Self-employed retirement plans Phoenix, AZ. The independence of owning your own business in Phoenix, AZ offers many benefits of being self-employed. However, this independence often comes with potential drawbacks, particularly in terms of building your retirement fund, because you don't have the benefit of a workplace retirement plan. Only 13% of self-employed individuals have a workplace retirement plan, although many should consider understanding their retirement options. In addition to having a financially stable retirement, seeking advice from a financial advisor in Phoenix, AZ to create your self-employed retirement plan offers significant tax advantages that enable you to move your business forward.
Few Phoenix, AZ financial advisory and retirement planning firms truly grasp the challenges faced by small business owners better than 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 have a rich history of assisting business owners in their retirement planning needs. We recognize that your professional and personal aspirations go far beyond basic numbers, and we work tirelessly to offer personalized solutions that reflect your objectives. Read on to discover about your self-employed retirement plan options in Phoenix, AZ, or reach out to Correct Capital at 877-930-401k or contact us online to talk to a self-employed financial advisor in Phoenix, AZ today.
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Why Phoenix, 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 tangible benefits today. With customizable contribution options to substantial tax savings, consulting a financial advisor in Phoenix, AZ helps you create 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 flexibility to tailor how much you save:
- Customizable Contributions: Set aside more during profitable years and scale back when revenues are down, so that your plan works with your financial situation.
- Roth Options: A Roth Solo 401(k) lets you pay taxes on contributions now, enabling you to withdraw tax-free later—a wise move if you anticipate your tax rate to be higher in the future.
Save Money on Taxes
Plans designed for the self-employed deliver significant tax benefits:
- Tax-Deductible Contributions: Contributions to a SEP IRA shrink your tax liability, so you can keep more of your earnings.
- Tax-Deferred Growth: You won't pay taxes on investment growth until you withdraw it, giving your money more time to grow.
- State-Specific Incentives: Based on your location, you could qualify for state-specific deductions as a self-employed individual. These state-level incentives can make these plans even more valuable.
- Retirement Savings Contributions Credit (Saver’s Credit): Qualified participants 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 goes beyond just how much you save—it’s also about how you invest:
- Diversified Portfolios: Distributing your investments across varied stocks, bonds, and alternatives serves to reduce risk while still growing your nest egg.
- Emergency Back-Up: Pairing your retirement plan with a dedicated business safety net ensures you don’t dipping into savings during financial hardships and risking extra costs.
Plan for the Future of Your Phoenix, AZ Business
Preparing for retirement can assist you think through what’s next with your Phoenix, AZ business:
- Selling Your Business: When selling your business, accounts such as SEP IRAs or Solo 401(k)s remain yours and won’t be included in the sale. These plans can provide the financial stability you’ll need later on. It’s important to note that while the sale of a business usually creates 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, with catch-up contributions, based on plan compensation).
- Minimizing Taxes: Making the most of retirement savings minimizes the taxes you are required to pay when you transfer your business.
- Succession Planning: For those winding down or handing over their business, your retirement accounts provide a stable foundation during the change. You may also seek advice from a financial advisor who specializes in succession planning and retirement accounts to help with taxes on the sale.
With the proper savings strategy, you gain control over your financial future, lower your tax bill, and establish a strong framework for both your retirement and your business goals.
Why Start a Self-Employed Retirement Plan in Phoenix, AZ Now?
Time is one of the most important factors when it comes to saving for retirement. Starting early not only helps you grow a bigger financial cushion but also lowers the pressure of playing catch-up as you get older. Here’s why it is beneficial to start now:
The Cost of Waiting
Waiting to start your retirement fund can have a significant impact on the amount 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 greater the impact of compounding.
Example: Taylor and Alex are both self-employed professionals. They each aim 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 saves $7,500 annually to catch up.
By age 65, using a projected 7% annual return:
- Alex contributes $180,000 and ends up with $691,184.39*.
- Taylor puts in $195,500 but achieves a total of only $474,367.78*.
How Early Contributions Grow
Even modest contributions contributed over time often create impressive growth. Here’s a simple scenario showing the impact of consistent growth:
- Starting at age 25: By investing $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: Saving the same $200 per month would result in only $235,412.97* by age 65—a difference of over $260,000, all because of a 10-year delay.
The earlier you begin, the less you need to save each year to meet 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. These examples are intended as illustrative examples and cannot predict actual future outcomes. Your individual results may differ based on variables including market conditions, fees, and individual circumstances. We recommend consulting a financial advisor for guidance tailored to your needs.
Take Control of Your Financial Future
For self-employed individuals in Phoenix, AZ, it is often the case that you put more emphasis on reinvesting in your business instead of saving for retirement. That said, starting a plan now allows you to:
- Leverage growth that is tax-deferred or tax-free withdrawals down the road.
- Enjoy contribution flexibility that change with your income.
- Create a long-term safety measure that offers peace of mind, no matter how your business evolves.
Starting early, the less you’ll be required to worry about playing catch-up later in life. Building your retirement savings today means taking control of your financial future and giving yourself the ability to turn your attention to your goals—both for your golden years and your Phoenix, AZ business.
Types of Self-Employed Retirement Plans
Multiple retirement savings options designed for self-employed individuals in Phoenix, AZ, each with its own advantages and considerations. A financial advisor can help you understand the advantages and disadvantages of each choice and identify the one most suitable for your needs. Generally speaking, your self-employed retirement plan options in Phoenix, AZ consist of:
Traditional or Roth IRA
Plan Overview: IRAs, or Individual Retirement Accounts, are retirement savings vehicles that include specific tax advantages. In a conventional IRA, the money you contribute is often tax-deductible, and returns grow free of current taxes, but retirement distributions are taxable. In contrast, with Roth IRAs, you contribute are made with after-tax income, but qualified withdrawals in retirement, including earnings, are exempt from taxes. In both cases, withdrawals don’t incur penalties if you are at least 59½.
