Self-employed retirement plans Palmdale, CA. The flexibility of being your own boss in Palmdale, CA is one of the greatest advantages of being self-employed. However, this freedom can come with a lack of security, especially in terms of building your retirement fund, because you don't have access to a workplace retirement plan. Only 13% of self-employed individuals have a workplace retirement plan, yet countless should consider looking into other possibilities. In addition to having a financially stable retirement, seeking advice from a financial advisor in Palmdale, CA to set up your self-employed retirement plan offers significant tax advantages that allow you to move your business forward.
Few Palmdale, CA investment consulting and retirement planning firms truly grasp the challenges faced by entrepreneurs quite like Correct Capital. The father of our founder was a small business owner himself (learn more about our story here), and Correct Capital take pride in helping businesses with their retirement planning needs. We know that your business and retirement aspirations go far beyond simple financial figures, and we work tirelessly to create customized solutions aligned with your vision. Read on to discover about your self-employed retirement plan options in Palmdale, CA, or reach out to Correct Capital at 877-930-401k or contact us online to speak with a small business financial advisor in Palmdale, CA today.
Why Palmdale, CA 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 Palmdale, CA allows you to design your retirement plan to fit your unique financial situation.
Flexibility That Fits Your Income
When your earnings vary from year to year, a plan like a SEP IRA or Solo 401(k) provides the option to tailor how much you save:
- Customizable Contributions: Set aside more during profitable years and scale back when income is lower, so your plan aligns with your financial situation.
- Roth Options: A Roth Solo 401(k) lets you pay taxes on contributions now, so you can withdraw tax-free later—an advantageous choice if you believe your tax rate is likely to rise in the future.
Save Money on Taxes
Plans designed for the self-employed offer significant tax benefits:
- Tax-Deductible Contributions: Contributions to a SIMPLE IRA lower your taxable income, so you can keep more of your income.
- Tax-Deferred Growth: You won't pay taxes on investment growth until you withdraw it, giving your money more time to compound.
- State-Specific Incentives: Based on your location, you might access extra deductions as a sole proprietor. These regional 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, further reducing your tax bill even more.
Protect Your Savings With Smart Investments
Building a secure retirement requires more than 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 is a smart way to mitigate financial risk while helping to grow your nest egg.
- 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 Palmdale, CA Business
Preparing for retirement enables you to plan ahead for what’s next with your Palmdale, CA business:
- Selling Your Business: When selling your business, retirement accounts like SEP IRAs and Solo 401(k)s remain yours and won’t be included in the sale. These accounts offer the steady income you’ll need in the future. Remember 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 as much as $70,000 for Solo 401(k)s, including catch-up contributions, according to plan rules).
- Minimizing Taxes: Using retirement contributions wisely helps lower the taxes you’ll owe when you pass on your business.
- Succession Planning: If you’re passing the business on, your nest egg provide financial security during the change. You might want to partner with a financial advisor who specializes in succession planning and retirement accounts to help with taxes associated with the transaction.
With the right retirement plan, you can take control of your financial future, lower your tax bill, and build a solid base for both your retirement and your business goals.
Why Start a Self-Employed Retirement Plan in Palmdale, CA Now?
Time is one of the most important resources when it comes to saving for retirement. Beginning sooner rather than later not only lets you accumulate a bigger financial cushion but also minimizes the stress of saving aggressively in the future. This is why it pays to take action now:
The Cost of Waiting
Putting off saving for retirement may cause a significant impact on the total you’ll have when you stop working. The biggest reason is compound interest—the powerful process where your investments grow, and those returns, then, earn even more returns. The greater time span your money has to grow, the more significant the impact of compounding.
Example: Taylor and Alex are both entrepreneurs. Both of them want 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 catch up.
By age 65, assuming 7% annual return:
- Alex invests $180,000 and accumulates $691,184.39*.
- Taylor contributes $195,500 but only ends up with $474,367.78*.
How Early Contributions Grow
Regular, modest investments invested steadily often create significant growth. Here’s a simple scenario showing the effect of compound interest:
- Starting at age 25: Putting aside $200 per month in a retirement plan with an average annual return of 7%, you’ll grow to approximately $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 difference of over $260,000, just from a 10-year delay.
Saving early, the less you need to save each year to meet your retirement goals.
*The numbers shown in this scenario represent estimates generated with NerdWallet’s Compound Interest Calculator, assuming a 7% annual return. These calculations involved multiplying yearly deposits by the years contributed. These examples are for illustrative purposes only and do not guarantee future performance. Outcomes may change depending on variables including market conditions, fees, and personal factors. Always consult a financial advisor for custom recommendations.
Take Control of Your Financial Future
For self-employed individuals in Palmdale, CA, it can be tempting to focus more on reinvesting in your business instead of saving for retirement. That said, beginning a plan now allows you to:
- Take advantage of tax-deferred growth or withdrawals without taxes in the future.
- Benefit from adjustable savings that change with your cash flow.
- Establish a long-term safety measure that provides security, no matter how your business evolves.
Starting early, the less you’ll be required to worry about playing catch-up later in life. Building your retirement savings today means managing your financial future and giving yourself the ability to turn your attention to your goals—both for your future retirement and your Palmdale, CA business.
Types of Self-Employed Retirement Plans
A variety of retirement savings options open for those working for themselves in Palmdale, CA, each offering its own benefits and trade-offs. A financial advisor is available to help you evaluate the pros and cons of each option and choose the one best suited for your circumstances. Generally speaking, your self-employed retirement plan options in Palmdale, CA are:
Traditional or Roth IRA
Plan Overview: IRAs, or Individual Retirement Accounts, are financial tools for retirement that include distinct tax benefits. In a standard IRA, contributions are typically tax-deductible, and investment earnings grow tax-deferred, but money taken out during retirement are taxed as income. In contrast, Roth IRAs require contributions using income already taxed, but eligible distributions during retirement, including earnings, are not taxed. In both types of accounts, withdrawals don’t incur penalties if you are at least 59½.
