Self-employed retirement plans Pittsburgh, PA. The freedom of running your own company in Pittsburgh, PA offers many benefits of working for yourself. That said, this independence often comes with potential drawbacks, notably regarding planning for retirement, since you don't have access to employer-sponsored retirement plans. Only 13% of self-employed individuals have a workplace retirement plan, yet countless should consider exploring their options. In addition to having a more secure retirement, partnering with a financial advisor in Pittsburgh, PA to create your self-employed retirement plan delivers significant tax advantages that help both you and your business to thrive.
Few Pittsburgh, PA wealth management and retirement planning firms understand the needs of entrepreneurs quite like Correct Capital. Our founder's father was a small business owner himself (read more of our story here), and our firm have a rich history of helping businesses with their retirement planning needs. We understand that your goals for your business and retirement aren’t limited to just monetary concerns, and we strive to provide customized solutions to meet your unique goals. Keep reading to learn more about your self-employed retirement plan options in Pittsburgh, PA, or give us a call at Correct Capital at 877-930-401k or contact us online to consult with a small business financial advisor in Pittsburgh, PA today.
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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 offer immediate benefits today. Offering flexibility in contributions to substantial tax savings, working with a financial advisor in Pittsburgh, PA enables you to customize your retirement plan to fit your specific needs.
Flexibility That Fits Your Income
For those with fluctuating income annually, a plan like a SEP IRA or Solo 401(k) gives you the flexibility to modify how much you save:
- Customizable Contributions: Set aside more during high-income years and cut back when revenues are down, ensuring your plan fits your cash flow.
- Roth Options: Opting for a Roth Solo 401(k) lets you handle taxes upfront, allowing you to withdraw tax-free later—an advantageous choice if you anticipate your tax rate is likely to rise in the future.
Save Money on Taxes
Self-employed retirement plans provide powerful tax benefits:
- Tax-Deductible Contributions: Contributions to a SIMPLE IRA reduce what you owe in taxes, helping you 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: In some states, you could qualify for extra credits as a business owner. These local incentives make these plans even more valuable.
- Retirement Savings Contributions Credit (Saver’s Credit): Qualified participants can claim a tax credit of up to 50% of the first $2,000 put into a retirement plan, cutting down your tax bill even more.
Protect Your Savings With Smart Investments
Building a secure retirement goes beyond just how much you save—it’s also about how you invest:
- Diversified Portfolios: Distributing your investments across varied asset classes like stocks and bonds is a smart way to minimize exposure to risk while still growing your nest egg.
- Emergency Back-Up: Supplementing your retirement savings with a financial buffer for your business prevents you from dipping into savings during challenging periods and incurring penalties.
Plan for the Future of Your Pittsburgh, PA Business
Retirement planning enables you to prepare for what’s next with your Pittsburgh, PA business:
- Selling Your Business: For those considering a sale, plans like SEP IRAs or Solo 401(k)s stay in your name and are not part of the sale. These plans offer the reliable income you’ll need later on. It’s important to note that while selling your business results in a capital gain, retirement plan contributions are restricted by contribution limits (e.g., as much as $7,000 for IRAs or a maximum of $70,000 for Solo 401(k)s, factoring in catch-up contributions, according to plan rules).
- Minimizing Taxes: Using retirement contributions wisely minimizes the taxes you’ll owe when you sell your business.
- Succession Planning: Whether you’re transferring ownership, your nest egg ensure a stable foundation during the change. You can also work with a financial advisor who specializes in succession planning and retirement accounts to help with taxes on the sale.
With the best-fit retirement strategy, you manage your financial future, cut down your tax obligations, and establish a strong framework for both your retirement and your business goals.
Why Start a Self-Employed Retirement Plan in Pittsburgh, PA Now?
