Self-employed retirement plans Newport News, VA. The flexibility of being your own boss in Newport News, VA is one of the best aspects of working for yourself. Even so, this independence sometimes brings with a lack of security, especially regarding building your retirement fund, since you don't have the benefit of retirement programs through an employer. Only 13% of self-employed individuals have a workplace retirement plan, but many should consider looking into other possibilities. In addition to achieving a more secure retirement, working with a financial advisor in Newport News, VA to set up your self-employed retirement plan offers significant tax advantages that allow you to move your business forward.
Few Newport News, VA investment consulting and retirement planning firms understand the needs of small business owners as well as Correct Capital. Our company’s founder grew up with a father who was a small business owner himself (check out our story here), and we are deeply experienced in assisting business owners in their retirement planning needs. We understand that your business and retirement aspirations extend well past simple financial figures, and we are dedicated to create tailored solutions aligned with your vision. Keep reading to learn more about your self-employed retirement plan options in Newport News, VA, or reach out to Correct Capital at 877-930-401k or contact us online to talk to 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 not only prepare you for the future, they also deliver immediate benefits today. From flexible contributions to significant tax savings, partnering with a financial advisor in Newport News, VA enables you to create your retirement plan to suit your unique financial situation.
Flexibility That Fits Your Income
When your earnings vary over time, a plan like a SEP IRA or Solo 401(k) offers the option to modify how much you save:
- Customizable Contributions: Contribute more during successful years and reduce savings when revenues are down, ensuring your plan aligns with your financial situation.
- Roth Options: Choosing a Roth Solo 401(k) lets you handle taxes upfront, enabling you to withdraw tax-free later—an advantageous choice if you believe your tax rate will increase in the future.
Save Money on Taxes
Retirement plans for self-employed individuals provide valuable tax benefits:
- Tax-Deductible Contributions: Contributions to a SEP IRA shrink your tax liability, allowing you to keep more of your hard-earned money.
- Tax-Deferred Growth: Investments grow tax-free until withdrawal, which gives your money more time to accumulate.
- State-Specific Incentives: Based on your location, you might access additional credits as a business owner. These regional incentives can make these plans even more advantageous.
- Retirement Savings Contributions Credit (Saver’s Credit): Eligible individuals can take advantage of a credit of up to 50% of the first $2,000 put into a retirement plan, helping to lower your tax bill even more.
Protect Your Savings With Smart Investments
Creating a stable future requires more than how much you save—it’s also determined by your investment strategy:
- Diversified Portfolios: Distributing your investments across different stocks, bonds, and alternatives can help mitigate financial risk while still growing your savings.
- Emergency Back-Up: Combining your retirement strategy and a dedicated business safety net helps you avoid using your retirement funds during tough times and incurring penalties.
Plan for the Future of Your Newport News, VA Business
Retirement planning also helps you prepare for what’s next with your Newport News, VA business:
- Selling Your Business: If you’re planning to sell, plans like SEP IRAs or Solo 401(k)s remain yours and are not part of the sale. These savings ensure the reliable income you’ll need later on. Remember that while selling a business often leads to a capital gain, deposits into these plans are restricted by contribution limits (e.g., up to $7,000 for IRAs or as much as $70,000 for Solo 401(k)s, with catch-up contributions, according to plan rules).
- Minimizing Taxes: Strategically planning your contributions minimizes the taxes you might face when you pass on your business.
- Succession Planning: Whether you’re transferring ownership, your retirement accounts provide financial security through the transition. You can also seek advice from a financial advisor with expertise in succession and retirement planning to reduce taxes during the sale.
With the best-fit retirement strategy, you can take control of your financial future, cut down your tax obligations, and build a solid base 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 factors when it comes to saving for retirement. Beginning sooner rather than later not only lets you accumulate a larger nest egg but also lowers the stress of saving aggressively in the future. The following are reasons why it is beneficial to start now:
The Cost of Waiting
Delaying your retirement savings may cause a major impact on the savings you’ll have when you stop working. The main reason is compound interest—the powerful process where your investments grow, and those returns, then, earn even more returns. The longer your money has to grow, the more significant the impact of compounding.
