Self-employed retirement plans Peoria, AZ. The flexibility of owning your own business in Peoria, AZ offers many benefits of being self-employed. However, this freedom sometimes brings with a lack of security, especially regarding building your retirement fund, because you don't have access to employer-sponsored retirement plans. Only 13% of self-employed individuals have a workplace retirement plan, but many could benefit from exploring their options. In addition to having a more comfortable retirement, seeking advice from a financial advisor in Peoria, AZ to create your self-employed retirement plan offers significant tax advantages that allow both you and your business to thrive.
Few Peoria, AZ investment consulting and retirement planning firms are as attuned to the requirements of small business owners quite like Correct Capital. The father of our founder was a small business owner himself (read more of our story here), and our firm have a rich history of assisting business owners in their retirement planning needs. We know that your professional and personal aspirations extend well past simple financial figures, and we strive to create tailored solutions that reflect your objectives. Keep reading to learn more about your self-employed retirement plan options in Peoria, AZ, or call Correct Capital at 877-930-401k or contact us online to speak with a self-employed financial advisor in Peoria, AZ today.
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Why Peoria, AZ Self-Employed Individuals Should Have a Retirement Plan
Retirement plans for self-employed individuals not only prepare you for the future, they also offer real benefits today. Offering flexibility in contributions to considerable tax savings, consulting a financial advisor in Peoria, AZ helps you customize your retirement plan to align with your individual circumstances.
Flexibility That Fits Your Income
For those with fluctuating income annually, a plan like a SEP IRA or Solo 401(k) provides the flexibility to modify how much you save:
- Customizable Contributions: Contribute more during high-income years and cut back when your earnings dip, so your plan aligns with your financial situation.
- Roth Options: Opting for a Roth Solo 401(k) lets you pay taxes on contributions now, so you can withdraw tax-free later—a wise move if you anticipate your tax rate will increase in the future.
Save Money on Taxes
Self-employed retirement plans offer valuable tax benefits:
- Tax-Deductible Contributions: Contributions to a SIMPLE IRA lower your taxable income, allowing you to keep more of your income.
- Tax-Deferred Growth: Your savings grow untaxed until withdrawn, providing your money more time to grow.
- State-Specific Incentives: Based on your location, you might access state-specific credits as a self-employed individual. These regional incentives can make these plans even more valuable.
- Retirement Savings Contributions Credit (Saver’s Credit): Qualified participants 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 linked to the way you invest:
- Diversified Portfolios: Spreading your investments across varied stocks, bonds, and alternatives is a smart way to minimize exposure to risk while still growing your retirement fund.
- Emergency Back-Up: Pairing your retirement plan with a business emergency fund prevents you from using your retirement funds during financial hardships and facing tax penalties.
Plan for the Future of Your Peoria, AZ Business
Retirement planning can assist you prepare for what’s next with your Peoria, AZ business:
- Selling Your Business: For those considering a sale, retirement accounts like SEP IRAs and Solo 401(k)s stay in your name and don’t transfer with the business. These accounts can provide the reliable income you’ll need during retirement. It’s important to note that while the sale of a business usually creates a capital gain, contributions to retirement accounts are restricted by contribution limits (e.g., a maximum of $7,000 for IRAs or up to $70,000 for Solo 401(k)s, including catch-up contributions, according to plan rules).
- Minimizing Taxes: Making the most of retirement savings can reduce the taxes you might face when you transfer your business.
- Succession Planning: Whether you’re transferring ownership, your nest egg provide financial security through the transition. You may also partner with a financial advisor with expertise in succession and retirement planning to help with taxes on the sale.
With the proper savings strategy, you gain control over your financial future, cut down your tax obligations, and create a strong framework for both your retirement and your business goals.
Why Start a Self-Employed Retirement Plan in Peoria, AZ Now?
