Self-employed retirement plans Philadelphia, PA. The independence of owning your own business in Philadelphia, PA is one of the greatest advantages of being self-employed. However, this freedom often comes with certain challenges, notably 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, but many could benefit from looking into other possibilities. In addition to achieving a more comfortable retirement, working with a financial advisor in Philadelphia, PA to set up your self-employed retirement plan offers significant tax advantages that enable both you and your business to thrive.
Few Philadelphia, PA wealth management and retirement planning firms truly grasp the challenges faced by self-employed individuals better than Correct Capital. Our founder's father was a small business owner himself (check out our story here), and Correct Capital have a rich history of assisting business owners in their retirement planning needs. We understand that your business and retirement aspirations go far beyond just monetary concerns, and we are dedicated to offer tailored solutions to meet your unique goals. Keep reading to learn more about your self-employed retirement plan options in Philadelphia, PA, or give us a call at Correct Capital at 877-930-401k or contact us online to talk to a self-employed financial advisor in Philadelphia, PA today.
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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 immediate benefits today. From flexible contributions to substantial tax savings, working with a financial advisor in Philadelphia, PA enables you to design your retirement plan to align with your specific needs.
Flexibility That Fits Your Income
For those with fluctuating income 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 reduce savings when your earnings dip, ensuring your plan works with your current income.
- Roth Options: Opting for 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 anticipate your tax rate is likely to rise in the future.
Save Money on Taxes
Plans designed for the self-employed deliver powerful tax benefits:
- Tax-Deductible Contributions: Contributions to a SIMPLE IRA lower your taxable income, helping you keep more of your earnings.
- Tax-Deferred Growth: Your savings grow untaxed until withdrawn, providing your money more time to accumulate.
- State-Specific Incentives: Based on your location, you could qualify for state-specific deductions as a sole proprietor. These regional incentives make these plans even more valuable.
- Retirement Savings Contributions Credit (Saver’s Credit): Eligible individuals can take advantage of a credit of up to 50% of the first $2,000 contributed a retirement plan, cutting down 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 determined by your investment strategy:
- Diversified Portfolios: Spreading your investments across different stocks, bonds, and other assets can help reduce risk while continuing to build your nest egg.
- Emergency Back-Up: Combining your retirement strategy and a financial buffer for your business helps you avoid tapping into your nest egg during tough times and facing tax penalties.
Plan for the Future of Your Philadelphia, PA Business
Preparing for retirement also helps you think through what’s next with your Philadelphia, PA business:
- Selling Your Business: When selling your business, retirement accounts like SEP IRAs and Solo 401(k)s remain your personal assets and don’t transfer with the business. These savings ensure the financial stability you’ll need in the future. Remember that while selling a business often leads to a capital gain, retirement plan contributions are restricted by contribution limits (e.g., up to $7,000 for IRAs or a maximum of $70,000 for Solo 401(k)s, including catch-up contributions, according to plan rules).
- Minimizing Taxes: Using retirement contributions wisely minimizes the taxes you are required to pay when you sell your business.
- Succession Planning: If you’re passing the business on, your nest egg ensure a stable foundation through the transition. You can also partner with a financial advisor with expertise in succession and retirement planning to minimize tax burdens associated with the transaction.
With the right retirement plan, you can take control of your financial future, reduce your tax burden, and create a secure foundation for both your retirement and your business goals.
Why Start a Self-Employed Retirement Plan in Philadelphia, PA Now?
Time remains one of the most important resources in retirement planning. Starting early not only allows you to build a larger nest egg but also reduces the financial burden of playing catch-up as you get older. Here’s why it pays to take action now:
The Cost of Waiting
Putting off saving for retirement can have a significant impact on the total you’ll have when you retire. The primary reason is compound interest—the powerful process where your investments grow, and those returns, then, accumulate even more returns. The greater time span your money has to grow, the more significant the impact of compounding.
