Self-employed retirement plans Norfolk, VA. The freedom of being your own boss in Norfolk, VA is one of the greatest advantages of being self-employed. That said, this flexibility sometimes brings with potential drawbacks, especially in terms of building your retirement fund, since you don't have access to employer-sponsored retirement plans. Only 13% of self-employed individuals have a workplace retirement plan, yet countless would be better off exploring their options. In addition to enjoying a more comfortable retirement, partnering with a financial advisor in Norfolk, VA to set up your self-employed retirement plan delivers significant tax advantages that enable both you and your business to thrive.
Few Norfolk, VA financial advisory and retirement planning firms understand the needs of self-employed individuals quite like Correct Capital. Our founder's father was a small business owner himself (read more of our story here), and we are deeply experienced in supporting entrepreneurs with their retirement planning needs. We recognize that your business and retirement aspirations go far beyond basic numbers, and we work tirelessly to create tailored solutions that reflect your objectives. Keep reading to learn more about your self-employed retirement plan options in Norfolk, VA, or reach out to Correct Capital at 877-930-401k or contact us online to speak with a self-employed financial advisor in Norfolk, VA today.
Why Norfolk, VA Self-Employed Individuals Should Have a Retirement Plan
Retirement plans for self-employed individuals not only prepare you for the future, they also offer real benefits today. With customizable contribution options to substantial tax savings, consulting a financial advisor in Norfolk, VA helps you customize your retirement plan to fit your specific needs.
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 option to adjust how much you save:
- Customizable Contributions: Set aside more during profitable years and scale back when revenues are down, so your plan aligns with your financial situation.
- Roth Options: Choosing a Roth Solo 401(k) lets you pay taxes on contributions now, so you can withdraw your savings tax-free down the road—a smart decision if you expect your tax rate is likely to rise in the future.
Save Money on Taxes
Self-employed retirement plans provide valuable tax benefits:
- Tax-Deductible Contributions: Contributions to a Solo 401(k) lower your taxable income, allowing you to keep more of your income.
- Tax-Deferred Growth: You won't pay taxes on investment growth until you withdraw it, which gives your money more time to compound.
- State-Specific Incentives: In some states, you might access state-specific tax breaks as a sole proprietor. These local incentives make these plans even more valuable.
- Retirement Savings Contributions Credit (Saver’s Credit): Qualified participants can take advantage of a 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 requires more than how much you save—it’s also about how you invest:
- Diversified Portfolios: Allocating your investments across different asset classes like stocks and bonds serves to reduce risk while continuing to build your savings.
- Emergency Back-Up: Combining your retirement strategy and a financial buffer for your business ensures you don’t dipping into savings during tough times and risking extra costs.
Plan for the Future of Your Norfolk, VA Business
A thoughtful retirement strategy enables you to plan ahead for what’s next with your Norfolk, VA business:
- Selling Your Business: If you’re planning to sell, plans like SEP IRAs or Solo 401(k)s remain your personal assets and don’t transfer with the business. These plans ensure the financial stability you’ll need later on. Keep in mind that while the sale of a business usually creates a capital gain, deposits into these plans are subject to yearly maximums (e.g., as much as $7,000 for IRAs or up to $70,000 for Solo 401(k)s, with catch-up contributions, according to plan rules).
- Minimizing Taxes: Making the most of retirement savings can reduce the taxes you’ll owe when you transfer your business.
- Succession Planning: Whether you’re transferring ownership, your retirement accounts offer a stable foundation through the transition. You may also partner with a financial advisor with expertise in succession and retirement planning to reduce taxes on the sale.
With the right retirement plan, you gain control over your financial future, reduce your tax burden, and create a solid base for both your retirement and your business goals.
Why Start a Self-Employed Retirement Plan in Norfolk, VA Now?
Time is one of the most valuable factors in retirement planning. Beginning sooner rather than later not only helps you grow a bigger financial cushion but also minimizes the pressure of playing catch-up as you get older. The following are reasons why it pays to take action now:
The Cost of Waiting
Waiting to start your retirement fund may cause a substantial impact on the savings you’ll have when you reach retirement age. The main reason is compound interest—the powerful process where your investments grow, and those returns, in turn, accumulate even more returns. The longer your money has to grow, the greater the impact of this growth.