There’s no denying that time is one of the most crucial assets when it comes to saving for retirement. Beginning sooner rather than later not only allows you to build a more substantial retirement fund but also reduces the pressure of catching up later in life. Here’s why it is beneficial to start now:
The Cost of Waiting
Putting off saving for retirement could lead to a major impact on the savings you’ll have when you reach retirement age. The biggest reason is compound interest—the powerful process where your investments generate earnings, and those returns, subsequently, earn even more returns. The longer your money has to grow, the larger the impact of this growth.
Example: Two individuals, Alex and Taylor are both self-employed professionals. They each aim 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 contributes $7,500 annually to make up for lost time.
By age 65, with an assumption of 7% annual return:
- Alex contributes $180,000 and ends up with $691,184.39*.
- Taylor invests $195,500 but accumulates just $474,367.78*.
How Early Contributions Grow
Regular, modest investments contributed over time can lead to significant growth. Consider this example showing the effect of compound interest:
- Starting at age 25: If you invest $200 per month in a retirement plan with an expected yearly growth rate of 7%, you’ll end up with $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 lower your annual savings needs each year to reach your retirement goals.
*These calculations represent estimates calculated using NerdWallet’s Compound Interest Calculator, assuming a 7% annual return. These calculations involved multiplying yearly deposits by the years contributed. This information is meant to provide general guidance and do not guarantee future performance. Your individual results may differ depending on elements like market conditions, fees, and your unique situation. We recommend consulting a financial advisor for guidance tailored to your needs.
Take Control of Your Financial Future
If you’re self-employed in Peoria, AZ, it can be tempting to focus more on reinvesting in your business over saving for retirement. That said, beginning a plan now enables you to:
- Leverage tax-deferred growth or penalty-free withdrawals in the future.
- Take advantage of contribution flexibility that align with your earnings.
- Establish a long-term safety measure that provides security, no matter how your business changes.
The sooner you start, the less you’ll have to worry about making up for lost time later in life. Saving for retirement now means gaining control over your financial future and giving yourself the ability to concentrate on your goals—both for your retirement years and your Peoria, AZ business.
Types of Self-Employed Retirement Plans
A variety of retirement savings options available for entrepreneurs in Peoria, AZ, each offering its own benefits and trade-offs. A financial advisor will guide you to evaluate the pros and cons of each choice and identify the one ideal for your circumstances. In most cases, your self-employed retirement plan options in Peoria, AZ consist of:
Traditional or Roth IRA
Plan Overview: Individual Retirement Accounts (IRAs), as explained here, represent retirement savings vehicles that offer distinct tax benefits. In a standard IRA, contributions are typically tax-deductible, and returns grow free of current taxes, but retirement distributions are taxed as income. In contrast, with Roth IRAs, you contribute from post-tax earnings, but eligible distributions during retirement, including earnings, are exempt from taxes. In both accounts, withdrawals come without penalties if you are at least 59½.
Eligibility: Unlike plans linked to your job, traditional and Roth IRAs are accessible for individuals with a source of income.
Contribution Limits: For 2025, annual contribution limits for IRAs are capped at $7,000, or $8,000 if you're 50 or older.
Simplified Employee Pension Plan (SEP IRA)
Plan Overview: SEP IRAs serves as a retirement savings option that enables self-employed individuals to save a percentage of their net business profits. Contributions are strictly employer contributions an employer, so, as a independent business owner, you (the employee) are limited to contributions from the employer role beyond 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 fixed dollar figure or a percentage of wages to employee accounts. This type of plan may be ideal for entrepreneurs facing fluctuating revenue streams. In contrast to some alternatives, SEP IRAs lack costly startup or administrative fees.
SEPs function like standard IRAs, where the contributions are tax-deferred and money withdrawn is subject to income tax.
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 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 self-employed retirement plan meant for businesses with no employees or when the sole employee is your spouse. This type of plan operate much like employer-sponsored 401(k) plans, and let you make contributions as both an employer and an employee with pre-tax money. This provides more savings than SEPs or IRAs; however, the increased savings potential may be offset by more limited investment options. 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: Only business owners and their spouses can set up and contribute to a solo 401(k).
