they'll have in retirement. This strategy is ideal for high-earning professionals who aim to accumulate a large amount for retirement and are willing to make larger deposits. Contributions are tax deferred, and withdrawals are taxable as income in retirement.
Eligibility: Entrepreneurs managing a one-person company or with a small staff of under five may establish an individual defined benefit plan, but it's generally recommended for people above age 50 who generate a minimum of $250,000 yearly. In most cases, good candidates for defined benefit plans include:
- Entrepreneurs who want to invest more than $70,000 (or $77,500 for those aged 50+)
- Organizations that already put in 3-4% and are willing to do more
- Businesses that have demonstrated consistent profit patterns
- Partners or owners over age 40 who desire to "catch up" or accelerate the retirement savings
Contribution Limits: The contribution limit is calculated by an actuary determined by your income, age, and retirement goals. Limits on contributions are adjusted each year.
The Importance of a Financial Advisor in Newport News, VA for Your Self-Employed Retirement Plan
Working with a financial advisor in Newport News, VA experienced with retirement plans for the self-employed serves as an essential partner for entrepreneurs. They offer the knowledge to assist navigate the complexities of retirement planning and develop a customized plan that aligns with your goals. A financial advisor in Newport News, VA will assess where you stand financially, understand your risk tolerance, and assist you in choosing wisely about saving and investing for retirement. Included in what we do for you features:
- Guide you in choosing a plan that aligns with your objectives and circumstances
- Tailor the plan to your specific situation even further
- Create a written plan that complies with IRS regulations
- Organize a trust plan to manage your assets
- Help you understand the plan's terms
- Review and modify your plan to keep it aligned with your goals
- Provide ongoing education and advice throughout your retirement planning process
- Increase your retirement income by maximizing 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 handle their self-employed retirement plan themselves often feel overwhelmed as they look at their choices. Through our team at Correct Capital, our Newport News, VA financial advisors take on the bulk of your savings plan setup for you, working to make meeting your retirement goals as straightforward as possible for you. We will guide you in creating your self-employed retirement plan in just four steps:
- Schedule a Call: In just 20 minutes, a member of our advisor team can determine if we're a good fit for you and your business. This short conversation 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 gather information, including how many employees you have (if any), your existing financial picture, and your retirement goals. This allows us to put together a tailored approach designed just for you.
- Review Your Plan: Once we've developed a plan based on the information you provide, we'll sit down with you and discuss your plan step by step to make sure it's clear and understand how it best correlates to your needs.
- Implementation and Monitoring: After we agree on your plan, we'll set everything up so you can initiate your savings journey. As time goes on, we'll check in and track your progress to keep it tailored to your evolving circumstances.
Our Newport News, VA financial advisors and retirement plan consultants serve as fiduciary advisors, meaning they are required by law and ethical standards to act in your best interest.
Other financial advisory services we offer in Newport News, VA include:
- Financial Planning for Business Owners
- Comprehensive Financial Planning
- Retirement Income Planning
- Investment Planning
- Retirement Financial Planning
- Independent Financial Advisor
- Roth Conversion
- Investment Management
- 401(k) Audit
- High-Net-Worth Wealth Management
Call Correct Capital for Your Self-Employed Retirement Plan in Newport News, VA
Your business isn't "just a business" to you, and your Newport News, VA financial advisors need to offer more than just good financial guidance. With Correct Capital, we make it a priority to understand our clients and their businesses to provide customized self-employed retirement plans. To every client in Newport News, VA, we provide 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.