Time remains one of the most valuable resources for building your retirement fund. Starting early not only allows you to build a bigger financial cushion but also lowers the financial burden of catching up later in life. This is why it pays to take action now:
The Cost of Waiting
Putting off saving for retirement can have a significant impact on the savings you’ll have when you retire. The biggest reason is compound interest—the powerful process where your investments earn returns, and those returns, subsequently, generate even more returns. The greater time span your money has to grow, the greater the impact of compounding.
Example: Two individuals, Alex and Taylor are both self-employed individuals. They each aim 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 contributes $7,500 annually to make up for lost time.
By age 65, using a projected 7% annual return:
- Alex puts in $180,000 and ends up with $691,184.39*.
- Taylor contributes $195,500 but only ends up with $474,367.78*.
How Early Contributions Grow
Regular, modest investments invested steadily may result in significant growth. Take a look at this scenario showing the effect 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 accumulate $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 gap of over $260,000, all because of a 10-year delay.
The earlier you begin, the lower your annual savings needs each year to meet your retirement goals.
*The figures provided in this example are estimates derived from NerdWallet’s Compound Interest Calculator, with the assumption of a 7% annual return. The contributions were calculated by multiplying the annual deposit amount by the total number of years contributions were made. This information is intended as illustrative examples and are not a promise of future results. Outcomes may change based on factors such as market conditions, fees, and your unique situation. Always consult a financial advisor for personalized advice.
Take Control of Your Financial Future
For self-employed individuals in Pittsburgh, PA, it might seem easier to focus more on reinvesting in your business rather than saving for retirement. That said, initiating a plan now gives you the chance to:
- Leverage tax-free future growth or tax-free withdrawals in the future.
- Take advantage of contribution flexibility that change with your cash flow.
- Establish a safety net that provides security, no matter how your business changes.
Starting early, the less you’ll have to worry about playing catch-up later in life. Saving for retirement now means managing your financial future and allowing yourself the freedom to concentrate on your goals—both for your golden years and your Pittsburgh, PA business.
Types of Self-Employed Retirement Plans
Multiple retirement savings options designed for entrepreneurs in Pittsburgh, PA, each providing its own pros and cons. A financial advisor can help you learn about the pros and cons of each option and determine the one most suitable for your circumstances. Typically, your self-employed retirement plan options in Pittsburgh, PA are:
Traditional or Roth IRA
Plan Overview: IRAs, or Individual Retirement Accounts, are retirement savings vehicles that provide key tax perks. In a traditional IRA, you can usually deduct your contributions from taxable income, and earnings grow without immediate taxation, but retirement distributions are subject to income tax. In contrast, with Roth IRAs, you contribute are made with after-tax income, but retirement withdrawals that qualify, including earnings, are tax-free. In both accounts, withdrawals come without penalties provided 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 are capped 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 contribute a percentage of their net earnings. Contributions can only be made by an employer, so, as a sole proprietor, you (the employee) would not be able to contribute beyond the 25% you (the employer) already contributed. If you have employees, you are obligated to contribute the same amount for them as you do for yourself. You may choose to contribute a fixed dollar figure or a percentage of wages to employee accounts. SEP IRAs is a good option for companies with cycles of high revenue and low revenue. Compared to other retirement options, SEP IRAs don’t have expensive setup or ongoing fees.
SEPs work like traditional IRAs, where contributions are made with pre-tax money and withdrawals are taxed as income.
Eligibility: Employers of any type, including 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 amount eligible to be contributed 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 savings option for the self-employed designed for businesses with no employees or where the only employee is a spouse. Solo 401(k)s function similarly to traditional employer-managed 401(k) plans, and enable contributions as both an employee or an employer with pre-tax money. This provides more savings versus SEPs or IRAs; however, the extra savings options often come with more limited investment options. With this type of plan, 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 can set up and contribute to a solo 401(k).
Contribution Limits: As a self-employed individual with a solo 401(k) plan, you can make two types of contributions:
- Deferrals as an employee of up to 100% of your self-employment income, capped at the annual contribution limit. In 2025, those limits are $23,500, or $31,000 if you are 50 or older, or $34,750 if you attain age 60-63 in 2025.