Contribution Limits: If you are self-employed with a solo 401(k) plan, you have the ability to make two types of contributions:
- Elective deferrals (as an employee) of up to 100% of your earned income from self-employment, subject to the annual contribution limit. The contribution limits for 2025 include $23,500, or $31,000 if you are 50 or older, or $34,750 for those who turn 60-63 in 2025.
- Profit-sharing contributions (as an employer) must not surpass 25% of your adjusted self-employment income, which is your net profit minus half of your self-employment tax and the employee contributions you made.
Total contributions are capped at $70,000, or $77,500 if you're over age 50 (as of 2025), $81,250 if you attain age 60-63 in 2025.
Individual Defined Benefit Plan
Plan Overview: The defined benefit plan is a retirement option that provides a fixed, predetermined benefit to entrepreneurs upon retirement. Unlike defined contribution plans mentioned above, this plan is not influenced by market performance, but enables participants to determine what they'll get in retirement. This strategy is ideal for high-earning self-employed individuals who are focused on saving a substantial amount for retirement and can commit to making larger deposits. Contributions are tax deferred, and withdrawals incur taxes as income in retirement.
Eligibility: Entrepreneurs managing a one-person company or employing fewer than five people can open an individual defined benefit plan, but it's generally recommended for individuals aged 50+ who make $250,000 or more annually. In most cases, good candidates for defined benefit plans tend to be:
- Entrepreneurs who want to invest more than $70,000 (or $77,500 for individuals 50 and older)
- Companies already contributing 3-4% with plans to contribute more
- Organizations that have demonstrated consistent profit patterns
- Entrepreneurs over age 40 who aim to quickly build retirement savings or boost savings within a short timeframe
Contribution Limits: The contribution limit must be determined by an actuary determined by your earnings, age, and retirement objectives. Contribution limits are adjusted each year.
The Importance of a Financial Advisor in Peoria, AZ for Your Self-Employed Retirement Plan
A financial advisor in Peoria, AZ specialized in self-employed retirement plans can be an invaluable resource for self-employed individuals. They have the expertise to help guide you through the challenges of retirement planning and develop a personalized approach that aligns with your goals. An expert in your area will evaluate your financial situation, understand your risk tolerance, and help you in selecting the best options about saving and investing for retirement. Included in what we do for you involves:
- Help you choose a plan that best fits your needs and goals
- Tailor the plan to your needs even further
- Adopt a written plan in accordance with IRS guidelines
- Organize a trust plan to manage your assets
- Ensure you comprehend the plan's terms
- Track and fine-tune your plan as needed
- Provide ongoing education and advice 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 Peoria, AZ: Correct Capital's Process
Peoria, AZ business owners who aren’t equipped with the time or understanding to handle their own retirement planning themselves can become overwhelmed as they look at their options. At Correct Capital, our Peoria, AZ financial advisors take on the lion's share of your retirement strategy for you, working to make meeting your retirement goals 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: In just 20 minutes, a member of our advisor team can help understand if we're a good fit for you and your business. This short conversation lets us get a sense of your goals with zero commitment 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 personalized strategy that aligns with your goals.
- Review Your Plan: After we put together a plan using the information you provide, we'll sit down with you and discuss your plan thoroughly to help you fully grasp it and show how it aligns with your goals.
- Implementation and Monitoring: Once we've agreed on your plan, we'll set everything up so you can initiate your savings journey. As time goes on, we'll have regular meetings and monitor your plan to keep it tailored to your evolving circumstances.
Our Peoria, AZ financial advisors and retirement plan consultants are fiduciary advisors, who are obligated to they are required by law and ethical standards to act in your best interest.
Other financial advisory services we offer in Peoria, AZ 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 Peoria, AZ
You don't see your business as "just a business", and your Peoria, AZ financial advisors need to offer more than simply sound financial advice. With Correct Capital, we focus on building a relationship with our clients and their businesses to provide tailored self-employed retirement plans. All our clients in Peoria, AZ benefit from our I.O.U. promise: all of the advice you get from us 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.
