Self-employed retirement plans Peoria, AZ. The flexibility of being your own boss in Peoria, AZ is one of the best aspects of working for yourself. However, this independence can come with certain challenges, notably in terms of building your retirement fund, as you don't have access to retirement programs through an employer. Only 13% of self-employed individuals have a workplace retirement plan, yet countless would be better off understanding their retirement options. In addition to having a more comfortable retirement, partnering with a financial advisor in Peoria, AZ to establish your self-employed retirement plan can provide significant tax advantages that enable your business to grow and succeed.
Few Peoria, AZ investment consulting and retirement planning firms truly grasp the challenges faced by small business owners quite like 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 our firm take pride in assisting business owners in their retirement planning needs. We recognize that your business and retirement aspirations extend well past basic numbers, and we are dedicated to offer personalized solutions that reflect your objectives. Continue exploring to find out about your self-employed retirement plan options in Peoria, AZ, or call Correct Capital at 877-930-401k or contact us online to talk to a entrepreneurial 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 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 fit 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 option to adjust how much you save:
- Customizable Contributions: Contribute more during high-income years and scale back when your earnings dip, ensuring your plan fits your cash flow.
- Roth Options: A Roth Solo 401(k) lets you pay taxes on contributions now, enabling you to withdraw your savings tax-free down the road—a smart decision if you believe your tax rate will increase in the future.
Save Money on Taxes
Self-employed retirement plans deliver significant tax benefits:
- Tax-Deductible Contributions: Contributions to a SIMPLE IRA lower your taxable income, allowing you to keep more of your hard-earned money.
- 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: In some states, you may be eligible for additional deductions as a self-employed individual. These state-level incentives help 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, further reducing your tax bill even more.
Protect Your Savings With Smart Investments
Building a secure retirement goes beyond just how much you save—it’s also linked to the way you invest:
- Diversified Portfolios: Allocating your investments across varied stocks, bonds, and other assets is a smart way to mitigate financial risk while continuing to build your retirement fund.
- Emergency Back-Up: Pairing your retirement plan with a dedicated business safety net helps you avoid dipping into savings during challenging periods and facing tax penalties.
Plan for the Future of Your Peoria, AZ Business
Retirement planning also helps you plan ahead for what’s next with your Peoria, AZ business:
- Selling Your Business: If you’re planning to sell, plans like SEP IRAs or Solo 401(k)s remain yours and are not part of the sale. These savings offer the steady income you’ll need in the future. It’s important to note that while selling a business often leads to a capital gain, deposits into these plans are restricted by contribution limits (e.g., a maximum of $7,000 for IRAs or a maximum of $70,000 for Solo 401(k)s, with catch-up contributions, based on plan compensation).
- Minimizing Taxes: Strategically planning your contributions can reduce the taxes you are required to pay when you transfer your business.
- Succession Planning: If you’re passing the business on, your retirement savings offer financial security as you make this shift. You might want to seek advice from a financial advisor experienced in both succession and retirement strategies to minimize tax burdens associated with the transaction.
With the proper savings strategy, you manage your financial future, reduce your tax burden, and establish 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 valuable resources when it comes to saving for retirement. Beginning sooner rather than later not only lets you accumulate a more substantial retirement fund but also lowers the financial burden of saving aggressively in the future. Here’s why it is beneficial to start now:
The Cost of Waiting
Putting off saving for retirement can have a substantial impact on the total you’ll have when you retire. The primary reason is compound interest—the concept where your investments earn returns, and those returns, then, accumulate even more returns. The more time your money has to grow, the larger the impact of this compounding process.
Example: Taylor and Alex are both self-employed individuals. 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 saves $7,500 annually to catch up.
By age 65, using a projected 7% annual return:
- Alex puts in $180,000 and accumulates $691,184.39*.
- Taylor contributes $195,500 but achieves a total of only $474,367.78*.
How Early Contributions Grow
Regular, modest investments contributed over time can lead to substantial growth. Take a look at this scenario showing the impact of consistent growth:
- Starting at age 25: Putting aside $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 yields only $235,412.97* by age 65—a shortfall of over $260,000, simply due to a 10-year delay.
Saving early, the less effort required each year to achieve your retirement goals.
*These calculations represent estimates calculated using 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. The scenarios provided are intended as illustrative examples and cannot predict actual future outcomes. Actual results may vary due to elements like market conditions, fees, and individual circumstances. We recommend consulting a financial advisor for personalized advice.
Take Control of Your Financial Future
As a self-employed person in Peoria, AZ, it might seem easier to focus more on reinvesting in your business instead of saving for retirement. Even so, beginning a plan now allows you to:
- Benefit from growth that is tax-deferred or penalty-free withdrawals down the road.
- Take advantage of adjustable savings that change with your earnings.
- Build a financial cushion that provides security, no matter how your business develops.
Starting early, the less you’ll be required to worry about making up for lost time later in life. Saving for retirement now means managing your financial future and allowing yourself the freedom to concentrate on your objectives—both for your golden years and your Peoria, AZ business.
Types of Self-Employed Retirement Plans
Multiple retirement savings options designed for self-employed individuals 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 choose the one most suitable for your circumstances. In most cases, your self-employed retirement plan options in Peoria, AZ are:
Traditional or Roth IRA
Plan Overview: Individual Retirement Accounts (IRAs), as explained here, represent financial tools for retirement that offer distinct tax benefits. In a conventional IRA, contributions are typically tax-deductible, and returns grow free of current taxes, but withdrawals in retirement are taxable. In contrast, Roth IRAs require contributions are made with after-tax income, but qualified withdrawals in retirement, including earnings, are not taxed. In both cases, withdrawals are penalty-free provided you are at least 59½.
