Self-employed retirement plans Oceanside, CA. The independence of owning your own business in Oceanside, CA is one of the best aspects of being self-employed. That said, this independence sometimes brings with certain challenges, notably regarding planning for retirement, because you don't have the option of employer-sponsored retirement plans. Only 13% of self-employed individuals have a workplace retirement plan, but many should consider exploring their options. In addition to enjoying a more comfortable retirement, seeking advice from a financial advisor in Oceanside, CA to establish your self-employed retirement plan offers significant tax advantages that help both you and your business to thrive.
Few Oceanside, CA wealth management and retirement planning firms are as attuned to the requirements of self-employed individuals better than Correct Capital. Our company’s founder grew up with a father who was a small business owner himself (learn more about our story here), and we take pride in assisting business owners in their retirement planning needs. We understand that your professional and personal aspirations extend well past simple financial figures, and we are dedicated to provide personalized solutions aligned with your vision. Keep reading to learn more about your self-employed retirement plan options in Oceanside, CA, or call Correct Capital at 877-930-401k or contact us online to consult with a small business financial advisor in Oceanside, CA today.
Why Oceanside, CA Self-Employed Individuals Should Have a Retirement Plan
Retirement plans for self-employed individuals help prepare you for the future, they also deliver immediate benefits today. Offering flexibility in contributions to considerable tax savings, working with a financial advisor in Oceanside, CA helps you design your retirement plan to suit your individual circumstances.
Flexibility That Fits Your Income
When your earnings vary annually, a plan like a SEP IRA or Solo 401(k) offers the option to tailor how much you save:
- Customizable Contributions: Contribute more during high-income years and cut back when your earnings dip, so your plan fits your current income.
- Roth Options: Opting for a Roth Solo 401(k) lets you settle taxes at the time of contribution, so you can withdraw without tax penalties in the future—a smart decision if you believe your tax rate is likely to rise in the future.
Save Money on Taxes
Self-employed retirement plans offer powerful 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: Investments grow tax-free until withdrawal, which gives your money more time to grow.
- State-Specific Incentives: Depending on where you live, you might access extra credits as a self-employed individual. These state-level incentives can 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 contributed a retirement plan, helping to lower your tax bill even more.
Protect Your Savings With Smart Investments
Planning for a safe retirement isn’t only about how much you save—it’s also linked to the way you invest:
- Diversified Portfolios: Spreading your investments across different asset classes like stocks and bonds can help reduce risk while continuing to build your savings.
- Emergency Back-Up: Pairing your retirement plan with a dedicated business safety net prevents you from using your retirement funds during challenging periods and facing tax penalties.
Plan for the Future of Your Oceanside, CA Business
Retirement planning also helps you think through what’s next with your Oceanside, CA business:
- Selling Your Business: If you’re planning to sell, plans like SEP IRAs or Solo 401(k)s remain your personal assets and won’t be included in the sale. These savings ensure the reliable income you’ll need later on. Keep in mind that while the sale of a business usually creates a capital gain, retirement plan contributions are restricted by contribution limits (e.g., a maximum of $7,000 for IRAs or a maximum of $70,000 for Solo 401(k)s, factoring in catch-up contributions, based on plan compensation).
- Minimizing Taxes: Making the most of retirement savings minimizes the taxes you are required to pay when you sell your business.
- Succession Planning: For those winding down or handing over their business, your retirement accounts provide the funds you need during the change. You might want to partner with a financial advisor who specializes in succession planning and retirement accounts to minimize tax burdens on the sale.
With the proper savings strategy, you gain control over your financial future, cut down your tax obligations, and create a solid base for both your retirement and your business goals.
Why Start a Self-Employed Retirement Plan in Oceanside, CA Now?
Time remains one of the most crucial assets in retirement planning. Getting a head start not only lets you accumulate a larger nest egg but also reduces the stress of saving aggressively in the future. This is why it is beneficial to start now:
The Cost of Waiting
Delaying your retirement savings can have a major impact on the total you’ll have when you retire. The main reason is compound interest—the powerful process where your investments generate earnings, and those returns, in turn, generate even more returns. The more time your money has to grow, the greater the benefit of this growth.
