Self-employed retirement plans Peoria, AZ. The flexibility of being your own boss in Peoria, AZ is one of the greatest advantages of having a self-directed career. That said, this independence often comes with potential drawbacks, notably when it comes to building your retirement fund, as you don't have the option of retirement programs through an employer. Only 13% of self-employed individuals have a workplace retirement plan, although many should consider understanding their retirement options. In addition to enjoying a financially stable retirement, working with a financial advisor in Peoria, AZ to establish your self-employed retirement plan offers significant tax advantages that allow both you and your business to thrive.
Few Peoria, AZ financial advisory and retirement planning firms truly grasp the challenges faced by small business owners 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 assisting business owners in their retirement planning needs. We know that your professional and personal aspirations aren’t limited to simple financial figures, and we strive to create personalized solutions to meet your unique goals. Read on to discover about your self-employed retirement plan options in Peoria, AZ, or give us a call at Correct Capital at 877-930-401k or contact us online to consult with a self-employed financial advisor in Peoria, AZ today.
Why Peoria, AZ Self-Employed Individuals Should Have a Retirement Plan
Retirement plans for self-employed individuals are essential for preparing you for the future, they also deliver tangible benefits today. With customizable contribution options to significant tax savings, working with a financial advisor in Peoria, AZ helps you design your retirement plan to align with your individual circumstances.
Flexibility That Fits Your Income
If your income changes annually, a plan like a SEP IRA or Solo 401(k) provides the flexibility to modify how much you save:
- Customizable Contributions: Set aside more during successful years and scale back when revenues are down, ensuring your plan works with your cash flow.
- Roth Options: Opting for a Roth Solo 401(k) lets you handle taxes upfront, enabling you to withdraw without tax penalties in the future—a smart decision if you expect your tax rate to be higher in the future.
Save Money on Taxes
Self-employed retirement plans offer powerful tax benefits:
- Tax-Deductible Contributions: Contributions to a SEP IRA lower your taxable income, so you can keep more of your earnings.
- Tax-Deferred Growth: Your savings grow untaxed until withdrawn, which gives your money more time to compound.
- State-Specific Incentives: Depending on where you live, you might access state-specific credits as a business owner. These state-level 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 put into a retirement plan, helping to lower your tax bill even more.
Protect Your Savings With Smart Investments
Creating a stable future goes beyond just how much you save—it’s also about how you invest:
- Diversified Portfolios: Allocating your investments across varied stocks, bonds, and alternatives serves to minimize exposure to risk while still growing your retirement fund.
- Emergency Back-Up: Combining your retirement strategy and a dedicated business safety net 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 think through what’s next with your Peoria, AZ business:
- Selling Your Business: If you’re planning to sell, retirement accounts like SEP IRAs and Solo 401(k)s stay in your name and don’t transfer with the business. These accounts offer the financial stability you’ll need in the future. Keep in mind that while selling your business results in a capital gain, deposits into these plans are capped at annual limits (e.g., as much as $7,000 for IRAs or as much as $70,000 for Solo 401(k)s, with catch-up contributions, depending on plan details).
- Minimizing Taxes: Strategically planning your contributions can reduce the taxes you might face when you pass on your business.
- Succession Planning: For those winding down or handing over their business, your retirement accounts ensure the funds you need during the change. You may also partner with a financial advisor with expertise in succession and retirement planning to help with taxes associated with the transaction.
With the best-fit retirement strategy, you manage your financial future, cut down your tax obligations, and establish a secure foundation 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 important resources for building your retirement fund. Getting a head start not only lets you accumulate a more substantial retirement fund but also lowers the stress of saving aggressively in the future. The following are reasons why it pays to take action now:
The Cost of Waiting
Delaying your retirement savings may cause a significant impact on the savings you’ll have when you stop working. The biggest reason is compound interest—the powerful process where your investments grow, and those returns, in turn, generate even more returns. The more time your money has to grow, the larger the effect of this compounding process.
Example: Two individuals, Alex and Taylor are both self-employed professionals. 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 bridge the gap.
By age 65, with an assumption of 7% annual return:
- Alex invests $180,000 and ends up with $691,184.39*.
- Taylor contributes $195,500 but only ends up with $474,367.78*.
How Early Contributions Grow
Regular, modest investments contributed over time may result in significant growth. Consider this example showing the power 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, all because of a 10-year delay.
Starting sooner, the lower your annual savings needs each year to achieve your retirement goals.
*These calculations are 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. These examples are meant to provide general guidance and are not a promise of future results. Your individual results may differ due to elements like market conditions, fees, and your unique situation. Always consult a financial advisor for personalized advice.
Take Control of Your Financial Future
As a self-employed person in Peoria, AZ, it can be tempting to put more emphasis on reinvesting in your business instead of saving for retirement. Even so, initiating a plan now allows you to:
- Benefit from tax-free future growth or penalty-free withdrawals later on.
- Benefit from contribution flexibility that adapt to your income.
- Build a financial cushion that ensures stability, no matter how your business develops.
The sooner you start, the less you’ll have to worry about playing catch-up later in life. Saving for retirement now means managing your financial future and creating for yourself the opportunity to turn your attention to your goals—both for your golden years and your Peoria, AZ business.