- Contributions as an employer (as an employer) must not surpass 25% of your net self-employment income, which is your net profit minus half of your self-employment tax and the elective deferrals you made.
The total contribution cannot exceed $70,000, or $77,500 for those aged 50 and older (as of 2025), $81,250 for individuals turning 60-63 in 2025.
Individual Defined Benefit Plan
Plan Overview: The defined benefit plan is a retirement option that provides a set amount to self-employed individuals upon retirement. Unlike defined contribution plans mentioned above, this plan is not influenced by market performance, but enables participants to determine exactly how much they'll get in retirement. This strategy is ideal for wealthier self-employed individuals who want to save a significant sum for retirement and can commit to making larger deposits. Contributions grow tax-free until withdrawal, and withdrawals are taxable as income upon retirement.
Eligibility: Any self-employed individual running an owner-only business or with less than five employees are eligible to open an individual defined benefit plan, but it's most commonly recommended for those over 50 who make $250,000 or more annually. Generally, good candidates for defined benefit plans tend to be:
- Business owners or partners who aim to deposit more than $70,000 (or $77,500 for those aged 50+)
- Companies already contributing 3-4% with plans to contribute more
- Organizations with proven consistent profit patterns
- Business leaders over age 40 who desire to "catch up" or increase their retirement contributions rapidly
Contribution Limits: The maximum allowable contribution must be determined by an actuary based on your earnings, age, and retirement objectives. Limits on contributions are updated yearly.
The Importance of a Financial Advisor in Pittsburgh, PA for Your Self-Employed Retirement Plan
Partnering with an advisor in Pittsburgh, PA experienced with retirement plans for the self-employed serves as an important asset for entrepreneurs. They have the expertise to help understand the intricacies of saving for retirement and craft a personalized approach that matches your objectives. Your advisor in Pittsburgh, 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 involves:
- Assist in selecting a plan that suits your unique requirements
- Further adapt the plan to your needs even further
- Adopt a written plan that complies with IRS regulations
- Organize a trust plan to manage your assets
- Ensure you comprehend the plan's terms
- Track and fine-tune your plan when necessary
- Deliver continuous support and financial insights 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 Pittsburgh, PA: Correct Capital's Process
Pittsburgh, PA business owners who aren’t equipped with the time or understanding to manage their self-employed retirement plan on their own often feel overwhelmed when faced with their choices. At Correct Capital, our Pittsburgh, PA financial advisors manage the lion's share of your savings plan setup for you, and strive to ensure meeting your financial objectives as easy as possible for you. We are here to assist you in setting up your self-employed retirement plan in a quick, four-step process:
- Schedule a Call: It only takes 20 minutes, a member of our advisor team can help understand if we're a good fit for you and your business. This brief introduction allows us to learn about your needs with zero commitment or significant effort on your part.
- Gather Information: Should we agree to proceed, we'll ask for information, including how many employees you have (if any), your current financial situation, and your future objectives. This helps us create a personalized strategy suited specifically for your needs.
- Review Your Plan: When we finalize a plan using the information you provide, we'll schedule a meeting and discuss your plan in detail to make sure it's clear and understand how it best correlates to your needs.
- Implementation and Monitoring: After we agree on your plan, we'll put everything in place so you can start saving. Over the course of our partnership, we'll have regular meetings and monitor your plan to keep it tailored to your evolving circumstances.
Our Pittsburgh, PA financial advisors and retirement plan consultants are fiduciary advisors, which means they are legally and ethically bound to do what's in your best interest.
Other financial advisory services we offer in Pittsburgh, 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 Pittsburgh, PA
You don't see your business as "just a business", and your Pittsburgh, PA financial advisors must deliver more than just good financial guidance. With Correct Capital, we make it a priority to understand our clients and their businesses to deliver customized self-employed retirement plans. All our clients in Pittsburgh, PA benefit from our I.O.U. promise: everything we recommend 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.