Example: Alex and Taylor are both self-employed individuals. Both of them want to save $500,000 for retirement by age 65:
- Alex initiates savings of $5,000 annually at age 30.
- Taylor postpones starting contributions to age 40 but saves $7,500 annually to catch up.
By age 65, using a projected 7% annual return:
- Alex puts in $180,000 and accumulates $691,184.39*.
- Taylor contributes $195,500 but only ends up with $474,367.78*.
How Early Contributions Grow
Even modest contributions made consistently may result in impressive growth. Here’s a simple scenario showing the impact of compounding:
- Starting at age 25: By investing $200 per month in a retirement plan with an average annual return of 7%, you’ll accumulate $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.
Saving early, the less effort required each year to meet your retirement goals.
*The numbers shown in this scenario represent estimates generated with NerdWallet’s Compound Interest Calculator, with the assumption of a 7% annual return. The contributions were calculated by multiplying the annual deposit amount by the total number of years contributions were made. These examples are meant to provide general guidance and do not guarantee future performance. Actual results may vary depending on elements like market conditions, fees, and individual circumstances. Always consult a financial advisor for custom recommendations.
Take Control of Your Financial Future
If you’re self-employed in Oceanside, CA, it can be tempting to focus more on reinvesting in your business instead of saving for retirement. That said, initiating a plan now enables you to:
- Take advantage of tax-free future growth or withdrawals without taxes in the future.
- Take advantage of adjustable savings that align with your earnings.
- Create a long-term safety measure that offers peace of mind, no matter how your business develops.
The sooner you start, the less you’ll have to worry about playing catch-up later in life. Saving for retirement now means taking control of your financial future and creating for yourself the opportunity to concentrate on your objectives—both for your retirement years and your Oceanside, CA business.
Types of Self-Employed Retirement Plans
There are several retirement savings options designed for those working for themselves in Oceanside, CA, each with its own advantages and considerations. A financial advisor will guide you to understand the pros and cons of each plan and identify the one best suited for your needs. In most cases, your self-employed retirement plan options in Oceanside, CA consist of:
Traditional or Roth IRA
Plan Overview: Individual Retirement Accounts (IRAs), as explained here, represent retirement savings vehicles that include distinct tax benefits. In a conventional IRA, you can usually deduct your contributions from taxable income, and returns grow free of current taxes, but withdrawals in retirement are taxed as income. In contrast, Roth IRAs require contributions from post-tax earnings, but qualified withdrawals in retirement, including earnings, are not taxed. In both cases, withdrawals come without penalties as long as you are at least 59½.
Eligibility: While many retirement plans, such as 401(k)s, are tied to employment, both traditional and Roth IRAs are open to those with a source of income.
Contribution Limits: For 2025, annual contribution limits for IRAs remain $7,000, or $8,000 if you qualify for catch-up contributions.
Simplified Employee Pension Plan (SEP IRA)
Plan Overview: The Simplified Employee Pension IRA serves as a retirement savings option that allows self-employed individuals to set aside a portion of their self-employment income. Contributions are strictly employer contributions an employer, so, as a sole proprietor, you (the employee) would not be able to contribute 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 set monetary value or a percentage of wages to employee accounts. This type of plan works well for entrepreneurs facing cycles of high revenue and low revenue. Unlike other plans, SEP IRAs don’t have the high fees associated with starting or maintaining other plans.
SEPs function like traditional IRAs, where you contribute pre-tax dollars and retirement distributions are taxable.
Eligibility: Employers of any type, including self-employed individuals can set up 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 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 self-employed retirement plan designed for businesses without employees or where the only employee is a spouse. These plans are similar to standard 401(k) plans, and allow you to contribute as both an employee or an employer with pre-tax money. This allows for more savings than SEPs or IRAs; however, the additional opportunities often come with more limited investment options. With this type of plan, you can make either traditional or Roth deferrals, which offer the same tax benefits as their IRA contribution counterparts.
Eligibility: This plan is exclusively for business owners and their spouses may establish and contribute to a solo 401(k).
