Self-employed retirement plans Oakland, CA. The independence of owning your own business in Oakland, CA is one of the best aspects of working for yourself. Even so, this flexibility often comes with certain challenges, especially in terms of retirement savings, because you don't have the option of employer-sponsored retirement plans. Only 13% of self-employed individuals have a workplace retirement plan, yet countless should consider exploring their options. In addition to achieving a financially stable retirement, seeking advice from a financial advisor in Oakland, CA to create your self-employed retirement plan delivers significant tax advantages that enable you to move your business forward.
Few Oakland, CA wealth management and retirement planning firms truly grasp the challenges faced by small business owners as well as Correct Capital. Our founder's father was a small business owner himself (learn more about our story here), and we are deeply experienced in assisting business owners in their retirement planning needs. We understand that your goals for your business and retirement go far beyond simple financial figures, and we work tirelessly to create customized solutions aligned with your vision. Keep reading to learn more about your self-employed retirement plan options in Oakland, CA, or call Correct Capital at 877-930-401k or contact us online to talk to a entrepreneurial financial advisor in Oakland, CA today.
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Why Oakland, CA 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. Offering flexibility in contributions to significant tax savings, partnering with a financial advisor in Oakland, CA helps you design your retirement plan to align with your unique financial situation.
Flexibility That Fits Your Income
For those with fluctuating income over time, a plan like a SEP IRA or Solo 401(k) offers the freedom to tailor how much you save:
- Customizable Contributions: Set aside more during successful years and scale back when revenues are down, ensuring your plan aligns with your cash flow.
- Roth Options: A Roth Solo 401(k) lets you pay taxes on contributions now, so you can withdraw without tax penalties in the future—a smart decision if you believe your tax rate will increase in the future.
Save Money on Taxes
Self-employed retirement plans deliver significant tax benefits:
- Tax-Deductible Contributions: Contributions to a Solo 401(k) reduce what you owe in taxes, so you can keep more of your income.
- Tax-Deferred Growth: You won't pay taxes on investment growth until you withdraw it, providing your money more time to accumulate.
- State-Specific Incentives: Depending on where you live, you may be eligible for extra deductions as a self-employed individual. These state-level incentives help make these plans even more advantageous.
- Retirement Savings Contributions Credit (Saver’s Credit): Eligible individuals can claim a tax credit of up to 50% of the first $2,000 they contribute a retirement plan, cutting down your tax bill even more.
Protect Your Savings With Smart Investments
Planning for a safe retirement requires more than how much you save—it’s also linked to the way you invest:
- Diversified Portfolios: Spreading your investments across different stocks, bonds, and alternatives is a smart way to minimize exposure to risk while continuing to build your savings.
- Emergency Back-Up: Pairing your retirement plan with a dedicated business safety net prevents you from tapping into your nest egg during financial hardships and risking extra costs.
Plan for the Future of Your Oakland, CA Business
A thoughtful retirement strategy also helps you prepare for what’s next with your Oakland, CA business:
- Selling Your Business: For those considering a sale, retirement accounts like SEP IRAs and Solo 401(k)s remain your personal assets and won’t be included in the sale. These accounts ensure the financial stability you’ll need in the future. Keep in mind that while selling a business often leads to a capital gain, deposits into these plans are subject to yearly maximums (e.g., a maximum of $7,000 for IRAs or a maximum of $70,000 for Solo 401(k)s, including catch-up contributions, depending on plan details).
- Minimizing Taxes: Using retirement contributions wisely minimizes the taxes you’ll owe when you pass on your business.
- Succession Planning: For those winding down or handing over their business, your retirement savings ensure a stable foundation as you make this shift. You might want to partner with a financial advisor experienced in both succession and retirement strategies to minimize tax burdens associated with the transaction.
With the right retirement plan, you manage 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 Oakland, CA Now?