Example: Alex and Taylor are both self-employed professionals. Both of them want to save $500,000 for retirement by age 65:
- Alex starts saving $5,000 annually at age 30.
- Taylor delays savings until age 40 but saves $7,500 annually to bridge the gap.
By age 65, with an assumption of 7% annual return:
- Alex invests $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
Small, consistent savings contributed over time often create impressive growth. Consider this example showing the effect 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 end up with $497,303.29* by age 65.
- Starting at age 35: Contributing the same $200 per month leaves you with only $235,412.97* by age 65—a shortfall of over $260,000, simply due to a 10-year delay.
Starting sooner, the less effort required each year to achieve your retirement goals.
*The numbers shown in this scenario are estimates calculated using NerdWallet’s Compound Interest Calculator, with the assumption of a 7% annual return. These calculations involved multiplying yearly deposits by the years contributed. This information is meant to provide general guidance and cannot predict actual future outcomes. Your individual results may differ based on variables including market conditions, fees, and personal factors. We recommend consulting a financial advisor for guidance tailored to your needs.
Take Control of Your Financial Future
As a self-employed person in Norfolk, VA, it might seem easier to put more emphasis on reinvesting in your business over saving for retirement. Even so, beginning a plan now allows you to:
- Benefit from tax-deferred growth or penalty-free withdrawals later on.
- Enjoy contribution flexibility that change with your cash flow.
- Establish a long-term safety measure that offers peace of mind, no matter how your business changes.
Starting early, the less you’ll have to worry about playing catch-up later in life. Taking steps toward your retirement goals today means managing your financial future and giving yourself the freedom to concentrate on your dreams—both for your retirement years and your Norfolk, VA business.
Types of Self-Employed Retirement Plans
There are several retirement savings options designed for self-employed individuals in Norfolk, VA, each providing 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 needs. Generally speaking, your self-employed retirement plan options in Norfolk, VA include:
Traditional or Roth IRA
Plan Overview: Individual Retirement Accounts (IRAs), as explained here, represent retirement savings vehicles that offer distinct tax benefits. In a standard IRA, you can usually deduct your contributions from taxable income, and returns grow free of current taxes, but money taken out during retirement are taxable. In contrast, Roth IRAs require contributions from post-tax earnings, but retirement withdrawals that qualify, including earnings, are not taxed. In both accounts, withdrawals are penalty-free provided you are at least 59½.
Eligibility: While many retirement plans, such as 401(k)s, are tied to employment, traditional and Roth IRAs are open to those with an earned income.
Contribution Limits: For 2025, annual contribution limits for IRAs are capped at $7,000, or $8,000 for those aged 50+.
Simplified Employee Pension Plan (SEP IRA)
Plan Overview: A Simplified Employee Pension (SEP) IRA serves as a retirement savings option that permits those who are self-employed to contribute a percentage of their net earnings. Contributions are strictly employer contributions an employer, so, as a independent business owner, you (the employee) are limited to contributions from the employer role beyond the 25% you (the employer) allocate. 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 fixed dollar figure or a percentage of wages to employee accounts. This type of plan works well for businesses that experience periods of inconsistent earnings. Compared to other retirement options, SEP IRAs are free of the high fees associated with starting or maintaining other plans.
SEPs work like standard IRAs, where you contribute pre-tax dollars and retirement distributions are taxable.
Eligibility: Both employers and self-employed individuals can establish a SEP.
Contribution Limits: Contribution limits for employees in a SEP IRA are capped at the lower of:
- 25% of compensation, or
- $70,000 for 2025
If you’re self-employed, the allowable contribution 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 retirement savings plan meant for businesses with no employees or where the only employee is a spouse. This type of plan function similarly to standard 401(k) plans, and enable contributions as both an employer and an employee with pre-tax money. This allows for more savings compared to SEPs or IRAs; however, the extra savings options can be balanced by more restricted investment choices. 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: This plan is exclusively for 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 are allowed to make two types of contributions:
- Deferrals as an employee of up to 100% of your earned income from self-employment, capped at the annual contribution limit. The contribution limits for 2025 include $23,500, or $31,000 for those aged 50 and above, or $34,750 if you attain age 60-63 in 2025.