Eligibility: While many retirement plans, such as 401(k)s, are tied to employment, traditional and Roth IRAs are open to those with a source of income.
Contribution Limits: For 2025, annual contribution limits for IRAs are set at $7,000, or $8,000 if you qualify for catch-up contributions.
Simplified Employee Pension Plan (SEP IRA)
Plan Overview: SEP IRAs offers a way to save for retirement 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, you are obligated to contribute the same amount for them as you do for yourself. You may choose to contribute a fixed dollar figure or a percentage of wages to employee accounts. A SEP IRA may be ideal for businesses that experience periods of inconsistent earnings. In contrast to some alternatives, SEP IRAs are free of costly startup or administrative fees.
SEPs function like traditional IRAs, where you contribute pre-tax dollars and retirement distributions are taxable.
Eligibility: Employers of any type, including self-employed individuals can open a SEP.
Contribution Limits: Contribution limits for employees in a SEP IRA are the lesser of:
- 25% of compensation, or
- $70,000 for 2025
As a self-employed person, the allowable contribution is based on a special calculation.
Solo 401(k)
Plan Overview: The Solo 401(k), also called an Individual 401(k) or one-participant 401(k) plan, is a retirement savings plan designed for businesses with no employees or when the sole employee is your spouse. Solo 401(k)s operate much like standard 401(k) plans, and let you make contributions as both an employer and an employee with pre-tax money. This allows for more savings than SEPs or IRAs; however, the extra savings options often come with more limited investment options. In a solo 401(k) plan, 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 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:
- Elective deferrals (as an employee) of up to 100% of your earned income from self-employment, capped at 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.
- Contributions as an employer (as an employer) cannot exceed 25% of your net self-employment income, which is your net profit minus half of your self-employment tax and the elective deferrals you made.
The total contribution cannot exceed $70,000, or $77,500 for those aged 50 and older (for 2025), $81,250 for those aged 60-63 in 2025.
Individual Defined Benefit Plan
Plan Overview: The defined benefit plan offers a structured retirement solution that provides a fixed, predetermined benefit to business owners upon retirement. Unlike defined contribution plans mentioned above, this plan is not influenced by market performance, but lets individuals clearly understand exactly how much they'll have in retirement. This plan is best suited for higher-income professionals who aim to accumulate a substantial amount for retirement and are prepared to contribute substantial contributions. Contributions offer tax-deferred growth, and withdrawals are taxed as income during retirement.
Eligibility: Entrepreneurs operating a solo business or with a small staff of under five can open an individual defined benefit plan, but it's most commonly suggested for individuals aged 50+ who make $250,000 or more annually. Typically, good candidates for defined benefit plans tend to be:
- Business owners or partners who want to invest more than $70,000 (or $77,500 if over age 50)
- Companies already contributing 3-4% and are willing to do more
- Businesses that have demonstrated consistent profit patterns
- Entrepreneurs over age 40 who wish to accelerate savings or increase their retirement contributions rapidly
Contribution Limits: The cap on contributions must be determined by an actuary determined by your financial situation, age, and savings targets. Limits on contributions are updated yearly.
The Importance of a Financial Advisor in Peoria, AZ for Your Self-Employed Retirement Plan
Partnering with an advisor in Peoria, AZ focused on self-employed retirement strategies serves as an invaluable resource for self-employed individuals. They offer the knowledge to assist navigate the complexities of retirement planning and craft a customized plan that matches your objectives. A financial advisor in Peoria, AZ will evaluate your financial situation, understand your risk tolerance, and assist you in making informed decisions about saving and investing for retirement. Part of what we do for you involves:
- Help you choose a plan that suits your unique requirements
- Customize the plan to your specific situation even further
- Create a written plan that complies with IRS regulations
- Organize a trust plan to manage your assets
- Help you understand the plan's terms
- Track and fine-tune your plan when necessary
- Provide ongoing education and advice throughout your retirement planning process
- Boost your retirement earnings by making the most of your social security
Self-Employed Retirement Plans in Peoria, AZ: Correct Capital's Process
Entrepreneurs in Peoria, AZ who aren’t equipped with the time or understanding to oversee their retirement savings strategy themselves may end up overwhelmed by their choices. At Correct Capital, our Peoria, AZ financial advisors handle the majority of your retirement strategy for you, working to make meeting your retirement goals as straightforward as possible for you. We can help you get set up your self-employed retirement plan in just four steps:
- Schedule a Call: In just 20 minutes, a member of our advisor team will assess if our services align for you and your business. This brief introduction allows us to learn about your needs with no pressure or major time investment on your part.
- Gather Information: Should we agree to proceed, we'll request information, including whether you have employees, your present financial standing, and your long-term savings targets. This enables us to craft a personalized strategy that aligns with your goals.
- Review Your Plan: Once we've developed a plan based on the information you provide, we'll sit down with you and go over your plan step by step 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 implement the necessary steps so you can initiate your savings journey. Throughout our relationship, we'll meet with you and monitor your plan to make sure it remains aligned with your goals.
Our Peoria, AZ financial advisors and retirement plan consultants act as fiduciary advisors, which means they are committed by law and ethics to act in your best interest.
Other financial advisory services we offer in Peoria, AZ 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 Peoria, AZ
Your business isn't "just a business" to you, and your Peoria, AZ financial advisors need to offer more than just good financial guidance. With Correct Capital, we take the time to get to know our clients and their businesses to create tailored self-employed retirement plans. To every client in Peoria, AZ, we provide 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, reach out to Correct Capital at 877-930-401k or contact us online.
