Self-employed retirement plans Ontario, CA. The independence of running your own company in Ontario, CA is one of the best aspects of having a self-directed career. Even so, this flexibility can come with potential drawbacks, especially when it comes to retirement savings, as you don't have access to retirement programs through an employer. Only 13% of self-employed individuals have a workplace retirement plan, although many would be better off looking into other possibilities. In addition to enjoying a financially stable retirement, working with a financial advisor in Ontario, CA to create your self-employed retirement plan offers significant tax advantages that help both you and your business to thrive.
Few Ontario, CA financial advisory and retirement planning firms are as attuned to the requirements of self-employed individuals better than Correct Capital. Our founder's father was a small business owner himself (learn more about our story here), and our firm take pride in supporting entrepreneurs with their retirement planning needs. We know that your professional and personal aspirations aren’t limited to basic numbers, and we work tirelessly to provide personalized solutions that reflect your objectives. Keep reading to learn more about your self-employed retirement plan options in Ontario, CA, or call Correct Capital at 877-930-401k or contact us online to talk to a entrepreneurial financial advisor in Ontario, CA today.
Why Ontario, CA Self-Employed Individuals Should Have a Retirement Plan
Retirement plans for self-employed individuals are essential for preparing you for the future, they also offer real benefits today. With customizable contribution options to considerable tax savings, working with a financial advisor in Ontario, CA allows you to design your retirement plan to fit your specific needs.
Flexibility That Fits Your Income
For those with fluctuating income over time, a plan like a SEP IRA or Solo 401(k) provides the freedom to tailor how much you save:
- Customizable Contributions: Contribute more during high-income years and reduce savings when revenues are down, ensuring your plan aligns with your cash flow.
- Roth Options: Choosing a Roth Solo 401(k) lets you handle taxes upfront, allowing you to withdraw your savings tax-free down the road—a wise move if you anticipate your tax rate to be higher in the future.
Save Money on Taxes
Plans designed for the self-employed deliver powerful tax benefits:
- Tax-Deductible Contributions: Contributions to a SIMPLE IRA shrink your tax liability, so you can keep more of your income.
- Tax-Deferred Growth: Your savings grow untaxed until withdrawn, giving your money more time to compound.
- 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 advantageous.
- Retirement Savings Contributions Credit (Saver’s Credit): Qualified participants can take advantage of a credit of up to 50% of the first $2,000 put into 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: Spreading your investments across a mix of stocks, bonds, and alternatives is a smart way to minimize exposure to risk while continuing to build your retirement fund.
- Emergency Back-Up: Combining your retirement strategy and a financial buffer for your business ensures you don’t using your retirement funds during financial hardships and incurring penalties.
Plan for the Future of Your Ontario, CA Business
A thoughtful retirement strategy enables you to plan ahead for what’s next with your Ontario, CA business:
- Selling Your Business: If you’re planning to sell, retirement accounts like SEP IRAs and Solo 401(k)s remain yours and won’t be included in the sale. These plans can provide the steady 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 restricted by contribution limits (e.g., as much as $7,000 for IRAs or as much as $70,000 for Solo 401(k)s, factoring in catch-up contributions, depending on plan details).
- Minimizing Taxes: Strategically planning your contributions minimizes the taxes you’ll owe when you sell your business.
- Succession Planning: Whether you’re transferring ownership, your retirement accounts ensure financial security as you make this shift. You might want to partner with a financial advisor with expertise in succession and retirement planning to minimize tax burdens associated with the transaction.
With the right retirement plan, you can take control of your financial future, lower your tax bill, and establish a secure foundation for both your retirement and your business goals.
Why Start a Self-Employed Retirement Plan in Ontario, CA Now?
