Self-employed retirement plans Pittsburgh, PA. The independence of owning your own business in Pittsburgh, PA offers many benefits of being self-employed. Even so, this freedom often comes with a lack of security, notably in terms of retirement savings, because you don't have the benefit of employer-sponsored retirement plans. Only 13% of self-employed individuals have a workplace retirement plan, but many should consider looking into other possibilities. In addition to enjoying a more comfortable retirement, partnering with a financial advisor in Pittsburgh, PA to set up your self-employed retirement plan can provide significant tax advantages that help both you and your business to thrive.
Few Pittsburgh, PA financial advisory and retirement planning firms understand the needs of entrepreneurs as well as Correct Capital. The father of our founder was a small business owner himself (learn more about our story here), and our firm have a rich history of supporting entrepreneurs with their retirement planning needs. We know that your professional and personal aspirations extend well past just monetary concerns, and we work tirelessly to create customized solutions to meet your unique goals. Continue exploring to find out about your self-employed retirement plan options in Pittsburgh, PA, or reach out to Correct Capital at 877-930-401k or contact us online to talk to a self-employed financial advisor in Pittsburgh, PA today.
Why Pittsburgh, PA Self-Employed Individuals Should Have a Retirement Plan
Retirement plans for self-employed individuals not only prepare you for the future, they also provide tangible benefits today. Offering flexibility in contributions to substantial tax savings, consulting a financial advisor in Pittsburgh, PA allows you to customize your retirement plan to align with your unique financial situation.
Flexibility That Fits Your Income
If your income changes over time, a plan like a SEP IRA or Solo 401(k) offers the freedom to adjust how much you save:
- Customizable Contributions: Save extra during high-income years and cut back when revenues are down, so your plan fits your current income.
- Roth Options: A Roth Solo 401(k) lets you handle taxes upfront, enabling you to withdraw your savings tax-free down the road—an advantageous choice if you expect 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 Solo 401(k) reduce what you owe in taxes, so you can keep more of your income.
- Tax-Deferred Growth: Investments grow tax-free until withdrawal, which gives your money more time to compound.
- State-Specific Incentives: Based on your location, you may be eligible for additional deductions as a business owner. These local incentives help make these plans even more advantageous.
- 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, helping to lower 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 about how you invest:
- Diversified Portfolios: Spreading your investments across varied stocks, bonds, and other assets serves to minimize exposure to risk while continuing to build your savings.
- Emergency Back-Up: Combining your retirement strategy and a business emergency fund prevents you from tapping into your nest egg during financial hardships and risking extra costs.
Plan for the Future of Your Pittsburgh, PA Business
Preparing for retirement enables you to think through what’s next with your Pittsburgh, PA business:
- Selling Your Business: For those considering a sale, accounts such as SEP IRAs or Solo 401(k)s remain yours and don’t transfer with the business. These savings can provide the steady income you’ll need during retirement. 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., up to $7,000 for IRAs or a maximum of $70,000 for Solo 401(k)s, including catch-up contributions, depending on plan details).
- Minimizing Taxes: Making the most of retirement savings helps lower the taxes you’ll owe when you pass on your business.
- Succession Planning: For those winding down or handing over their business, your retirement accounts provide financial security through the transition. You may also seek advice from a financial advisor experienced in both succession and retirement strategies to minimize tax burdens during the sale.
With the proper savings strategy, you can take control of your financial future, cut down your tax obligations, and establish a solid base for both your retirement and your business goals.
Why Start a Self-Employed Retirement Plan in Pittsburgh, PA Now?
Time is one of the most valuable assets when it comes to saving for retirement. Beginning sooner rather than later not only lets you accumulate a larger nest egg but also lowers the financial burden of catching up later in life. The following are reasons why it makes sense to begin today:
The Cost of Waiting
Putting off saving for retirement could lead to a substantial impact on the amount you’ll have when you stop working. The biggest 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 greater the benefit of compounding.
Example: Taylor and Alex are both entrepreneurs. They each aim to save $500,000 for retirement by age 65:
- Alex initiates savings of $5,000 annually at age 30.
- Taylor postpones starting contributions to age 40 but saves $7,500 annually to catch up.
By age 65, assuming 7% annual return:
- Alex contributes $180,000 and achieves a total of $691,184.39*.
- Taylor puts in $195,500 but achieves a total of only $474,367.78*.
How Early Contributions Grow
Even modest contributions invested steadily can lead to significant growth. Take a look at this scenario showing the impact of consistent growth:
- Starting at age 25: If you invest $200 per month in a retirement plan with an projected return of 7%, you’ll end up with $497,303.29* by age 65.
- Starting at age 35: Contributing the same $200 per month leaves you with only $235,412.97* by age 65—a difference of over $260,000, all because of a 10-year delay.
Starting sooner, the less effort required each year to achieve your retirement goals.
*The numbers shown in this scenario represent estimates calculated using NerdWallet’s Compound Interest Calculator, assuming a 7% annual return. Annual deposits were multiplied by the number of years to estimate total contributions. This information is meant to provide general guidance and do not guarantee future performance. Outcomes may change based on factors such as market conditions, fees, and your unique situation. Be sure to speak with a financial advisor for guidance tailored to your needs.
Take Control of Your Financial Future
For self-employed individuals in Pittsburgh, PA, it is often the case that you prioritize reinvesting in your business rather than saving for retirement. That said, starting a plan now allows you to:
- Benefit from tax-free future growth or withdrawals without taxes later on.
- Benefit from contribution flexibility that adapt to your earnings.
- Build a financial cushion that ensures stability, no matter how your business develops.