Time is one of the most important assets when it comes to saving for retirement. Starting early not only lets you accumulate a more substantial retirement fund but also minimizes the financial burden of saving aggressively in the future. Here’s why it is beneficial to start 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 stop working. The main reason is compound interest—the financial principle where your investments generate earnings, and those returns, subsequently, generate even more returns. The longer your money has to grow, the greater the impact of compounding.
Example: Taylor and Alex are both entrepreneurs. Their shared goal is to save $500,000 for retirement by age 65:
- Alex initiates savings of $5,000 annually at age 30.
- Taylor waits until age 40 but puts away $7,500 annually to make up for lost time.
By age 65, using a projected 7% annual return:
- Alex contributes $180,000 and accumulates $691,184.39*.
- Taylor invests $195,500 but only ends up with $474,367.78*.
How Early Contributions Grow
Small, consistent savings contributed over time may result in impressive growth. Take a look at this scenario showing the power of consistent growth:
- 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: Investing the same $200 per month yields only $235,412.97* by age 65—a gap of over $260,000, just from a 10-year delay.
The earlier you begin, the lower your annual savings needs each year to reach your retirement goals.
*The numbers shown in this scenario are based on estimates calculated using NerdWallet’s Compound Interest Calculator, assuming a 7% annual return. These calculations involved multiplying yearly deposits by the years contributed. This information is for illustrative purposes only and do not guarantee future performance. Outcomes may change depending on factors such as market conditions, fees, and your unique situation. Be sure to speak with a financial advisor for guidance tailored to your needs.
Take Control of Your Financial Future
As a self-employed person in Oakland, CA, it might seem easier to focus more on reinvesting in your business rather than saving for retirement. Even so, starting a plan now allows you to:
- Leverage tax-deferred growth or penalty-free withdrawals later on.
- Enjoy flexible contributions that adapt to your earnings.
- Build a financial cushion that ensures stability, no matter how your business evolves.
Getting started now, the less you’ll be required to worry about making up for lost time later in life. Taking steps toward your retirement goals today means managing your financial future and giving yourself the ability to concentrate on your dreams—both for your retirement years and your Oakland, CA business.
Types of Self-Employed Retirement Plans
A variety of retirement savings options designed for those working for themselves in Oakland, CA, each providing its own pros and cons. A financial advisor will guide you to learn about the benefits and drawbacks of each plan and determine the one best suited for your circumstances. In most cases, your self-employed retirement plan options in Oakland, CA consist of:
Traditional or Roth IRA
Plan Overview: Individual Retirement Accounts (IRAs), as explained here, represent financial tools for retirement that offer key tax perks. In a conventional IRA, you can usually deduct your contributions from taxable income, and earnings grow without immediate taxation, but withdrawals in retirement are taxed as income. In contrast, Roth IRAs require contributions from post-tax earnings, but eligible distributions during retirement, including earnings, are not taxed. In both accounts, withdrawals come without penalties as long as you are at least 59½.
Eligibility: Unlike 401(k)s, which are employer-sponsored, IRAs, including traditional and Roth options 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 offers a way to save for retirement that allows those who are self-employed to save a percentage of their net business profits. Contributions are strictly employer contributions an employer, so, as a sole proprietor, you (the employee) would not be able to contribute more than 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 set monetary value or a percentage of wages to employee accounts. SEP IRAs is a good option for businesses that experience fluctuating revenue streams. Unlike other plans, SEP IRAs lack the high fees associated with starting or maintaining other plans.
SEPs operate like conventional IRAs, where contributions are made with pre-tax money and retirement distributions are taxable.
Eligibility: Employers of any type, including self-employed individuals 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
For self-employed individuals, the allowable contribution is based on a special calculation.
