Self-employed retirement plans Overland Park, KS. The freedom of being your own boss in Overland Park, KS offers many benefits of working for yourself. Even so, this independence can come with potential drawbacks, particularly regarding building your retirement fund, because you don't have the option of a workplace retirement plan. Only 13% of self-employed individuals have a workplace retirement plan, yet countless would be better off understanding their retirement options. In addition to enjoying a financially stable retirement, working with a financial advisor in Overland Park, KS to set up your self-employed retirement plan can provide significant tax advantages that allow your business to grow and succeed.
Few Overland Park, KS wealth management and retirement planning firms truly grasp the challenges faced by self-employed individuals as well as Correct Capital. Our company’s founder grew up with a father who was a small business owner himself (read more of our story here), and we have a rich history of supporting entrepreneurs with their retirement planning needs. We know that your goals for your business and retirement extend well past basic numbers, and we work tirelessly to offer customized solutions aligned with your vision. Keep reading to learn more about your self-employed retirement plan options in Overland Park, KS, or call Correct Capital at 877-930-401k or contact us online to talk to a self-employed financial advisor in Overland Park, KS today.
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Why Overland Park, KS Self-Employed Individuals Should Have a Retirement Plan
Retirement plans for self-employed individuals help prepare you for the future, they also provide tangible benefits today. Offering flexibility in contributions to substantial tax savings, working with a financial advisor in Overland Park, KS enables you to customize your retirement plan to suit your specific needs.
Flexibility That Fits Your Income
For those with fluctuating income from year to year, 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 cut back when income is lower, ensuring your plan aligns with 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 tax-free later—an advantageous choice if you anticipate your tax rate to be higher in the future.
Save Money on Taxes
Plans designed for the self-employed deliver valuable tax benefits:
- Tax-Deductible Contributions: Contributions to a Solo 401(k) reduce what you owe in taxes, allowing you to keep more of your income.
- Tax-Deferred Growth: Investments grow tax-free until withdrawal, which gives your money more time to compound.
- State-Specific Incentives: Based on your location, you could qualify for extra credits as a self-employed individual. These state-level incentives can make these plans even more beneficial.
- 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, helping to lower 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 about how you invest:
- Diversified Portfolios: Spreading your investments across different stocks, bonds, and alternatives can help minimize exposure to risk while still growing your savings.
- Emergency Back-Up: Combining your retirement strategy and a financial buffer for your business prevents you from using your retirement funds during financial hardships and facing tax penalties.
Plan for the Future of Your Overland Park, KS Business
A thoughtful retirement strategy can assist you think through what’s next with your Overland Park, KS business:
- Selling Your Business: For those considering a sale, plans like SEP IRAs or Solo 401(k)s stay in your name and won’t be included in the sale. These plans can provide the steady income you’ll need in the future. Remember that while selling a business often leads to a capital gain, contributions to retirement accounts are restricted by contribution limits (e.g., as much as $7,000 for IRAs or a maximum of $70,000 for Solo 401(k)s, including catch-up contributions, based on plan compensation).
- Minimizing Taxes: Strategically planning your contributions can reduce the taxes you are required to pay when you pass on your business.
- Succession Planning: For those winding down or handing over their business, your nest egg offer financial security during the change. You can also partner with a financial advisor who specializes in succession planning and retirement accounts to help with taxes during the sale.
With the right retirement plan, you manage your financial future, lower your tax bill, and build a strong framework for both your retirement and your business goals.
Why Start a Self-Employed Retirement Plan in Overland Park, KS Now?
Time remains one of the most crucial resources when it comes to saving for retirement. Getting a head start not only helps you grow a more substantial retirement fund but also reduces the financial burden of playing catch-up as you get older. The following are reasons why it makes sense to begin today:
The Cost of Waiting
Putting off saving for retirement can have a major impact on the amount you’ll have when you retire. The primary reason is compound interest—the concept where your investments grow, and those returns, then, earn even more returns. The more time your money has to grow, the more significant the impact of compounding.