Eligibility: Unlike 401(k)s, which are employer-sponsored, 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: A Simplified Employee Pension (SEP) IRA offers a way to save for retirement that enables entrepreneurs to contribute a percentage of their net earnings. Contributions are strictly employer contributions an employer, so, as a sole proprietor, you (the employee) would not be able to contribute above the 25% you (the employer) already contributed. If you have employees, you are obligated to contribute the same amount for them as you do for yourself. You have the flexibility to contribute a set monetary value or a percentage of wages to employee accounts. This type of plan may be ideal for entrepreneurs facing fluctuating revenue streams. Compared to other retirement options, SEP IRAs lack expensive setup or ongoing fees.
SEPs function like conventional IRAs, where contributions are made with pre-tax money and withdrawals are taxed as income.
Eligibility: Employers of any type, including self-employed individuals can set up a SEP.
Contribution Limits: Contribution limits for employees in a SEP IRA are the lesser of:
- 25% of compensation, or
- $70,000 for 2025
If you’re self-employed, the amount eligible to be contributed is based on a special calculation.
Solo 401(k)
Plan Overview: Solo 401(k)s, commonly known as an Individual 401(k) or one-participant 401(k) plan, is a retirement savings plan meant for businesses without employees or when the sole employee is your spouse. These plans operate much like traditional employer-managed 401(k) plans, and allow you to contribute as both an employee or an employer with pre-tax money. This provides more savings than SEPs or IRAs; however, the extra savings options may be offset by more constrained investment avenues. Using a solo 401(k), 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 are eligible to open and contribute to a solo 401(k).
Contribution Limits: As a self-employed individual 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. 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.
- Contributions as an employer (as an employer) are limited to 25% of your adjusted 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 (as of 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 guarantees a pre-established payout to business owners upon retirement. As opposed to defined contribution plans, a defined benefit plan doesn't fluctuate based on investment returns, but allows self-employed individuals to know the precise amount they'll get in retirement. This strategy is recommended for wealthier entrepreneurs who want to save a significant sum for retirement and are prepared to contribute sizeable contributions. Contributions are tax deferred, and withdrawals incur taxes as income upon retirement.
Eligibility: Self-employed professionals operating a solo business or with a small staff of under five can open an individual defined benefit plan, but it's typically suggested for people above age 50 who generate a minimum of $250,000 yearly. Generally, good candidates for defined benefit plans include:
- Entrepreneurs who desire to contribute more than $70,000 (or $77,500 for those aged 50+)
- Companies already contributing 3-4% with plans to contribute more
- Businesses with proven consistent profit patterns
- Partners or owners over age 40 who desire to "catch up" or accelerate the retirement savings
Contribution Limits: The cap on contributions requires calculation from an actuary using your earnings, age, and retirement objectives. Limits on contributions are adjusted each year.
The Importance of a Financial Advisor in Palmdale, CA for Your Self-Employed Retirement Plan
A financial advisor in Palmdale, CA specialized in self-employed retirement plans serves as an important asset for self-employed individuals. They have the expertise to help understand the intricacies of saving for retirement and design a tailored strategy that reflects your aspirations. Your advisor in Palmdale, CA will assess where you stand financially, identify your risk preferences, and guide you in selecting the best options about saving and investing for retirement. Part of what we do for you involves:
- Guide you in choosing a plan that best fits your needs and goals
- Further adapt the plan to fit you personally even further
- Formalize a plan in writing that complies with IRS regulations
- Set up an asset trust plan
- Ensure you comprehend the plan's terms
- Track and fine-tune your plan to keep it aligned with your goals
- Offer continued financial education and guidance as you continue on the road to retirement
- Increase your retirement income by making the most of your social security
Self-Employed Retirement Plans in Palmdale, CA: Correct Capital's Process
Entrepreneurs in Palmdale, CA who don’t have the time or expertise to handle their self-employed retirement plan independently can become overwhelmed by their choices. Through our team at Correct Capital, our Palmdale, CA financial advisors manage the lion's share of your retirement planning for you, to help make meeting your future savings targets as straightforward as possible for you. We will guide you in creating 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 suited to your needs for you and your business. This short conversation helps us learn about your needs with zero commitment or extensive time commitment on your part.
- Gather Information: If we both decide to move forward, we'll gather information, including your employee count, your current financial situation, and your future objectives. This enables us to craft a personalized strategy designed just for you.
- Review Your Plan: Once we've developed a plan using the information you provide, we'll meet with you and go over your plan in detail to make sure it's clear and explain its fit to your circumstances.
- Implementation and Monitoring: After we agree on your plan, we'll set everything up so you can initiate your savings journey. Over the course of our partnership, we'll check in and monitor your plan to ensure it stays suited to your needs.
Our Palmdale, CA financial advisors and retirement plan consultants serve as fiduciary advisors, which means they are required by law and ethical standards to do what's in your best interest.
Other financial advisory services we offer in Palmdale, CA include:
- 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 Palmdale, CA
You don't see your business as "just a business", and your Palmdale, CA financial advisors need to offer more than basic financial recommendations. Correct Capital takes pride in, we make it a priority to understand our clients and their businesses to provide tailored self-employed retirement plans. All our clients in Palmdale, 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, call Correct Capital today at 877-930-401k or contact us online.