There’s no denying that time is one of the most important factors in retirement planning. Starting early not only helps you grow a larger nest egg but also reduces the financial burden of saving aggressively in the future. Here’s why it pays to take action now:
The Cost of Waiting
Delaying your retirement savings may cause a major impact on the amount you’ll have when you retire. The main reason is compound interest—the powerful process where your investments grow, and those returns, subsequently, earn even more returns. The greater time span your money has to grow, the greater the effect of this compounding process.
Example: Taylor and Alex are both self-employed individuals. They each aim to save $500,000 for retirement by age 65:
- Alex starts saving $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, assuming 7% annual return:
- Alex contributes $180,000 and ends up with $691,184.39*.
- Taylor contributes $195,500 but achieves a total of only $474,367.78*.
How Early Contributions Grow
Small, consistent savings made consistently can lead to substantial growth. Here’s a simple scenario showing the impact of compound interest:
- Starting at age 25: Putting aside $200 per month in a retirement plan with an projected return 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.
The earlier you begin, the less you need to save each year to achieve your retirement goals.
*The figures provided in this example are based on estimates generated with NerdWallet’s Compound Interest Calculator, based on a 7% annual return. Annual deposits were multiplied by the number of years to estimate total contributions. The scenarios provided are for illustrative purposes only and do not guarantee future performance. Actual results may vary due to factors such as market conditions, fees, and personal factors. Always consult a financial advisor for guidance tailored to your needs.
Take Control of Your Financial Future
If you’re self-employed in Ontario, CA, it can be tempting to put more emphasis on reinvesting in your business rather than saving for retirement. Even so, initiating a plan now enables you to:
- Take advantage of tax-deferred growth or penalty-free withdrawals in the future.
- Take advantage of adjustable savings that change with your earnings.
- Establish a safety net that offers peace of mind, no matter how your business develops.
Getting started now, the less you’ll have to worry about making up for lost time later in life. Taking steps toward your retirement goals today means taking control of your financial future and creating for yourself the ability to concentrate on your goals—both for your retirement years and your Ontario, CA business.
Types of Self-Employed Retirement Plans
A variety of retirement savings options available for entrepreneurs in Ontario, CA, each with its own benefits and trade-offs. A financial advisor is available to help you understand the advantages and disadvantages of each choice and choose the one most suitable for your circumstances. Generally speaking, your self-employed retirement plan options in Ontario, CA are:
Traditional or Roth IRA
Plan Overview: IRAs, or Individual Retirement Accounts, are long-term savings plans that include key tax perks. In a standard IRA, you can usually deduct your contributions from taxable income, and investment earnings grow tax-deferred, but withdrawals in retirement are taxable. In contrast, Roth IRA contributions from post-tax earnings, but eligible distributions during retirement, including earnings, are tax-free. In both accounts, withdrawals come without penalties if you are at least 59½.
Eligibility: Unlike 401(k)s, which are employer-sponsored, traditional and Roth IRAs are accessible for individuals with taxable earnings.
Contribution Limits: For 2025, annual contribution limits for IRAs are set at $7,000, or $8,000 for those aged 50+.
Simplified Employee Pension Plan (SEP IRA)
Plan Overview: The Simplified Employee Pension IRA offers a way to save for retirement that enables entrepreneurs to save a percentage of their net business profits. Contributions can only be made by an employer, so, as a independent business owner, you (the employee) cannot make additional contributions more than the 25% you (the employer) allocate. If you have employees, it's required to contribute the same amount for them as you do for yourself. It's your choice whether to contribute a fixed dollar figure or a percentage of wages to employee accounts. SEP IRAs may be ideal 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 operate like standard IRAs, where the contributions are tax-deferred and withdrawals are taxed as income.
Eligibility: Employers of any type, including self-employed individuals can establish a SEP.
Contribution Limits: Contribution limits for employees in a SEP IRA are the lesser of:
- 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: The Solo 401(k), also called an Individual 401(k) or one-participant 401(k) plan, is a retirement savings plan intended for companies that have no employees or if the only employee is your spouse. This type of plan function similarly to traditional employer-managed 401(k) plans, and allow you to contribute as both an employee or an employer with pre-tax money. This allows for more savings versus SEPs or IRAs; however, the extra savings options 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: Solo 401(k)s are available solely to business owners and their spouses may establish 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:
- Deferrals as an employee of up to 100% of your self-employed earnings, capped at 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.
