Self-employed retirement plans Pomona, CA. The flexibility of owning your own business in Pomona, CA is one of the greatest advantages of being self-employed. However, this independence often comes with certain challenges, particularly when it comes to retirement savings, because you don't have access to a workplace retirement plan. Only 13% of self-employed individuals have a workplace retirement plan, yet countless could benefit from understanding their retirement options. In addition to having a more secure retirement, partnering with a financial advisor in Pomona, CA to establish your self-employed retirement plan offers significant tax advantages that help both you and your business to thrive.
Few Pomona, CA wealth management and retirement planning firms understand the needs of self-employed individuals as well as 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 our firm are deeply experienced in supporting entrepreneurs with their retirement planning needs. We recognize that your goals for your business and retirement extend well past simple financial figures, and we are dedicated to offer customized solutions to meet your unique goals. Read on to discover about your self-employed retirement plan options in Pomona, CA, or reach out to Correct Capital at 877-930-401k or contact us online to talk to a self-employed financial advisor in Pomona, CA today.
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Why Pomona, CA 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 considerable tax savings, working with a financial advisor in Pomona, CA helps you customize your retirement plan to suit your specific needs.
Flexibility That Fits Your Income
If your income changes from year to year, a plan like a SEP IRA or Solo 401(k) offers the option to tailor how much you save:
- Customizable Contributions: Set aside more during successful years and cut back when your earnings dip, so that your plan works with your cash flow.
- Roth Options: 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 smart decision if you believe your tax rate to be higher in the future.
Save Money on Taxes
Retirement plans for self-employed individuals offer valuable tax benefits:
- Tax-Deductible Contributions: Contributions to a SEP IRA reduce what you owe in taxes, allowing you to keep more of your hard-earned money.
- Tax-Deferred Growth: You won't pay taxes on investment growth until you withdraw it, providing your money more time to compound.
- State-Specific Incentives: In some states, you could qualify for state-specific tax breaks as a self-employed individual. These state-level incentives make these plans even more advantageous.
- Retirement Savings Contributions Credit (Saver’s Credit): Qualified participants can apply for a credit of up to 50% of the first $2,000 they contribute a retirement plan, helping to lower your tax bill even more.
Protect Your Savings With Smart Investments
Creating a stable future requires more than how much you save—it’s also about how you invest:
- Diversified Portfolios: Distributing your investments across a mix of stocks, bonds, and alternatives serves to minimize exposure to risk while helping to grow your retirement fund.
- Emergency Back-Up: Pairing your retirement plan with a financial buffer for your business prevents you from tapping into your nest egg during tough times and facing tax penalties.
Plan for the Future of Your Pomona, CA Business
A thoughtful retirement strategy can assist you think through what’s next with your Pomona, CA business:
- Selling Your Business: For those considering a sale, retirement accounts like SEP IRAs and Solo 401(k)s stay in your name and are not part of the sale. These plans offer the reliable income you’ll need in the future. Keep in mind that while selling a business often leads to a capital gain, contributions to retirement accounts are restricted by contribution limits (e.g., up to $7,000 for IRAs or a maximum of $70,000 for Solo 401(k)s, factoring in 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: Whether you’re transferring ownership, your retirement savings provide the funds you need during the change. You may also seek advice from a financial advisor experienced in both succession and retirement strategies to reduce taxes during the sale.
With the right retirement plan, you gain control over your financial future, lower your tax bill, and build a secure foundation for both your retirement and your business goals.
Why Start a Self-Employed Retirement Plan in Pomona, CA Now?
Time is one of the most important factors in retirement planning. Getting a head start not only lets you accumulate a larger nest egg but also lowers the financial burden of catching up later in life. This is why it is beneficial to start now:
The Cost of Waiting
Waiting to start your retirement fund may cause a substantial impact on the savings you’ll have when you retire. The primary reason is compound interest—the concept where your investments generate earnings, and those returns, in turn, accumulate even more returns. The greater time span your money has to grow, the more significant the benefit of compounding.
Example: Taylor and Alex are both self-employed professionals. Their shared goal is to save $500,000 for retirement by age 65:
- Alex starts saving $5,000 annually at age 30.
- Taylor waits until age 40 but saves $7,500 annually to make up for lost time.
By age 65, assuming 7% annual return:
- Alex contributes $180,000 and achieves a total of $691,184.39*.
- Taylor contributes $195,500 but only ends up with $474,367.78*.
How Early Contributions Grow
Regular, modest investments made consistently can lead to substantial growth. Consider this example showing the effect of compound interest:
- Starting at age 25: Putting aside $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.
The earlier you begin, the lower your annual savings needs each year to reach your retirement goals.
*These calculations represent estimates generated with NerdWallet’s Compound Interest Calculator, with the assumption of 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. Outcomes may change depending 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 Pomona, CA, it might seem easier to prioritize reinvesting in your business instead of saving for retirement. Even so, beginning a plan now allows you to:
- Take advantage of growth that is tax-deferred or tax-free withdrawals down the road.
- Benefit from flexible contributions that adapt to your cash flow.
- Establish a long-term safety measure 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. Taking steps toward your retirement goals today means managing your financial future and allowing yourself the freedom to turn your attention to your dreams—both for your future retirement and your Pomona, CA business.
