Self-employed retirement plans Phoenix, AZ. The flexibility of owning your own business in Phoenix, AZ is one of the greatest advantages of working for yourself. That said, this flexibility often comes with potential drawbacks, notably regarding retirement savings, since you don't have the benefit of a workplace retirement plan. Only 13% of self-employed individuals have a workplace retirement plan, but many would be better off understanding their retirement options. In addition to having a more comfortable retirement, partnering with a financial advisor in Phoenix, AZ to set up your self-employed retirement plan offers significant tax advantages that help your business to grow and succeed.
Few Phoenix, AZ financial advisory and retirement planning firms understand the needs of small business owners quite like Correct Capital. Our founder's father was a small business owner himself (check out our story here), and our firm have a rich history of assisting business owners in their retirement planning needs. We understand that your goals for your business and retirement go far beyond basic numbers, and we work tirelessly to offer tailored solutions aligned with your vision. Keep reading to learn more 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 entrepreneurial financial advisor in Phoenix, AZ today.
Why Phoenix, 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 tangible benefits today. From flexible contributions to considerable tax savings, consulting a financial advisor in Phoenix, AZ allows you to create 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) offers the freedom to tailor how much you save:
- Customizable Contributions: Save extra during profitable years and reduce savings when revenues are down, ensuring your plan fits your current income.
- Roth Options: Choosing a Roth Solo 401(k) lets you pay taxes on contributions now, so you can withdraw tax-free later—an advantageous choice if you anticipate your tax rate will increase in the future.
Save Money on Taxes
Retirement plans for self-employed individuals provide powerful tax benefits:
- Tax-Deductible Contributions: Contributions to a SEP IRA reduce what you owe in taxes, helping you 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 could qualify for state-specific deductions as a business owner. These regional incentives make these plans even more valuable.
- Retirement Savings Contributions Credit (Saver’s Credit): Eligible individuals can claim a tax credit of up to 50% of the first $2,000 they contribute a retirement plan, cutting down 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 linked to the way you invest:
- Diversified Portfolios: Spreading your investments across a mix of stocks, bonds, and alternatives can help minimize exposure to risk while still growing your nest egg.
- Emergency Back-Up: Combining your retirement strategy and a dedicated business safety net prevents you from using your retirement funds during challenging periods and incurring penalties.
Plan for the Future of Your Phoenix, AZ Business
Retirement planning can assist you plan ahead for what’s next with your Phoenix, AZ business:
- Selling Your Business: For those considering a sale, accounts such as SEP IRAs or Solo 401(k)s remain your personal assets and don’t transfer with the business. These accounts offer the reliable income you’ll need in the future. It’s important to note that while selling a business often leads to a capital gain, retirement plan contributions are restricted by contribution limits (e.g., as much as $7,000 for IRAs or as much as $70,000 for Solo 401(k)s, including catch-up contributions, based on plan compensation).
- Minimizing Taxes: Strategically planning your contributions helps lower the taxes you might face when you transfer your business.
- Succession Planning: If you’re passing the business on, your nest egg provide financial security as you make this shift. You may also partner with a financial advisor with expertise in succession and retirement planning to reduce taxes on the sale.
With the best-fit retirement strategy, you can take control of your financial future, cut down your tax obligations, and create a secure foundation 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 crucial assets for building your retirement fund. Starting early not only allows you to build a larger nest egg but also minimizes the financial burden of catching up later in life. This is why it is beneficial to start now:
The Cost of Waiting
Putting off saving for retirement can have a major impact on the total you’ll have when you stop working. The main reason is compound interest—the powerful process where your investments earn returns, and those returns, in turn, generate even more returns. The more time your money has to grow, the greater the benefit of this growth.
Example: Taylor and Alex are both entrepreneurs. They each aim to save $500,000 for retirement by age 65:
- Alex begins contributing $5,000 annually at age 30.
- Taylor postpones starting contributions to age 40 but puts away $7,500 annually to catch up.
By age 65, with an assumption of 7% annual return:
- Alex contributes $180,000 and ends up with $691,184.39*.
- Taylor invests $195,500 but only ends up with $474,367.78*.
How Early Contributions Grow
Small, consistent savings invested steadily may result in substantial growth. Here’s a simple scenario showing the impact of consistent growth:
- Starting at age 25: If you invest $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: Investing the same $200 per month leaves you with only $235,412.97* by age 65—a shortfall of over $260,000, all because of a 10-year delay.
The earlier you begin, the less effort required each year to achieve your retirement goals.
*The figures provided in this example are based on estimates derived from NerdWallet’s Compound Interest Calculator, assuming a 7% annual return. These calculations involved multiplying yearly deposits by the years contributed. The scenarios provided are for illustrative purposes only and cannot predict actual future outcomes. Outcomes may change based on variables including market conditions, fees, and personal factors. We recommend consulting a financial advisor for personalized advice.
Take Control of Your Financial Future
As a self-employed person in Phoenix, AZ, it can be tempting to focus more on reinvesting in your business instead of saving for retirement. That said, starting a plan now gives you the chance to:
- Leverage tax-deferred growth or tax-free withdrawals down the road.
- Benefit from adjustable savings that align with your earnings.
- Create a financial cushion that offers peace of mind, no matter how your business develops.
Starting early, the less you’ll need to worry about catching up later in life. Building your retirement savings today means managing your financial future and giving yourself the freedom to concentrate on your dreams—both for your future retirement and your Phoenix, AZ business.