Example: Alex and Taylor are both entrepreneurs. They each aim to save $500,000 for retirement by age 65:
- Alex begins contributing $5,000 annually at age 30.
- Taylor postpones starting contributions to age 40 but contributes $7,500 annually to bridge the gap.
By age 65, with an assumption of 7% annual return:
- Alex contributes $180,000 and ends up with $691,184.39*.
- Taylor puts in $195,500 but only ends up with $474,367.78*.
How Early Contributions Grow
Small, consistent savings invested steadily often create substantial growth. Take a look at this scenario showing the power of consistent growth:
- Starting at age 25: If you invest $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: Investing the same $200 per month leaves you with only $235,412.97* by age 65—a shortfall of over $260,000, just from a 10-year delay.
Saving early, the less effort required each year to achieve your retirement goals.
*The figures provided in this example represent 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 do not guarantee future performance. Outcomes may change due to factors such as market conditions, fees, and individual circumstances. We recommend consulting a financial advisor for guidance tailored to your needs.
Take Control of Your Financial Future
For self-employed individuals in Overland Park, KS, it might seem easier to put more emphasis on reinvesting in your business over saving for retirement. That said, initiating a plan now allows you to:
- Benefit from tax-deferred growth or penalty-free withdrawals in the future.
- Enjoy contribution flexibility that adapt to your cash flow.
- Establish a financial cushion that provides security, no matter how your business changes.
Starting early, the less you’ll have to worry about catching up later in life. Taking steps toward your retirement goals today means taking control of your financial future and creating for yourself the freedom to focus on your objectives—both for your golden years and your Overland Park, KS business.
Types of Self-Employed Retirement Plans
A variety of retirement savings options available for self-employed individuals in Overland Park, KS, each with its own pros and cons. A financial advisor is available to help you evaluate the benefits and drawbacks of each choice and choose the one best suited for your needs. Generally speaking, your self-employed retirement plan options in Overland Park, KS are:
Traditional or Roth IRA
Plan Overview: IRAs, or Individual Retirement Accounts, are retirement savings vehicles that include distinct tax benefits. In a traditional IRA, the money you contribute is often tax-deductible, and returns grow free of current taxes, but money taken out during retirement are taxed as income. In contrast, with Roth IRAs, you contribute are made with after-tax income, but qualified withdrawals in retirement, including earnings, are exempt from taxes. In both types of accounts, withdrawals are penalty-free as long as you are at least 59½.
Eligibility: Unlike plans linked to your job, both traditional and Roth IRAs are available to anyone with a source of 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: The Simplified Employee Pension IRA is a retirement plan that allows entrepreneurs to contribute a percentage of their net earnings. Contributions can only be made by an employer, so, as a sole proprietor, you (the employee) are limited to contributions from the employer role beyond the 25% you (the employer) have designated. If you have employees, you are obligated 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 businesses that experience cycles of high revenue and low revenue. Compared to other retirement options, SEP IRAs don’t have expensive setup or ongoing fees.
SEPs operate like traditional IRAs, where the contributions are tax-deferred and withdrawals are taxed as income.
Eligibility: Any employer, including the self-employed can set up 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
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), commonly known as an Individual 401(k) or one-participant 401(k) plan, is a retirement savings plan designed for businesses without employees or if the only employee is your spouse. These plans operate much like standard 401(k) plans, and enable contributions as both the employer and the employee with pre-tax money. This provides more savings than SEPs or IRAs; however, the extra savings options can be balanced by more restricted investment choices. Using a solo 401(k), you can make either traditional or Roth deferrals, which share 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: For self-employed individuals with a solo 401(k) plan, you can make two types of contributions:
- Employee contributions of up to 100% of your self-employed earnings, capped at the annual contribution limit. In 2025, those limits are $23,500, or $31,000 if you're over 50, or $34,750 if you attain age 60-63 in 2025.