Solo 401(k)
Plan Overview: A Solo 401(k) plan, also called an Individual 401(k) or one-participant 401(k) plan, is a savings option for the self-employed intended for companies that have no employees or when the sole employee is your spouse. This type of plan function similarly to traditional employer-managed 401(k) plans, and allow you to contribute as both the employer and the employee with pre-tax money. This offers more savings than SEPs or IRAs; however, the additional opportunities often come with 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: For self-employed individuals with a solo 401(k) plan, you are allowed to make two types of contributions:
- Employee contributions of up to 100% of your self-employed earnings, up to the annual contribution limit. In 2025, those limits are $23,500, or $31,000 if you are 50 or older, or $34,750 for those who turn 60-63 in 2025.
- Employer profit-sharing contributions (as an employer) are limited to 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.
Total contributions are capped at $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: The defined benefit plan offers a structured retirement solution that delivers a fixed, predetermined benefit to entrepreneurs upon retirement. In contrast to the plans discussed earlier, this plan is not influenced by market performance, but allows self-employed individuals to know the precise amount they'll have in retirement. This plan is ideal for high-earning self-employed individuals who want to save a large amount for retirement and are willing to make substantial contributions. Contributions offer tax-deferred growth, and withdrawals are taxed as income upon retirement.
Eligibility: Self-employed professionals running an owner-only business or with a small staff of under five can open an individual defined benefit plan, but it's generally 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 individuals 50 and older)
- Businesses currently investing 3-4% but are open to increasing contributions
- Businesses with proven consistent profit patterns
- Partners or owners 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 determined by your income, age, and retirement goals. Contribution limits are updated yearly.
The Importance of a Financial Advisor in Oakland, CA for Your Self-Employed Retirement Plan
A financial advisor in Oakland, CA focused on self-employed retirement strategies can be an important asset for entrepreneurs. They bring the skills needed to guide you through the challenges of retirement planning and design a tailored strategy that matches your objectives. Your advisor in Oakland, CA will evaluate your financial situation, determine how much risk you’re comfortable with, and assist you in choosing wisely about saving and investing for retirement. Part of what we do for you involves:
- Help you choose a plan that suits your unique requirements
- Tailor the plan to your specific situation even further
- Formalize a plan in writing that complies with IRS regulations
- Set up an asset trust plan
- Help you understand the plan's terms
- Review and modify your plan when necessary
- Provide ongoing education and advice throughout your retirement planning process
- Boost your retirement earnings by maximizing your social security benefits
Self-Employed Retirement Plans in Oakland, CA: Correct Capital's Process
Oakland, CA business owners who lack the time, interest, or knowledge to oversee their retirement savings strategy on their own often feel overwhelmed by their available plans. Through our team at Correct Capital, our Oakland, CA financial advisors manage the lion's share of your savings plan setup for you, and strive to ensure meeting your future savings targets as straightforward as possible for you. We can help you get set up your self-employed retirement plan in four simple steps:
- 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 short conversation helps us get a sense of your goals with no pressure or significant effort on your part.
- Gather Information: Once we mutually decide to continue, we'll ask for information, including your employee count, your existing financial picture, and your long-term savings targets. This helps us create a custom plan suited specifically for your needs.
- Review Your Plan: After we put together a plan from the information you provide, we'll sit down with you and discuss your plan in detail to make sure it's clear and show how it aligns with your goals.
- Implementation and Monitoring: When we finalize on your plan, we'll set everything up so you can begin contributing. As time goes on, we'll have regular meetings and monitor your plan to ensure it stays suited to your needs.
Our Oakland, CA financial advisors and retirement plan consultants act as fiduciary advisors, which means they are legally and ethically bound to prioritize your needs above all else.
Other financial advisory services we offer in Oakland, CA include:
- Roth Conversion
- 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 Oakland, CA
To you, your business is more than "just a business", and your Oakland, CA financial advisors must deliver more than basic financial recommendations. With Correct Capital, we make it a priority to understand our clients and their businesses to deliver tailored self-employed retirement plans. All our clients in Oakland, CA benefit from our I.O.U. promise: everything we recommend will be independent, objective, and unbiased. To take the first step on your self-employment retirement plan, reach out to Correct Capital at 877-930-401k or contact us online.