Example: Alex and Taylor are both self-employed professionals. Both of them want to save $500,000 for retirement by age 65:
- Alex begins contributing $5,000 annually at age 30.
- Taylor delays savings until age 40 but contributes $7,500 annually to bridge the gap.
By age 65, with an assumption of 7% annual return:
- Alex contributes $180,000 and accumulates $691,184.39*.
- Taylor invests $195,500 but achieves a total of only $474,367.78*.
How Early Contributions Grow
Even modest contributions contributed over time often create significant growth. Here’s a simple scenario showing the effect of compounding:
- Starting at age 25: By investing $200 per month in a retirement plan with an expected yearly growth rate of 7%, you’ll grow to approximately $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 shortfall of over $260,000, just from a 10-year delay.
Starting sooner, the less effort required each year to reach your retirement goals.
*The figures provided in this example represent estimates calculated using NerdWallet’s Compound Interest Calculator, based on a 7% annual return. Annual deposits were multiplied by the number of years to estimate total contributions. The scenarios provided are for illustrative purposes only and are not a promise of future results. Your individual results may differ due to variables including market conditions, fees, and individual circumstances. Be sure to speak with a financial advisor for custom recommendations.
Take Control of Your Financial Future
For self-employed individuals in Philadelphia, PA, it might seem easier to put more emphasis on reinvesting in your business instead of saving for retirement. However, beginning a plan now gives you the chance to:
- Leverage tax-free future growth or withdrawals without taxes in the future.
- Enjoy flexible contributions that change with your earnings.
- Create a long-term safety measure that provides security, no matter how your business changes.
The sooner you start, the less you’ll be required to worry about making up for lost time later in life. Saving for retirement now means taking control of your financial future and creating for yourself the ability to concentrate on your goals—both for your retirement years and your Philadelphia, PA business.
Types of Self-Employed Retirement Plans
Multiple retirement savings options open for self-employed individuals in Philadelphia, PA, each with its own benefits and trade-offs. A financial advisor will guide you to evaluate the advantages and disadvantages of each option and identify the one ideal for your circumstances. Generally speaking, your self-employed retirement plan options in Philadelphia, PA are:
Traditional or Roth IRA
Plan Overview: Individual Retirement Accounts (IRAs), as explained here, represent long-term savings plans that offer key tax perks. In a standard 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 exempt from taxes. In both types of accounts, withdrawals don’t incur penalties provided you are at least 59½.
Eligibility: Unlike plans linked to your job, IRAs, including traditional and Roth options are accessible for individuals with a source of income.
Contribution Limits: For 2025, annual contribution limits for IRAs remain $7,000, or $8,000 if you're 50 or older.
Simplified Employee Pension Plan (SEP IRA)
Plan Overview: The Simplified Employee Pension IRA is a retirement plan that permits those who are self-employed to contribute a percentage of their net earnings. 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 above 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. You have the flexibility to contribute a flat-dollar amount or a percentage of wages to employee accounts. SEP IRAs may be ideal for entrepreneurs facing fluctuating revenue streams. In contrast to some alternatives, SEP IRAs lack costly startup or administrative fees.
SEPs work like conventional IRAs, where you contribute pre-tax dollars and retirement distributions are taxable.
Eligibility: Any employer, including the self-employed can establish a SEP.
Contribution Limits: Contribution limits for employees in a SEP IRA must not exceed:
- 25% of compensation, or
- $70,000 for 2025
For self-employed individuals, the allowable contribution is based on a special calculation.
Solo 401(k)
Plan Overview: The Solo 401(k), 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. Solo 401(k)s operate much like traditional employer-managed 401(k) plans, and enable contributions as both the employer and the employee with pre-tax money. This offers more savings than SEPs or IRAs; however, the additional opportunities can be balanced by more restricted investment choices. In a solo 401(k) 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 can set up and contribute to a solo 401(k).