- Contributions as an employer (as an employer) cannot exceed 25% of your net self-employment income, which is defined as net profit minus half of your self-employment tax and the deferrals you made.
Total contributions are capped at $70,000, or $77,500 for individuals aged 50+ (in 2025), $81,250 for those aged 60-63 in 2025.
Individual Defined Benefit Plan
Plan Overview: Defined benefit plans offers a structured retirement solution that guarantees a pre-established payout to business owners upon retirement. In contrast to the plans discussed earlier, this plan is not influenced by market performance, but allows self-employed individuals to know exactly how much they'll receive in retirement. This option is best suited for wealthier entrepreneurs who aim to accumulate a significant sum for retirement and are willing to make sizeable contributions. Contributions grow tax-free until withdrawal, and withdrawals are taxable as income upon retirement.
Eligibility: Any self-employed individual running an owner-only business or with a small staff of under five may establish an individual defined benefit plan, but it's typically 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 if over age 50)
- Companies already contributing 3-4% but are open to increasing contributions
- Companies with proven consistent profit patterns
- Partners or owners over age 40 who desire to "catch up" or boost savings within a short timeframe
Contribution Limits: The cap on contributions is calculated by an actuary using your financial situation, age, and savings targets. Limits on contributions change annually.
The Importance of a Financial Advisor in Overland Park, KS for Your Self-Employed Retirement Plan
A financial advisor in Overland Park, KS focused on self-employed retirement strategies is an essential partner for those working for themselves. They have the expertise to help navigate the complexities of retirement planning and craft a tailored strategy that aligns with your goals. A financial advisor in Overland Park, KS will review your finances, identify your risk preferences, and assist you in selecting the best options about saving and investing for retirement. A key part of what we do for you features:
- Assist in selecting a plan that aligns with your objectives and circumstances
- Tailor the plan to fit you personally even further
- Formalize a plan in writing as required by IRS rules
- Set up an asset trust plan
- Ensure you comprehend the plan's terms
- Track and fine-tune your plan as needed
- Deliver continuous support and financial insights to help you navigate your retirement journey
- Maximize what you receive in retirement by making the most of your social security
Self-Employed Retirement Plans in Overland Park, KS: Correct Capital's Process
Entrepreneurs in Overland Park, KS who don’t have the time or expertise to oversee their self-employed retirement plan on their own often feel overwhelmed when faced with their available plans. Through our team at Correct Capital, our Overland Park, KS financial advisors manage the lion's share of your retirement planning for you, to help make meeting your financial objectives as straightforward as possible for you. We are here to assist you in setting up your self-employed retirement plan in just four steps:
- Schedule a Call: A quick 20-minute call is all it takes, a member of our advisor team can determine if our services align for you and your business. This brief introduction helps us get a sense of your goals with zero commitment or major time investment on your part.
- Gather Information: If we both decide to move forward, we'll ask for information, including whether you have employees, your existing financial picture, and your long-term savings targets. This enables us to craft a personalized strategy designed just for you.
- Review Your Plan: After we put together 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 explain its fit to your circumstances.
- Implementation and Monitoring: Once we've agreed on your plan, we'll put everything in place so you can begin contributing. Over the course of our partnership, we'll have regular meetings and track your progress to ensure it stays suited to your needs.
Our Overland Park, KS financial advisors and retirement plan consultants are fiduciary advisors, which means they are legally and ethically bound to do what's in your best interest.
Other financial advisory services we offer in Overland Park, KS include:
- 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 Overland Park, KS
To you, your business is more than "just a business", and your Overland Park, KS financial advisors need to offer more than simply sound financial advice. Correct Capital takes pride in, we focus on building a relationship with our clients and their businesses to create tailored self-employed retirement plans. To every client in Overland Park, KS, we provide 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, call Correct Capital today at 877-930-401k or contact us online.
