Self-employed retirement plans Philadelphia, PA. The flexibility of being your own boss in Philadelphia, PA is one of the greatest advantages of working for yourself. However, this freedom often comes with potential drawbacks, particularly in terms of retirement savings, because you don't have access to employer-sponsored retirement plans. Only 13% of self-employed individuals have a workplace retirement plan, yet countless would be better off looking into other possibilities. In addition to achieving a financially stable retirement, seeking advice from a financial advisor in Philadelphia, PA to create your self-employed retirement plan delivers significant tax advantages that allow you to move your business forward.
Few Philadelphia, PA investment consulting and retirement planning firms understand the needs of self-employed individuals as well as 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 Correct Capital are deeply experienced in assisting business owners in their retirement planning needs. We know 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 Philadelphia, PA, or reach out to Correct Capital at 877-930-401k or contact us online to speak with a small business financial advisor in Philadelphia, PA today.
Why Philadelphia, PA 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. From flexible contributions to substantial tax savings, partnering with a financial advisor in Philadelphia, PA allows you to customize your retirement plan to suit 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 freedom to tailor how much you save:
- Customizable Contributions: Set aside more during profitable years and cut back when income is lower, so that your plan fits your financial situation.
- Roth Options: Choosing a Roth Solo 401(k) lets you settle taxes at the time of contribution, so you can withdraw your savings tax-free down the road—a wise move if you believe 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 SIMPLE IRA lower your taxable income, so you can keep more of your income.
- Tax-Deferred Growth: Your savings grow untaxed until withdrawn, providing your money more time to grow.
- State-Specific Incentives: Depending on where you live, you might access state-specific deductions as a sole proprietor. These state-level incentives make these plans even more beneficial.
- Retirement Savings Contributions Credit (Saver’s Credit): Qualified participants can take advantage of 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
Building a secure retirement requires more than how much you save—it’s also about how you invest:
- Diversified Portfolios: Spreading your investments across different stocks, bonds, and alternatives serves to minimize exposure to risk while still growing 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 Philadelphia, PA Business
Retirement planning can assist you plan ahead for what’s next with your Philadelphia, PA business:
- Selling Your Business: For those considering a sale, plans like SEP IRAs or Solo 401(k)s stay in your name and don’t transfer with the business. These savings offer the reliable income you’ll need in the future. It’s important to note that while selling your business results in a capital gain, deposits into these plans are subject to yearly maximums (e.g., as much as $7,000 for IRAs or as much as $70,000 for Solo 401(k)s, factoring in catch-up contributions, depending on plan details).
- Minimizing Taxes: Making the most of retirement savings can reduce the taxes you might face when you sell your business.
- Succession Planning: For those winding down or handing over their business, your retirement accounts provide the funds you need through the transition. You can also work with a financial advisor experienced in both succession and retirement strategies to reduce taxes associated with the transaction.
With the right retirement plan, you can take control of your financial future, lower your tax bill, and create a secure foundation for both your retirement and your business goals.
Why Start a Self-Employed Retirement Plan in Philadelphia, PA Now?
There’s no denying that time is one of the most valuable resources in retirement planning. Starting early not only allows you to build a more substantial retirement fund but also lowers the financial burden of catching up later in life. This is why it makes sense to begin today:
The Cost of Waiting
Putting off saving for retirement may cause a substantial impact on the amount you’ll have when you stop working. The primary reason is compound interest—the financial principle where your investments generate earnings, and those returns, subsequently, accumulate even more returns. The longer your money has to grow, the more significant the effect of this growth.
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 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 accumulates $691,184.39*.
- Taylor contributes $195,500 but only ends up with $474,367.78*.
How Early Contributions Grow
Small, consistent savings contributed over time can lead to substantial growth. Here’s a simple scenario showing the impact of compounding:
- Starting at age 25: Putting aside $200 per month in a retirement plan with an projected return of 7%, you’ll accumulate $497,303.29* by age 65.
- Starting at age 35: Saving the same $200 per month yields only $235,412.97* by age 65—a shortfall of over $260,000, just from a 10-year delay.
Saving early, the less you need to save each year to achieve your retirement goals.
*The figures provided in this example are estimates generated with NerdWallet’s Compound Interest Calculator, assuming a 7% annual return. These calculations involved multiplying yearly deposits by the years contributed. The scenarios provided are meant to provide general guidance and do not guarantee future performance. Outcomes may change based on elements like market conditions, fees, and personal factors. We recommend consulting a financial advisor for personalized advice.
Take Control of Your Financial Future
If you’re self-employed in Philadelphia, PA, it is often the case that you put more emphasis on reinvesting in your business instead of saving for retirement. However, starting a plan now enables you to:
- Benefit from growth that is tax-deferred or penalty-free withdrawals down the road.
- Enjoy flexible contributions that align with your cash flow.
- Establish a safety net that offers peace of mind, no matter how your business evolves.
The sooner you start, the less you’ll need 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 opportunity to focus on your goals—both for your retirement years and your Philadelphia, PA business.
Types of Self-Employed Retirement Plans
There are several retirement savings options open for entrepreneurs in Philadelphia, PA, each with its own benefits and trade-offs. A financial advisor can help you learn about the advantages and disadvantages of each option and choose the one most suitable for your circumstances. Typically, your self-employed retirement plan options in Philadelphia, PA include:
Traditional or Roth IRA
Plan Overview: IRAs, or Individual Retirement Accounts, are retirement savings vehicles that provide distinct tax benefits. In a standard IRA, contributions are typically tax-deductible, and investment earnings grow tax-deferred, but retirement distributions are taxed as income. In contrast, Roth IRA contributions using income already taxed, but qualified withdrawals in retirement, including earnings, are tax-free. In both types of accounts, withdrawals are penalty-free if you are at least 59½.
