Self-employed retirement plans Overland Park, KS. The freedom of running your own company in Overland Park, KS is one of the best aspects of having a self-directed career. Even so, this freedom can come with certain challenges, particularly regarding planning for retirement, 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 could benefit from looking into other possibilities. In addition to achieving a financially stable retirement, seeking advice from a financial advisor in Overland Park, KS to establish your self-employed retirement plan offers significant tax advantages that enable your business to grow and succeed.
Few Overland Park, KS wealth management and retirement planning firms understand the needs of small business owners better than Correct Capital. Our founder's father was a small business owner himself (read more of our story here), and Correct Capital are deeply experienced in assisting business owners in their retirement planning needs. We know that your business and retirement aspirations go far beyond just monetary concerns, and we work tirelessly to provide personalized solutions to meet your unique goals. Keep reading to learn more about your self-employed retirement plan options in Overland Park, KS, or give us a call at Correct Capital at 877-930-401k or contact us online to speak with a self-employed financial advisor in Overland Park, KS today.
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 real benefits today. With customizable contribution options to considerable tax savings, partnering with a financial advisor in Overland Park, KS enables you to customize your retirement plan to align with your specific needs.
Flexibility That Fits Your Income
For those with fluctuating income annually, a plan like a SEP IRA or Solo 401(k) offers the freedom to tailor how much you save:
- Customizable Contributions: Contribute more during successful years and cut back when your earnings dip, so your plan aligns with your cash flow.
- Roth Options: A Roth Solo 401(k) lets you settle taxes at the time of contribution, enabling you to withdraw your savings tax-free down the road—an advantageous choice if you believe your tax rate to be higher in the future.
Save Money on Taxes
Self-employed retirement plans deliver powerful tax benefits:
- Tax-Deductible Contributions: Contributions to a SEP IRA reduce what you owe in taxes, allowing you to keep more of your income.
- Tax-Deferred Growth: Investments grow tax-free until withdrawal, giving your money more time to compound.
- State-Specific Incentives: Based on your location, you might access state-specific deductions as a business owner. These local incentives make these plans even more valuable.
- Retirement Savings Contributions Credit (Saver’s Credit): Those who meet the requirements can apply for a credit of up to 50% of the first $2,000 put into a retirement plan, further reducing 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: Allocating your investments across varied asset classes like stocks and bonds serves to minimize exposure to 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 using your retirement funds during tough times and risking extra costs.
Plan for the Future of Your Overland Park, KS Business
A thoughtful retirement strategy also helps you prepare for what’s next with your Overland Park, KS business:
- Selling Your Business: When selling your business, retirement accounts like SEP IRAs and Solo 401(k)s remain yours and are not part of the sale. These plans offer the steady income you’ll need in the future. Keep in mind that while selling your business results in a capital gain, contributions to retirement accounts are capped at annual 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, according to plan rules).
- Minimizing Taxes: Using retirement contributions wisely helps lower the taxes you are required to pay when you transfer your business.
- Succession Planning: If you’re passing the business on, your retirement accounts offer financial security as you make this shift. You may also work with a financial advisor with expertise in succession and retirement planning to reduce taxes on the sale.
With the best-fit retirement strategy, you manage your financial future, cut down your tax obligations, and create a secure foundation 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 important resources when it comes to saving for retirement. Getting a head start not only helps you grow a more substantial retirement fund but also lowers the financial burden of saving aggressively in the future. This is why it pays to take action now:
The Cost of Waiting
Waiting to start your retirement fund can have a major impact on the amount you’ll have when you retire. The biggest reason is compound interest—the concept where your investments generate earnings, and those returns, subsequently, accumulate even more returns. The more time your money has to grow, the greater the effect of this compounding process.
Example: Taylor and Alex are both self-employed professionals. Their shared goal is to save $500,000 for retirement by age 65:
- Alex starts saving $5,000 annually at age 30.