Eligibility: Unlike 401(k)s, which are employer-sponsored, both traditional and Roth IRAs are accessible for individuals with a source of income.
Contribution Limits: For 2025, annual contribution limits for IRAs remain $7,000, or $8,000 for those aged 50+.
Simplified Employee Pension Plan (SEP IRA)
Plan Overview: A Simplified Employee Pension (SEP) IRA offers a way to save for retirement that permits self-employed individuals to save a percentage of their net business profits. Contributions are strictly employer contributions an employer, so, as a self-employed individual, you (the employee) cannot make additional contributions above the 25% you (the employer) have designated. If you have employees, you must 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 may be ideal for companies with cycles of high revenue and low revenue. Compared to other retirement options, SEP IRAs lack the high fees associated with starting or maintaining other plans.
SEPs function like standard IRAs, where contributions are made with pre-tax money and withdrawals are taxed as income.
Eligibility: Both employers and self-employed individuals can establish a SEP.
Contribution Limits: Contribution limits for employees in a SEP IRA are capped at the lower of:
- 25% of compensation, or
- $70,000 for 2025
If you’re self-employed, the contribution you can make is based on a special calculation.
Solo 401(k)
Plan Overview: Solo 401(k)s, sometimes referred to as an Individual 401(k) or one-participant 401(k) plan, is a retirement savings plan meant for companies that have no employees or when the sole employee is your spouse. These plans operate much like employer-sponsored 401(k) plans, and allow you to contribute as both the employer and the employee with pre-tax money. This allows for more savings than SEPs or IRAs; however, the extra savings options 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: If you are self-employed with a solo 401(k) plan, you can make two types of contributions:
- Employee contributions of up to 100% of your self-employed earnings, subject to the annual contribution limit. For 2025, the limits will be $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 net earnings from self-employment, 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 for individuals aged 50+ (for 2025), $81,250 for individuals turning 60-63 in 2025.
Individual Defined Benefit Plan
Plan Overview: A defined benefit plan is a retirement option that provides a fixed, predetermined benefit to entrepreneurs upon retirement. In contrast to the plans discussed earlier, investment returns don’t affect the payout, but allows self-employed individuals to know exactly how much they'll have in retirement. This strategy is ideal for high-earning entrepreneurs who aim to accumulate a large amount for retirement and are willing to make sizeable contributions. Contributions offer tax-deferred growth, and withdrawals are taxed as income during retirement.
Eligibility: Self-employed professionals operating a solo business or with less than five employees are eligible to open an individual defined benefit plan, but it's most commonly advised for those over 50 who make $250,000 or more annually. Typically, good candidates for defined benefit plans are:
- Partners or owners who aim to deposit more than $70,000 (or $77,500 if over age 50)
- 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 increase their retirement contributions rapidly
Contribution Limits: The maximum allowable contribution must be determined by an actuary using your earnings, age, and retirement objectives. Limits on contributions are adjusted each year.
The Importance of a Financial Advisor in Phoenix, AZ for Your Self-Employed Retirement Plan
Partnering with an advisor in Phoenix, AZ specialized in self-employed retirement plans can be an essential partner for entrepreneurs. They bring the skills needed to guide you through the challenges of retirement planning and develop a personalized approach that aligns with your goals. An expert in your area will assess where you stand financially, determine how much risk you’re comfortable with, and help you in choosing wisely about saving and investing for retirement. Part of what we do for you involves:
- Guide you in choosing a plan that aligns with your objectives and circumstances
- Further adapt the plan to fit you personally even further
- Formalize a plan in writing as required by IRS rules
- Set up an asset trust plan
- Make sure you understand the plan's terms
- Review and modify your plan when necessary
- Offer continued financial education and guidance as you continue on the road to retirement
- Maximize what you receive in retirement by making the most of your social security
Self-Employed Retirement Plans in Phoenix, AZ: Correct Capital's Process
Entrepreneurs in Phoenix, AZ who aren’t equipped with the time or understanding to handle their self-employed retirement plan on their own often feel overwhelmed as they look at their options. With Correct Capital, our Phoenix, AZ financial advisors handle the majority of your retirement planning 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 just four steps:
- Schedule a Call: In just 20 minutes, a member of our advisor team can determine if we're suited to your needs for you and your business. This initial call helps us understand what you're looking for with zero commitment or major time investment on your part.
- Gather Information: Once we mutually decide to continue, we'll request information, including how many employees you have (if any), your present financial standing, and your retirement goals. This helps us create a custom plan that aligns with your goals.
- Review Your Plan: Once we've developed a plan using the information you provide, we'll schedule a meeting and discuss your plan step by step to make sure it's clear and show how it aligns with your goals.
- Implementation and Monitoring: When we finalize on your plan, we'll implement the necessary steps so you can initiate your savings journey. Throughout our relationship, we'll check in and monitor your plan to ensure it stays suited to your needs.
Our Phoenix, AZ financial advisors and retirement plan consultants are fiduciary advisors, meaning they are committed by law and ethics to do what's in your best interest.
Other financial advisory services we offer in Phoenix, 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 Phoenix, AZ
Your business isn't "just a business" to you, and your Phoenix, AZ financial advisors need to offer more than basic financial recommendations. At 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 Phoenix, AZ, we provide our I.O.U. promise: all of the advice you get from us will be independent, objective, and unbiased. To get started on your self-employment retirement plan, contact Correct Capital now at 877-930-401k or contact us online.