Eligibility: While many retirement plans, such as 401(k)s, are tied to employment, both traditional and Roth IRAs are available to anyone with an earned 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: A Simplified Employee Pension (SEP) IRA 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) are limited to contributions from the employer role beyond the 25% you (the employer) already contributed. If you have employees, you must contribute the same amount for them as you do for yourself. You have the flexibility to contribute a flat-dollar amount or a percentage of wages to employee accounts. This type of plan works well for entrepreneurs facing periods of inconsistent earnings. In contrast to some alternatives, SEP IRAs are free of the high fees associated with starting or maintaining other plans.
SEPs work like conventional IRAs, where the contributions are tax-deferred and withdrawals are taxed as income.
Eligibility: Both employers and self-employed individuals can open 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: Solo 401(k)s, commonly known as an Individual 401(k) or one-participant 401(k) plan, is a self-employed retirement plan designed for businesses without employees or if the only employee is your spouse. This type of plan function similarly to standard 401(k) plans, and allow you to contribute as both an employer and an employee with pre-tax money. This allows for more savings than 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 share the same tax benefits as their IRA contribution counterparts.
Eligibility: This plan is exclusively for business owners and their spouses may establish 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:
- Employee contributions of up to 100% of your earned income from self-employment, capped at the annual contribution limit. In 2025, those limits are $23,500, or $31,000 for those aged 50 and above, 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 calculated as net profits less half of your self-employment tax and the employee contributions you made.
Total contributions are capped at $70,000, or $77,500 for individuals aged 50+ (in 2025), $81,250 for those aged 60-63 in 2025.
Individual Defined Benefit Plan
Plan Overview: The defined benefit plan is a retirement option that delivers a set amount to business owners upon retirement. As opposed to defined contribution plans, this plan is not influenced by market performance, but lets individuals clearly understand exactly how much they'll receive in retirement. This plan is best suited for higher-income self-employed individuals who are focused on saving a significant sum for retirement and can commit to making larger deposits. Contributions grow tax-free until withdrawal, and withdrawals are taxed as income during retirement.
Eligibility: Entrepreneurs operating a solo business or with less than five employees 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. In most cases, good candidates for defined benefit plans are:
- Partners or owners who desire to contribute more than $70,000 (or $77,500 for individuals 50 and older)
- Businesses currently investing 3-4% with plans to contribute more
- Organizations that have demonstrated consistent profit patterns
- Partners or owners over age 40 who aim to quickly build retirement savings or accelerate the retirement savings
Contribution Limits: The maximum allowable contribution requires calculation from an actuary determined by your financial situation, age, and savings targets. Allowable contributions change annually.
The Importance of a Financial Advisor in Philadelphia, PA for Your Self-Employed Retirement Plan
Working with a financial advisor in Philadelphia, PA specialized in self-employed retirement plans is an invaluable resource for entrepreneurs. They offer the knowledge to assist guide you through the challenges of retirement planning and design a customized plan that aligns with your goals. A financial advisor in Philadelphia, PA will assess where you stand financially, identify your risk preferences, and assist you in choosing wisely about saving and investing for retirement. Part of what we do for you features:
- Guide you in choosing a plan that aligns with your objectives and circumstances
- Tailor 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
- Make sure you understand the plan's terms
- Track and fine-tune your plan to keep it aligned with your goals
- Deliver continuous support and financial insights as you continue on the road to retirement
- Maximize what you receive in retirement by maximizing your social security benefits
Self-Employed Retirement Plans in Philadelphia, PA: Correct Capital's Process
Entrepreneurs in Philadelphia, PA who aren’t equipped with the time or understanding to handle their retirement savings strategy on their own may end up overwhelmed as they look at their options. With Correct Capital, our Philadelphia, PA financial advisors manage the bulk of your retirement planning for you, to help make meeting your financial objectives as hassle-free as possible for you. We will guide you in creating your self-employed retirement plan in just four steps:
- 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 initial call lets us learn about your needs with zero commitment or significant effort on your part.
- Gather Information: Should we agree to proceed, we'll request information, including your employee count, your current financial situation, and your long-term savings targets. This allows us to put together a custom plan designed just for you.
- Review Your Plan: After we put together a plan based on the information you provide, we'll schedule a meeting and go over your plan in detail 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 begin contributing. Throughout our relationship, we'll meet with you and monitor your plan to make sure it remains aligned with your goals.
Our Philadelphia, PA 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 Philadelphia, PA include:
- Investment Planning
- Retirement Financial Planning
- Independent Financial Advisor
- Roth Conversion
- Investment Management
- 401(k) Audit
- High-Net-Worth Wealth Management
- Retirement Planner
- Financial Planning
- Retirement Plan Consultants
Call Correct Capital for Your Self-Employed Retirement Plan in Philadelphia, PA
Your business isn't "just a business" to you, and your Philadelphia, PA financial advisors should provide more than basic financial recommendations. With Correct Capital, we make it a priority to understand our clients and their businesses to deliver personalized self-employed retirement plans. To every client in Philadelphia, PA, we provide our I.O.U. promise: all guidance we provide 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.