Types of Self-Employed Retirement Plans
There are several retirement savings options open for entrepreneurs in Peoria, AZ, each providing its own pros and cons. A financial advisor is available to help you learn about the pros and cons of each option and choose the one ideal for your unique situation. In most cases, your self-employed retirement plan options in Peoria, AZ include:
Traditional or Roth IRA
Plan Overview: Individual Retirement Accounts (IRAs), as explained here, represent retirement savings vehicles that provide specific tax advantages. In a conventional IRA, the money you contribute is often tax-deductible, and earnings grow without immediate taxation, but retirement distributions are taxable. In contrast, Roth IRAs require contributions are made with after-tax income, but qualified withdrawals in retirement, including earnings, are tax-free. In both types of accounts, withdrawals come without penalties as long as you are at least 59½.
Eligibility: Unlike plans linked to your job, traditional and Roth IRAs are available to anyone with a source of income.
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 those who are self-employed 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 more than 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 flat-dollar amount or a percentage of wages to employee accounts. SEP IRAs is a good option for companies with periods of inconsistent earnings. Unlike other plans, SEP IRAs lack costly startup or administrative fees.
SEPs operate like standard IRAs, where you contribute pre-tax dollars and retirement distributions are taxable.
Eligibility: Both employers and 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 contribution you can make is based on a special calculation.
Solo 401(k)
Plan Overview: A Solo 401(k) plan, also called an Individual 401(k) or one-participant 401(k) plan, is a savings option for the self-employed designed for companies that have no employees or if the only employee is your spouse. This type of plan are similar to employer-sponsored 401(k) plans, and allow you to contribute as both an employer and an employee with pre-tax money. This allows for more savings compared to SEPs or IRAs; however, the additional opportunities can be balanced by more limited investment options. With this type of plan, you can make either traditional or Roth deferrals, which offer 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-employment income, up to the annual contribution limit. The contribution limits for 2025 include $23,500, or $31,000 if you're over 50, or $34,750 if you attain age 60-63 in 2025.
- Profit-sharing contributions (as an employer) must not surpass 25% of your net self-employment income, which is calculated as net profits less half of your self-employment tax and the elective deferrals you made.
The total contribution cannot exceed $70,000, or $77,500 for individuals aged 50+ (for 2025), $81,250 if you attain age 60-63 in 2025.
Individual Defined Benefit Plan
Plan Overview: A defined benefit plan is a retirement option that delivers a fixed, predetermined benefit to self-employed individuals upon retirement. Unlike defined contribution plans mentioned above, investment returns don’t affect the payout, but lets individuals clearly understand exactly how much they'll get in retirement. This strategy is best suited for wealthier entrepreneurs who are focused on saving a large amount for retirement and are willing to make substantial contributions. Contributions grow tax-free until withdrawal, and withdrawals are taxable as income upon retirement.
Eligibility: Self-employed professionals managing a one-person company or with less than five employees are eligible to open an individual defined benefit plan, but it's most commonly suggested for individuals aged 50+ who earn at least $250,000 a year. In most cases, good candidates for defined benefit plans are:
- Entrepreneurs who aim to deposit more than $70,000 (or $77,500 for individuals 50 and older)
- Businesses currently investing 3-4% and are willing to do more
- Businesses that have demonstrated consistent profit patterns
- Business leaders over age 40 who desire to "catch up" or increase their retirement contributions rapidly
Contribution Limits: The contribution limit is calculated by an actuary based on your financial situation, age, and savings targets. Contribution limits change annually.
The Importance of a Financial Advisor in Peoria, AZ for Your Self-Employed Retirement Plan
Working with a financial advisor in Peoria, AZ experienced with retirement plans for the self-employed can be an essential partner for those working for themselves. They bring the skills needed to guide you through the challenges of retirement planning and craft a tailored strategy that reflects your aspirations. A financial advisor in Peoria, AZ will review your finances, understand your risk tolerance, and guide you in selecting the best options about saving and investing for retirement. Part of what we do for you involves:
- Help you choose a plan that best fits your needs and goals
- Further adapt the plan to fit you personally even further
- Create 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 to keep it aligned with your goals
- 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 lack the time, interest, or knowledge to manage their own retirement planning on their own often feel overwhelmed when faced with their choices. At Correct Capital, our Peoria, AZ financial advisors take on the lion's share of your retirement strategy for you, and strive to ensure meeting your future savings targets as easy 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 our services align for you and your business. This short conversation lets us learn about your needs with no obligation or major time investment on your part.
- Gather Information: If we both decide to move forward, we'll ask for information, including how many employees you have (if any), your current financial situation, and your future objectives. This enables us to craft a custom plan designed just for you.
- Review Your Plan: After we put together a plan from the information you provide, we'll schedule a meeting 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 put everything in place so you can start saving. Throughout our relationship, we'll check in and monitor your plan to make sure it remains aligned with your goals.
Our Peoria, AZ financial advisors and retirement plan consultants are fiduciary advisors, which means they are required by law and ethical standards to prioritize your needs above all else.
Other financial advisory services we offer in Peoria, AZ 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 Peoria, AZ
You don't see your business as "just a business", and your Peoria, AZ financial advisors must deliver more than basic financial recommendations. At Correct Capital, we take the time to get to know our clients and their businesses to deliver tailored self-employed retirement plans. All our clients in Peoria, AZ benefit from 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.