- Contributions as an employer (as an employer) cannot exceed 25% of your adjusted self-employment income, which is calculated as net profits less 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 if you attain age 60-63 in 2025.
Individual Defined Benefit Plan
Plan Overview: A defined benefit plan is a retirement option that guarantees a fixed, predetermined benefit to entrepreneurs upon retirement. In contrast to the plans discussed earlier, a defined benefit plan doesn't fluctuate based on investment returns, but allows self-employed individuals to know the precise amount they'll get in retirement. This strategy is best suited for wealthier entrepreneurs who aim to accumulate a large amount for retirement and are willing to make substantial contributions. Contributions offer tax-deferred growth, and withdrawals are taxable as income during retirement.
Eligibility: Entrepreneurs operating a solo business or employing fewer than five people can open an individual defined benefit plan, but it's most commonly recommended for those over 50 who earn at least $250,000 a year. Generally, good candidates for defined benefit plans tend to be:
- Entrepreneurs who desire to contribute more than $70,000 (or $77,500 for individuals 50 and older)
- Organizations that already put in 3-4% but are open to increasing contributions
- Businesses that have demonstrated consistent profit patterns
- Business leaders over age 40 who aim to quickly build retirement savings or accelerate the retirement savings
Contribution Limits: The maximum allowable contribution is calculated by an actuary based on your financial situation, age, and savings targets. Allowable contributions change annually.
The Importance of a Financial Advisor in Norfolk, VA for Your Self-Employed Retirement Plan
Partnering with an advisor in Norfolk, VA specialized in self-employed retirement plans serves as an essential partner for entrepreneurs. They have the expertise to help navigate the complexities of retirement planning and craft a personalized approach that reflects your aspirations. Your advisor in Norfolk, VA will review your finances, understand your risk tolerance, and assist you in making informed decisions about saving and investing for retirement. Included in what we do for you features:
- Help you choose a plan that best fits your needs and goals
- Customize the plan to fit you personally even further
- Formalize a plan in writing that complies with IRS regulations
- Arrange a trust plan for assets
- Help you understand the plan's terms
- Monitor and adjust your plan to keep it aligned with your goals
- Provide ongoing education and advice as you continue on the road to retirement
- Maximize what you receive in retirement by maximizing your social security benefits
Self-Employed Retirement Plans in Norfolk, VA: Correct Capital's Process
Entrepreneurs in Norfolk, VA who don’t have the time or expertise to handle their self-employed retirement plan themselves often feel overwhelmed by their choices. With Correct Capital, our Norfolk, VA financial advisors handle the bulk of your retirement planning for you, working to make meeting your financial objectives 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: It only takes 20 minutes, a member of our advisor team can help understand if we're suited to your needs for you and your business. This brief introduction helps us understand what you're looking for with no pressure or extensive time commitment on your part.
- Gather Information: If we both decide to move forward, we'll ask for information, including whether you have employees, your present financial standing, and your future objectives. This enables us to craft a personalized strategy suited specifically for your needs.
- 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 ensure you understand it and show how it aligns with your goals.
- Implementation and Monitoring: Once we've agreed on your plan, we'll set everything up so you can start saving. As time goes on, we'll check in and monitor your plan to make sure it remains aligned with your goals.
Our Norfolk, VA financial advisors and retirement plan consultants are fiduciary advisors, meaning they are legally and ethically bound to act in your best interest.
Other financial advisory services we offer in Norfolk, VA include:
- 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 Norfolk, VA
You don't see your business as "just a business", and your Norfolk, VA financial advisors should provide more than basic financial recommendations. Correct Capital takes pride in, we take the time to get to know our clients and their businesses to create personalized self-employed retirement plans. All our clients in Norfolk, VA benefit from our I.O.U. promise: all guidance we provide 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.