Contribution Limits: As a self-employed individual with a solo 401(k) plan, you have the ability to make two types of contributions:
- Employee contributions 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're over 50, or $34,750 for individuals aged 60-63 in 2025.
- Employer profit-sharing contributions (as an employer) are limited to 25% of your net self-employment income, which is defined as 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 for those aged 50 and older (as of 2025), $81,250 for those aged 60-63 in 2025.
Individual Defined Benefit Plan
Plan Overview: Defined benefit plans is a retirement option that guarantees a set amount to self-employed individuals upon retirement. Unlike defined contribution plans mentioned above, investment returns don’t affect the payout, but enables participants to determine the precise amount they'll receive in retirement. This plan is recommended for high-earning entrepreneurs who want to save a significant sum for retirement and can commit to making substantial contributions. Contributions grow tax-free until withdrawal, and withdrawals are taxed as income upon retirement.
Eligibility: Entrepreneurs operating a solo business or employing fewer than five people are eligible to open an individual defined benefit plan, but it's most commonly suggested for individuals aged 50+ who make $250,000 or more annually. In most cases, good candidates for defined benefit plans include:
- Entrepreneurs who want to invest more than $70,000 (or $77,500 for individuals 50 and older)
- Companies already contributing 3-4% but are open to increasing contributions
- Companies 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 maximum allowable contribution must be determined by an actuary using your financial situation, age, and savings targets. Limits on contributions change annually.
The Importance of a Financial Advisor in Philadelphia, PA for Your Self-Employed Retirement Plan
A financial advisor in Philadelphia, PA experienced with retirement plans for the self-employed can be an invaluable resource for those working for themselves. They have the expertise to help understand the intricacies of saving for retirement and craft a tailored strategy that aligns with your goals. Your advisor in Philadelphia, PA will review your finances, identify your risk preferences, and assist you in choosing wisely about saving and investing for retirement. Part of what we do for you features:
- Assist in selecting a plan that suits your unique requirements
- Customize the plan to your specific situation even further
- Adopt a written plan that complies with IRS regulations
- Arrange a trust plan for assets
- Ensure you comprehend the plan's terms
- Track and fine-tune your plan as needed
- Offer continued financial education and guidance to help you navigate your retirement journey
- Boost your retirement earnings by maximizing your social security benefits
Self-Employed Retirement Plans in Philadelphia, PA: Correct Capital's Process
Philadelphia, PA business owners who aren’t equipped with the time or understanding to oversee their own retirement planning on their own can become overwhelmed as they look at their options. With Correct Capital, our Philadelphia, PA financial advisors handle the majority of your savings plan setup for you, working to make meeting your future savings targets as hassle-free 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 allows us to get a sense of your goals with no obligation or extensive time commitment on your part.
- Gather Information: Should we agree to proceed, we'll request information, including how many employees you have (if any), your existing financial picture, and your long-term savings targets. This helps us create a tailored approach suited specifically for your needs.
- Review Your Plan: When we finalize a plan from the information you provide, we'll meet with you and discuss your plan in detail to ensure you understand it and explain its fit to your circumstances.
- Implementation and Monitoring: After we agree on your plan, we'll implement the necessary steps so you can initiate your savings journey. As time goes on, we'll meet with you and monitor your plan to keep it tailored to your evolving circumstances.
Our Philadelphia, PA financial advisors and retirement plan consultants serve as fiduciary advisors, meaning they are committed by law and ethics to act in your best interest.
Other financial advisory services we offer in Philadelphia, PA 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 Philadelphia, PA
Your business isn't "just a business" to you, and your Philadelphia, PA financial advisors must deliver more than basic financial recommendations. At Correct Capital, we make it a priority to understand our clients and their businesses to deliver personalized self-employed retirement plans. We offer all our Philadelphia, PA clients our I.O.U. promise: everything we recommend will be independent, objective, and unbiased. To begin on your self-employment retirement plan, call Correct Capital today at 877-930-401k or contact us online.