Types of Self-Employed Retirement Plans
A variety of retirement savings options available for those working for themselves in Phoenix, AZ, each with its own advantages and considerations. A financial advisor is available to help you understand the pros and cons of each choice and identify the one most suitable for your unique situation. Generally speaking, your self-employed retirement plan options in Phoenix, AZ include:
Traditional or Roth IRA
Plan Overview: Individual Retirement Accounts (IRAs), as explained here, represent retirement savings vehicles that include specific tax advantages. In a conventional IRA, contributions are typically tax-deductible, and investment earnings grow tax-deferred, but withdrawals in retirement are subject to income tax. In contrast, Roth IRAs require contributions are made with after-tax income, but eligible distributions during retirement, including earnings, are not taxed. In both cases, withdrawals are penalty-free provided you are at least 59½.
Eligibility: Unlike plans linked to your job, both traditional and Roth IRAs are open to those with taxable earnings.
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 allows those who are self-employed 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) would not be able to contribute above 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 fixed dollar figure or a percentage of wages to employee accounts. SEP IRAs may be ideal for companies with fluctuating revenue streams. Unlike other plans, SEP IRAs don’t have the high fees associated with starting or maintaining other plans.
SEPs work like conventional 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 the lesser of:
- 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: Solo 401(k)s, sometimes referred to as an Individual 401(k) or one-participant 401(k) plan, is a savings option for the self-employed intended for businesses without employees or when the sole employee is your spouse. Solo 401(k)s operate much like standard 401(k) plans, and allow you to contribute as both an employer and an employee with pre-tax money. This offers more savings than SEPs or IRAs; however, the increased savings potential can be balanced by more limited investment options. Using a solo 401(k), you can make either traditional or Roth deferrals, which have the same tax benefits as their IRA contribution counterparts.
Eligibility: Only business owners and their spouses are eligible to open 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:
- Employee contributions of up to 100% of your earned income from self-employment, subject to the annual contribution limit. The contribution limits for 2025 include $23,500, or $31,000 if you are 50 or older, or $34,750 for those who turn 60-63 in 2025.
- Contributions as an employer (as an employer) cannot exceed 25% of your net self-employment income, which is defined as net profit minus half of your self-employment tax and the deferrals 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 provides a set amount to self-employed individuals upon retirement. As opposed to defined contribution plans, a defined benefit plan doesn't fluctuate based on investment returns, but enables participants to determine what they'll receive in retirement. This strategy is best suited for wealthier entrepreneurs who want to save a significant sum for retirement and are prepared to contribute substantial contributions. Contributions grow tax-free until withdrawal, and withdrawals are taxable as income in retirement.
Eligibility: Any self-employed individual operating a solo business or employing fewer than five people can open an individual defined benefit plan, but it's generally suggested for people above age 50 who generate a minimum of $250,000 yearly. In most cases, good candidates for defined benefit plans include:
- Entrepreneurs who desire to contribute more than $70,000 (or $77,500 if over age 50)
- Companies already contributing 3-4% but are open to increasing contributions
- Businesses that have demonstrated consistent profit patterns
- Business leaders over age 40 who wish to accelerate savings or accelerate the retirement savings
Contribution Limits: The contribution limit must be determined by an actuary determined by your financial situation, age, and savings targets. Contribution limits are updated yearly.
The Importance of a Financial Advisor in Phoenix, AZ for Your Self-Employed Retirement Plan
A financial advisor in Phoenix, AZ specialized in self-employed retirement plans can be an invaluable resource for self-employed individuals. They bring the skills needed to navigate the complexities of retirement planning and design a personalized approach that matches your objectives. A financial advisor in Phoenix, AZ will evaluate your financial situation, understand your risk tolerance, and help you in choosing wisely about saving and investing for retirement. A key part of what we do for you involves:
- Assist in selecting a plan that suits your unique requirements
- Further adapt the plan to fit you personally even further
- Adopt a written plan in accordance with IRS guidelines
- Arrange a trust plan for assets
- Make sure you understand the plan's terms
- Review and modify your plan as needed
- Offer continued financial education and guidance as you continue on the road to retirement
- Increase your retirement income by optimizing your social security benefits
Self-Employed Retirement Plans in Phoenix, AZ: Correct Capital's Process
Phoenix, AZ business owners who aren’t equipped with the time or understanding to handle their own retirement planning themselves often feel overwhelmed when faced with their choices. With Correct Capital, our Phoenix, AZ financial advisors take on the lion's share of your retirement strategy for you, and strive to ensure meeting your retirement goals as hassle-free as possible for you. We are here to assist you in setting up 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 help understand if our services align for you and your business. This initial call allows us to get a sense of your goals with no obligation or extensive time commitment on your part.
- Gather Information: Once we mutually decide to continue, we'll gather information, including whether you have employees, your present financial standing, and your retirement goals. This helps us create a custom plan designed just for you.
- 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 ensure you understand it and show how it aligns with your goals.
- Implementation and Monitoring: Once we've agreed on your plan, we'll put everything in place so you can initiate your savings journey. Over the course of our partnership, we'll meet with you and review your strategy to make sure it remains aligned with your goals.
Our Phoenix, AZ financial advisors and retirement plan consultants are fiduciary advisors, which means they are required by law and ethical standards to act in your best interest.
Other financial advisory services we offer in Phoenix, 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 Phoenix, AZ
Your business isn't "just a business" to you, and your Phoenix, AZ financial advisors must deliver more than just good financial guidance. Correct Capital takes pride in, we take the time to get to know our clients and their businesses to deliver personalized self-employed retirement plans. To every client in Phoenix, AZ, 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, call Correct Capital today at 877-930-401k or contact us online.