- Taylor postpones starting contributions to age 40 but saves $7,500 annually to make up for lost time.
By age 65, with an assumption of 7% annual return:
- Alex puts in $180,000 and achieves a total of $691,184.39*.
- Taylor contributes $195,500 but accumulates just $474,367.78*.
How Early Contributions Grow
Small, consistent savings made consistently often create impressive growth. Consider this example showing the effect 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 would result in only $235,412.97* by age 65—a gap of over $260,000, just from a 10-year delay.
Starting sooner, the less you need to save each year to reach your retirement goals.
*The figures provided in this example represent estimates generated with NerdWallet’s Compound Interest Calculator, assuming a 7% annual return. The contributions were calculated by multiplying the annual deposit amount by the total number of years contributions were made. This information is intended as illustrative examples and do not guarantee future performance. Outcomes may change due to factors such as market conditions, fees, and personal factors. We recommend consulting a financial advisor for custom recommendations.
Take Control of Your Financial Future
If you’re self-employed in Overland Park, KS, it might seem easier to focus more on reinvesting in your business rather than saving for retirement. Even so, starting a plan now enables you to:
- Leverage tax-deferred growth or withdrawals without taxes down the road.
- Take advantage of adjustable savings that adapt to your earnings.
- Establish a financial cushion that provides security, no matter how your business evolves.
Getting started now, the less you’ll be required to worry about playing catch-up later in life. Building your retirement savings today means taking control of your financial future and allowing yourself the ability to focus on your objectives—both for your retirement years and your Overland Park, KS business.
Types of Self-Employed Retirement Plans
A variety of retirement savings options available for entrepreneurs in Overland Park, KS, each providing its own benefits and trade-offs. A financial advisor is available to help you evaluate the benefits and drawbacks of each choice and choose the one most suitable for your unique situation. Typically, your self-employed retirement plan options in Overland Park, KS include:
Traditional or Roth IRA
Plan Overview: IRAs, or Individual Retirement Accounts, are retirement savings vehicles that provide specific tax advantages. In a traditional IRA, you can usually deduct your contributions from taxable income, and earnings grow without immediate taxation, but money taken out during retirement are taxed as income. In contrast, with Roth IRAs, you contribute are made with after-tax income, but retirement withdrawals that qualify, including earnings, are exempt from taxes. In both accounts, withdrawals are penalty-free provided you are at least 59½.
Eligibility: Unlike plans linked to your job, traditional and Roth IRAs are open to those with taxable earnings.
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: A Simplified Employee Pension (SEP) IRA serves as a retirement savings option that permits those who are self-employed to set aside a portion of their self-employment income. Contributions can only be made by an employer, so, as a self-employed individual, you (the employee) would not be able to contribute above the 25% you (the employer) already contributed. If you have employees, it's required to contribute the same amount for them as you do for yourself. You have the flexibility to contribute a fixed dollar figure or a percentage of wages to employee accounts. SEP IRAs works well for entrepreneurs facing cycles of high revenue and low revenue. Compared to other retirement options, SEP IRAs don’t have costly startup or administrative fees.
SEPs work like standard IRAs, where you contribute pre-tax dollars and withdrawals are taxed as income.
Eligibility: Employers of any type, including self-employed individuals can open 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 amount eligible to be contributed is based on a special calculation.
Solo 401(k)
Plan Overview: A Solo 401(k) plan, commonly known as an Individual 401(k) or one-participant 401(k) plan, is a retirement savings plan meant for businesses without employees or if the only employee is your spouse. This type of plan function similarly to standard 401(k) plans, and let you make contributions as both an employer and an employee with pre-tax money. This offers more savings versus 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 have the same tax benefits as their IRA contribution counterparts.
Eligibility: This plan is exclusively for business owners and their spouses are eligible to open 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-employment income, subject to 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.