- Contributions as an employer (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 deferrals you made.
Total contributions are capped at $70,000, or $77,500 if you're over age 50 (in 2025), $81,250 for individuals turning 60-63 in 2025.
Individual Defined Benefit Plan
Plan Overview: A defined benefit plan is a retirement option that provides a pre-established payout to business owners upon retirement. As opposed to defined contribution plans, this plan is not influenced by market performance, but allows self-employed individuals to know exactly how much they'll have in retirement. This plan is ideal for wealthier professionals who aim to accumulate a significant sum for retirement and can commit to making substantial contributions. Contributions are tax deferred, and withdrawals are taxed as income upon retirement.
Eligibility: Self-employed professionals operating a solo business or employing fewer than five people can open 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 are:
- Partners or owners who want to invest more than $70,000 (or $77,500 for individuals 50 and older)
- Businesses currently investing 3-4% but are open to increasing contributions
- Companies showing consistent profit patterns
- Entrepreneurs over age 40 who aim to quickly build retirement savings or boost savings within a short timeframe
Contribution Limits: The maximum allowable contribution is calculated by an actuary using your earnings, age, and retirement objectives. Limits on contributions are updated yearly.
The Importance of a Financial Advisor in Ontario, CA for Your Self-Employed Retirement Plan
Working with a financial advisor in Ontario, CA specialized in self-employed retirement plans serves as an invaluable resource for self-employed individuals. They bring the skills needed to navigate the complexities of retirement planning and develop a customized plan that reflects your aspirations. An expert in your area will evaluate your financial situation, determine how much risk you’re comfortable with, and assist you in making informed decisions about saving and investing for retirement. Part of what we do for you includes:
- Assist in selecting a plan that aligns with your objectives and circumstances
- Further adapt 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
- Monitor and adjust your plan as needed
- Offer continued financial education and guidance to help you navigate your retirement journey
- Boost your retirement earnings by maximizing your social security benefits
Self-Employed Retirement Plans in Ontario, CA: Correct Capital's Process
Self-employed individuals in Ontario, CA who lack the time, interest, or knowledge to handle their own retirement planning themselves may end up overwhelmed by their choices. Through our team at Correct Capital, our Ontario, CA financial advisors handle the majority of your retirement strategy for you, to help make meeting your future savings targets as easy as possible for you. We can help you get set 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 determine if we're a good fit for you and your business. This initial call allows us to understand what you're looking for with no obligation or extensive time commitment on your part.
- Gather Information: Should we agree to proceed, we'll ask for information, including how many employees you have (if any), your present financial standing, and your retirement goals. This helps us create a personalized strategy designed just for you.
- Review Your Plan: When we finalize a plan from the information you provide, we'll sit down with you and review your plan step by step to make sure it's clear and show how it aligns with your goals.
- Implementation and Monitoring: After we agree on your plan, we'll implement the necessary steps so you can start saving. As time goes on, we'll have regular meetings and review your strategy to ensure it stays suited to your needs.
Our Ontario, CA financial advisors and retirement plan consultants act as fiduciary advisors, meaning they are committed by law and ethics to act in your best interest.
Other financial advisory services we offer in Ontario, CA 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 Ontario, CA
To you, your business is more than "just a business", and your Ontario, CA financial advisors need to offer more than just good financial guidance. Correct Capital takes pride in, we make it a priority to understand our clients and their businesses to provide tailored self-employed retirement plans. We offer all our Ontario, CA clients our I.O.U. promise: all guidance we provide will be independent, objective, and unbiased. To get started on your self-employment retirement plan, call Correct Capital today at 877-930-401k or contact us online.