Contribution Limits: If you are self-employed with a solo 401(k) plan, you can make two types of contributions:
- Deferrals as an employee of up to 100% of your self-employed earnings, subject to the annual contribution limit. The contribution limits for 2025 include $23,500, or $31,000 for those aged 50 and above, or $34,750 for those who turn 60-63 in 2025.
- 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 deferrals you made.
Your combined contributions must not surpass $70,000, or $77,500 if you're over age 50 (in 2025), $81,250 for those aged 60-63 in 2025.
Individual Defined Benefit Plan
Plan Overview: Defined benefit plans is a retirement option that delivers a set amount to entrepreneurs upon retirement. Unlike defined contribution plans mentioned above, investment returns don’t affect the payout, but lets individuals clearly understand the precise amount they'll have in retirement. This option is ideal for wealthier professionals who want to save a substantial amount for retirement and can commit to making larger deposits. Contributions offer tax-deferred growth, and withdrawals are taxed as income upon retirement.
Eligibility: Any self-employed individual running an owner-only business or employing fewer than five people are eligible to open an individual defined benefit plan, but it's typically recommended for those over 50 who generate a minimum of $250,000 yearly. Generally, good candidates for defined benefit plans include:
- Entrepreneurs who aim to deposit more than $70,000 (or $77,500 for individuals 50 and older)
- Companies already contributing 3-4% with plans to contribute more
- Organizations showing consistent profit patterns
- Partners or owners over age 40 who desire to "catch up" or accelerate the retirement savings
Contribution Limits: The maximum allowable contribution requires calculation from an actuary determined by your financial situation, age, and savings targets. Contribution limits are adjusted each year.
The Importance of a Financial Advisor in Oceanside, CA for Your Self-Employed Retirement Plan
A financial advisor in Oceanside, CA specialized in self-employed retirement plans is an important asset for entrepreneurs. They offer the knowledge to assist navigate the complexities of retirement planning and develop a personalized approach that matches your objectives. Your advisor in Oceanside, CA will assess where you stand financially, determine how much risk you’re comfortable with, and assist you in choosing wisely about saving and investing for retirement. Included in what we do for you includes:
- Help you choose a plan that suits your unique requirements
- Customize the plan to your specific situation even further
- Formalize a plan in writing as required by IRS rules
- Organize a trust plan to manage your assets
- Make sure you understand the plan's terms
- Review and modify your plan as needed
- Deliver continuous support and financial insights to help you navigate your retirement journey
- Boost your retirement earnings by making the most of your social security
Self-Employed Retirement Plans in Oceanside, CA: Correct Capital's Process
Oceanside, CA business owners who lack the time, interest, or knowledge to manage their self-employed retirement plan on their own may end up overwhelmed when faced with their choices. At Correct Capital, our Oceanside, CA financial advisors handle the lion's share of your savings plan setup for you, working to make meeting your financial objectives as easy 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 can determine if we're a good fit for you and your business. This brief introduction helps us get a sense of your goals with no obligation or significant effort on your part.
- Gather Information: Once we mutually decide to continue, we'll request information, including how many employees you have (if any), your current financial situation, and your long-term savings targets. This enables us to craft a custom plan designed just for you.
- Review Your Plan: When we finalize a plan from the information you provide, we'll schedule a meeting and review your plan in detail 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 implement the necessary steps so you can start saving. As time goes on, we'll check in and monitor your plan to keep it tailored to your evolving circumstances.
Our Oceanside, CA financial advisors and retirement plan consultants act as fiduciary advisors, who are obligated to they are legally and ethically bound to do what's in your best interest.
Other financial advisory services we offer in Oceanside, CA include:
- 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 Oceanside, CA
You don't see your business as "just a business", and your Oceanside, CA financial advisors should provide more than basic financial recommendations. At Correct Capital, we make it a priority to understand our clients and their businesses to deliver personalized self-employed retirement plans. All our clients in Oceanside, CA benefit from our I.O.U. promise: everything we recommend will be independent, objective, and unbiased. To get started on your self-employment retirement plan, contact Correct Capital now at 877-930-401k or contact us online.