Starting early, the less you’ll need to worry about making up for lost time later in life. Saving for retirement now means gaining control over your financial future and allowing yourself the opportunity to turn your attention to your objectives—both for your retirement years and your Pittsburgh, PA business.
Types of Self-Employed Retirement Plans
There are several retirement savings options designed for self-employed individuals in Pittsburgh, PA, each with its own benefits and trade-offs. A financial advisor is available to help you learn about the pros and cons of each choice and choose the one most suitable for your needs. Generally speaking, your self-employed retirement plan options in Pittsburgh, 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 returns grow free of current taxes, but money taken out during retirement are taxed as income. In contrast, with Roth IRAs, you contribute from post-tax earnings, but eligible distributions during retirement, including earnings, are not taxed. In both cases, withdrawals are penalty-free if you are at least 59½.
Eligibility: Unlike 401(k)s, which are employer-sponsored, both traditional and Roth IRAs are available to anyone 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 serves as a retirement savings option that allows self-employed individuals to save a percentage of their net business profits. Contributions must come from an employer, so, as a sole proprietor, you (the employee) cannot make additional contributions more than the 25% you (the employer) allocate. 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 set monetary value or a percentage of wages to employee accounts. This type of plan may be ideal for businesses that experience fluctuating revenue streams. In contrast to some alternatives, SEP IRAs are free of costly startup or administrative fees.
SEPs operate like standard IRAs, where contributions are made with pre-tax money and retirement distributions are taxable.
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
If you’re self-employed, 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 intended for businesses with no employees or if the only employee is your spouse. These plans are similar to standard 401(k) plans, and enable contributions as both an employer and an employee with pre-tax money. This provides more savings versus SEPs or IRAs; however, the additional opportunities may be offset by more limited investment options. Using a solo 401(k), you can make either traditional or Roth deferrals, which offer the same tax benefits as their IRA contribution counterparts.
Eligibility: Solo 401(k)s are available solely to 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 earned income from self-employment, up to the annual contribution limit. For 2025, the limits will be $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 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 individuals aged 50+ (as of 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 delivers a set amount to business owners upon retirement. In contrast to the plans discussed earlier, a defined benefit plan doesn't fluctuate based on investment returns, but allows self-employed individuals to know exactly how much they'll have in retirement. This plan is ideal for high-earning professionals who aim to accumulate a substantial amount for retirement and can commit to making sizeable contributions. Contributions are tax deferred, and withdrawals incur taxes as income during retirement.
Eligibility: Entrepreneurs managing a one-person company or with a small staff of under five may establish an individual defined benefit plan, but it's typically suggested for those over 50 who make $250,000 or more annually. Typically, good candidates for defined benefit plans tend to be:
- Partners or owners who aim to deposit more than $70,000 (or $77,500 for individuals 50 and older)
- Organizations that already put in 3-4% but are open to increasing contributions
- Organizations showing consistent profit patterns
- Business leaders over age 40 who wish to accelerate savings or boost savings within a short timeframe
Contribution Limits: The cap on contributions requires calculation from an actuary using your financial situation, age, and savings targets. Limits on contributions change annually.
The Importance of a Financial Advisor in Pittsburgh, PA for Your Self-Employed Retirement Plan
Working with a financial advisor in Pittsburgh, PA specialized in self-employed retirement plans can be an important asset for entrepreneurs. They offer the knowledge to assist understand the intricacies of saving for retirement and craft a tailored strategy 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 assist you in making informed decisions about saving and investing for retirement. A key part of what we do for you features:
- Help you choose a plan that best fits your needs and goals
- Tailor the plan to fit you personally even further
- Adopt a written plan that complies with IRS regulations
- Arrange a trust plan for assets
- Ensure you comprehend the plan's terms
- Monitor and adjust your plan when necessary
- Deliver continuous support and financial insights to help you navigate your retirement journey
- Boost your retirement earnings by optimizing your social security benefits
Self-Employed Retirement Plans in Pittsburgh, PA: Correct Capital's Process
Self-employed individuals in Pittsburgh, PA who lack the time, interest, or knowledge to manage their retirement savings strategy independently may end up overwhelmed by their options. At Correct Capital, our Pittsburgh, PA financial advisors manage the bulk of your savings plan setup for you, to help make meeting your retirement goals as hassle-free as possible for you. We will guide you in creating your self-employed retirement plan in four simple steps:
- Schedule a Call: It only takes 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 lets us understand what you're looking for with no pressure or extensive time commitment on your part.
- Gather Information: Should we agree to proceed, we'll request information, including your employee count, your current financial situation, and your future objectives. This enables us to craft a tailored approach suited specifically for your needs.
- Review Your Plan: Once we've developed a plan from the information you provide, we'll meet with you and go over your plan in detail to help you fully grasp it and show how it aligns with your goals.
- Implementation and Monitoring: After we agree on your plan, we'll set everything up so you can initiate your savings journey. Over the course of our partnership, we'll check in and review your strategy to keep it tailored to your evolving circumstances.
Our Pittsburgh, PA financial advisors and retirement plan consultants serve as fiduciary advisors, who are obligated to they are committed by law and ethics to act in your best interest.
Other financial advisory services we offer in Pittsburgh, PA include:
- Roth Conversion
- Investment Management
- 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 Pittsburgh, PA
To you, your business is more than "just a business", and your Pittsburgh, PA financial advisors must deliver more than just good financial guidance. With Correct Capital, we take the time to get to know our clients and their businesses to deliver personalized self-employed retirement plans. All our clients in Pittsburgh, PA benefit from 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, call Correct Capital today at 877-930-401k or contact us online.