Example: Two individuals, Alex and Taylor are both entrepreneurs. They each aim to save $500,000 for retirement by age 65:
- Alex starts saving $5,000 annually at age 30.
- Taylor postpones starting contributions to age 40 but contributes $7,500 annually to make up for lost time.
By age 65, assuming 7% annual return:
- Alex puts in $180,000 and ends up with $691,184.39*.
- Taylor puts in $195,500 but accumulates just $474,367.78*.
How Early Contributions Grow
Regular, modest investments contributed over time can lead to substantial growth. Consider this example showing the impact of compound interest:
- Starting at age 25: Putting aside $200 per month in a retirement plan with an expected yearly growth rate of 7%, you’ll accumulate $497,303.29* by age 65.
- Starting at age 35: Investing the same $200 per month leaves you with only $235,412.97* by age 65—a difference of over $260,000, all because of a 10-year delay.
Saving early, the lower your annual savings needs each year to reach your retirement goals.
*These calculations are based on estimates calculated using NerdWallet’s Compound Interest Calculator, assuming a 7% annual return. Annual deposits were multiplied by the number of years to estimate total contributions. This information is meant to provide general guidance and are not a promise of future results. Outcomes may change due to factors such as market conditions, fees, and individual circumstances. Be sure to speak with a financial advisor for personalized advice.
Take Control of Your Financial Future
For self-employed individuals in Newport News, VA, it might seem easier to prioritize reinvesting in your business instead of saving for retirement. However, starting a plan now enables you to:
- Leverage tax-free future growth or tax-free withdrawals later on.
- Benefit from flexible contributions that align with your cash flow.
- Establish a financial cushion that offers peace of mind, no matter how your business evolves.
Starting early, the less you’ll have to worry about playing catch-up later in life. Saving for retirement now means managing your financial future and giving yourself the opportunity to focus on your objectives—both for your golden years and your Newport News, VA business.
Types of Self-Employed Retirement Plans
There are several retirement savings options designed for entrepreneurs in Newport News, VA, each with its own benefits and trade-offs. A financial advisor can help you learn about the benefits and drawbacks of each plan and determine the one best suited for your circumstances. Typically, your self-employed retirement plan options in Newport News, VA consist of:
Traditional or Roth IRA
Plan Overview: Individual Retirement Accounts (IRAs), as explained here, represent long-term savings plans that provide key tax perks. In a conventional IRA, contributions are typically tax-deductible, and investment earnings grow tax-deferred, but money taken out during retirement are taxed as income. In contrast, Roth IRA contributions using income already taxed, but retirement withdrawals that qualify, including earnings, are exempt from taxes. In both accounts, withdrawals are penalty-free as long as you are at least 59½.
Eligibility: Unlike 401(k)s, which are employer-sponsored, traditional and Roth IRAs are open to those with an earned 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: SEP IRAs serves as a retirement savings option that enables entrepreneurs to save a percentage of their net business profits. Contributions must come from an employer, so, as a sole proprietor, 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. You may choose to contribute a fixed dollar figure or a percentage of wages to employee accounts. SEP IRAs may be ideal for businesses that experience fluctuating revenue streams. In contrast to some alternatives, SEP IRAs don’t have expensive setup or ongoing fees.
SEPs work like traditional IRAs, where you contribute pre-tax dollars and retirement distributions are taxable.
Eligibility: Any employer, including the self-employed can open a SEP.
Contribution Limits: Contribution limits for employees in a SEP IRA must not exceed:
- 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: Solo 401(k)s, also called an Individual 401(k) or one-participant 401(k) plan, is a self-employed retirement plan intended for companies that have no employees or where the only employee is a spouse. This type of plan function similarly to standard 401(k) plans, and allow you to contribute as both an employer and an employee with pre-tax money. This offers more savings compared to SEPs or IRAs; however, the additional opportunities can be balanced by more limited investment options. 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 can set up 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:
- Elective deferrals (as an employee) of up to 100% of your self-employed earnings, up to the annual contribution limit. The contribution limits for 2025 include $23,500, or $31,000 if you're over 50, or $34,750 for individuals aged 60-63 in 2025.