- Employer profit-sharing contributions (as an employer) are limited to 25% of your net earnings from self-employment, which is your net profit minus half of your self-employment tax and the employee contributions you made.
The total contribution cannot exceed $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 represents a type of retirement plan that provides a fixed, predetermined benefit to entrepreneurs upon retirement. In contrast to the plans discussed earlier, this plan is not influenced by market performance, but enables participants to determine exactly how much they'll have in retirement. This strategy is ideal for higher-income self-employed individuals who are focused on saving a large amount for retirement and are prepared to contribute larger deposits. Contributions are tax deferred, and withdrawals are taxable as income in retirement.
Eligibility: Entrepreneurs operating a solo business or with a small staff of under five may establish an individual defined benefit plan, but it's most commonly suggested for individuals aged 50+ who generate a minimum of $250,000 yearly. Generally, good candidates for defined benefit plans are:
- Business owners or partners who aim to deposit more than $70,000 (or $77,500 for those aged 50+)
- Organizations that already put in 3-4% and are willing to do more
- Companies with proven consistent profit patterns
- Entrepreneurs over age 40 who aim to quickly build retirement savings or accelerate the retirement savings
Contribution Limits: The maximum allowable contribution must be determined by an actuary using your financial situation, age, and savings targets. Contribution limits are adjusted each year.
The Importance of a Financial Advisor in Overland Park, KS for Your Self-Employed Retirement Plan
Partnering with an advisor in Overland Park, KS specialized in self-employed retirement plans can be an invaluable resource for self-employed individuals. They bring the skills needed to understand the intricacies of saving for retirement and develop a customized plan that reflects your aspirations. A financial advisor in Overland Park, KS will evaluate your financial situation, understand your risk tolerance, and guide you in making informed decisions about saving and investing for retirement. Included in what we do for you includes:
- Assist in selecting a plan that aligns with your objectives and circumstances
- Customize the plan to fit you personally even further
- Formalize a plan in writing that complies with IRS regulations
- Organize a trust plan to manage your assets
- Help you understand the plan's terms
- Review and modify your plan when necessary
- Deliver continuous support and financial insights throughout your retirement planning process
- Boost your retirement earnings by making the most of your social security
Self-Employed Retirement Plans in Overland Park, KS: Correct Capital's Process
Self-employed individuals in Overland Park, KS who aren’t equipped with the time or understanding to oversee their retirement savings strategy on their own can become overwhelmed when faced with their options. With Correct Capital, our Overland Park, KS financial advisors handle the lion's share of your savings plan setup for you, and strive to ensure meeting your future savings targets as hassle-free 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: 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 understand what you're looking for with zero commitment or extensive time commitment on your part.
- Gather Information: Should we agree to proceed, we'll request information, including your employee count, your existing financial picture, and your long-term savings targets. This allows us to put together a tailored approach that aligns with your goals.
- Review Your Plan: Once we've developed a plan using the information you provide, we'll meet with you and review 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 start saving. Over the course of our partnership, we'll check in and monitor your plan to make sure it remains aligned with your goals.
Our Overland Park, KS financial advisors and retirement plan consultants act as fiduciary advisors, meaning they are committed by law and ethics to prioritize your needs above all else.
Other financial advisory services we offer in Overland Park, KS include:
- Financial Planning for Business Owners
- Comprehensive Financial Planning
- Retirement Income Planning
- Investment Planning
- Retirement Financial Planning
- Independent Financial Advisor
- Roth Conversion
- Investment Management
- 401(k) Audit
- High-Net-Worth Wealth Management
Call Correct Capital for Your Self-Employed Retirement Plan in Overland Park, KS
You don't see your business as "just a business", and your Overland Park, KS financial advisors need to offer more than simply sound financial advice. At Correct Capital, we focus on building a relationship with our clients and their businesses to deliver tailored self-employed retirement plans. We offer all our Overland Park, KS clients our I.O.U. promise: everything we recommend 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.