- Profit-sharing contributions (as an employer) are limited to 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.
Your combined contributions must not surpass $70,000, or $77,500 if you're over age 50 (for 2025), $81,250 for individuals turning 60-63 in 2025.
Individual Defined Benefit Plan
Plan Overview: Defined benefit plans represents a type of retirement plan that provides a fixed, predetermined benefit to business owners upon retirement. Unlike defined contribution plans mentioned above, this plan is not influenced by market performance, but enables participants to determine the precise amount they'll have in retirement. This plan is ideal for wealthier self-employed individuals who want to save a large amount for retirement and are willing to make larger deposits. Contributions grow tax-free until withdrawal, and withdrawals incur taxes as income upon retirement.
Eligibility: Self-employed professionals running an owner-only business or with less than five employees can open an individual defined benefit plan, but it's most commonly suggested for those over 50 who make $250,000 or more annually. In most cases, good candidates for defined benefit plans include:
- Entrepreneurs who desire to contribute more than $70,000 (or $77,500 for those aged 50+)
- Businesses currently investing 3-4% and are willing to do more
- Businesses showing consistent profit patterns
- Entrepreneurs over age 40 who wish to accelerate savings or increase their retirement contributions rapidly
Contribution Limits: The contribution limit must be determined by an actuary based on your financial situation, age, and savings targets. Contribution limits are updated yearly.
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 specialized in self-employed retirement plans can be an essential partner for those working for themselves. They have the expertise to help navigate the complexities of retirement planning and develop a tailored strategy that reflects your aspirations. An expert in your area will review your finances, determine how much risk you’re comfortable with, and help you in choosing wisely about saving and investing for retirement. A key part of what we do for you features:
- Help you choose a plan that best fits your needs and goals
- Further adapt the plan to your needs even further
- Adopt a written plan as required by IRS rules
- Set up an asset trust plan
- Ensure you comprehend 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
- Increase your retirement income by optimizing your social security benefits
Self-Employed Retirement Plans in Newport News, VA: Correct Capital's Process
Newport News, VA business owners who don’t have the time or expertise to oversee their self-employed retirement plan themselves can become overwhelmed as they look at their choices. With Correct Capital, our Newport News, VA financial advisors handle the majority of your retirement strategy for you, and strive to ensure meeting your financial objectives as straightforward as possible for you. We will guide you in creating your self-employed retirement plan in four simple steps:
- Schedule a Call: It only takes 20 minutes, a member of our advisor team can determine if we're suited to your needs for you and your business. This initial call helps us understand what you're looking for with no obligation or significant effort on your part.
- Gather Information: If we both decide to move forward, we'll ask for information, including whether you have employees, your current financial situation, and your retirement goals. 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 go over your plan in detail to help you fully grasp it and show how it aligns with your goals.
- Implementation and Monitoring: Once we've agreed on your plan, we'll put everything in place so you can begin contributing. Throughout our relationship, we'll have regular meetings and track your progress to ensure it stays suited to your needs.
Our Newport News, VA financial advisors and retirement plan consultants are fiduciary advisors, meaning they are committed by law and ethics to do what's in your best interest.
Other financial advisory services we offer in Newport News, VA include:
- Investment Planning
- Retirement Financial Planning
- Investment Management
- 401(k) Audit
- High-Net-Worth Wealth Management
- Retirement Planner
- Financial Planning
- Retirement Plan Consultants
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 must deliver more than simply sound financial advice. Correct Capital takes pride in, we make it a priority to understand our clients and their businesses to provide personalized self-employed retirement plans. To every client in Newport News, VA, we provide our I.O.U. promise: all of the advice you get from us 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.