Types of Self-Employed Retirement Plans
There are several retirement savings options open for those working for themselves in Pomona, CA, each offering its own pros and cons. A financial advisor can help you learn about the pros and cons of each option and identify the one best suited for your needs. Typically, your self-employed retirement plan options in Pomona, CA consist of:
Traditional or Roth IRA
Plan Overview: IRAs, or Individual Retirement Accounts, are long-term savings plans that provide specific tax advantages. In a standard IRA, contributions are typically tax-deductible, and investment earnings grow tax-deferred, but money taken out during retirement are taxed as income. In contrast, Roth IRAs require contributions from post-tax earnings, but eligible distributions during retirement, including earnings, are exempt from taxes. In both types of accounts, withdrawals are penalty-free as long as you are at least 59½.
Eligibility: Unlike plans linked to your job, both traditional and Roth IRAs are accessible for individuals with an earned income.
Contribution Limits: For 2025, annual contribution limits for IRAs are capped at $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 set aside a portion of their self-employment income. Contributions are strictly employer contributions an employer, so, as a sole proprietor, you (the employee) cannot make additional contributions beyond the 25% you (the employer) have designated. If you have employees, you must 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. A SEP IRA works well for entrepreneurs facing cycles of high revenue and low revenue. Compared to other retirement options, 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 money withdrawn is subject to income tax.
Eligibility: Employers of any type, including self-employed individuals can open a SEP.
Contribution Limits: Contribution limits for employees in a SEP IRA are the lesser of:
- 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: Solo 401(k)s, commonly known as an Individual 401(k) or one-participant 401(k) plan, is a self-employed retirement plan meant for businesses with no employees or when the sole employee is your spouse. This type of plan function similarly to traditional employer-managed 401(k) plans, and let you make contributions as both the employer and the employee with pre-tax money. This allows for more savings than SEPs or IRAs; however, the additional opportunities can be balanced by more constrained investment avenues. Using a solo 401(k), you can make either traditional or Roth deferrals, which share 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: 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 earned income from self-employment, subject 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 individuals aged 60-63 in 2025.
- Employer profit-sharing contributions (as an employer) are limited to 25% of your adjusted self-employment income, which is calculated as net profits less half of your self-employment tax and the deferrals you made.
Your combined contributions must not surpass $70,000, or $77,500 if you're over age 50 (as of 2025), $81,250 if you attain age 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. Unlike defined contribution plans mentioned above, this plan is not influenced by market performance, but allows self-employed individuals to know exactly how much they'll have in retirement. This plan is best suited for high-earning entrepreneurs who want to save a substantial amount for retirement and can commit to making sizeable contributions. Contributions are tax deferred, and withdrawals incur taxes as income upon retirement.
Eligibility: Any self-employed individual managing a one-person company or employing fewer than five people may establish an individual defined benefit plan, but it's generally suggested for people above age 50 who make $250,000 or more annually. Typically, good candidates for defined benefit plans include:
- Partners or owners who desire to contribute more than $70,000 (or $77,500 if over age 50)
- Organizations that already put in 3-4% and are willing to do more
- Organizations showing consistent profit patterns
- Partners or owners over age 40 who aim to quickly build retirement savings or accelerate the retirement savings
Contribution Limits: The maximum allowable contribution must be determined by an actuary using your income, age, and retirement goals. Contribution limits change annually.
The Importance of a Financial Advisor in Pomona, CA for Your Self-Employed Retirement Plan
Partnering with an advisor in Pomona, CA specialized in self-employed retirement plans serves as an invaluable resource for self-employed individuals. They offer the knowledge to assist guide you through the challenges of retirement planning and design a personalized approach that matches your objectives. Your advisor in Pomona, CA 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:
- Guide you in choosing a plan that aligns with your objectives and circumstances
- Further adapt the plan to fit you personally even further
- Create a written plan in accordance with IRS guidelines
- Set up an asset trust plan
- Make sure you understand the plan's terms
- Track and fine-tune your plan to keep it aligned with your goals
- Offer continued financial education and guidance to help you navigate your retirement journey
- Increase your retirement income by making the most of your social security
Self-Employed Retirement Plans in Pomona, CA: Correct Capital's Process
Pomona, CA business owners who don’t have the time or expertise to oversee their own retirement planning on their own often feel overwhelmed as they look at their available plans. Through our team at Correct Capital, our Pomona, CA financial advisors take on the bulk of your retirement strategy for you, working to make 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: In just 20 minutes, a member of our advisor team can determine if our services align for you and your business. This brief introduction lets us understand what you're looking for with zero commitment or major time investment on your part.
- Gather Information: Should we agree to proceed, we'll request information, including your employee count, your present financial standing, and your retirement goals. This enables us to craft a tailored approach suited specifically for your needs.
- Review Your Plan: When we finalize a plan based on the information you provide, we'll schedule a meeting and discuss your plan in detail to help you fully grasp it 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 initiate your savings journey. As time goes on, we'll check in and review your strategy to make sure it remains aligned with your goals.
Our Pomona, CA financial advisors and retirement plan consultants act as fiduciary advisors, who are obligated to they are required by law and ethical standards to do what's in your best interest.
Other financial advisory services we offer in Pomona, CA include:
- 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 Pomona, CA
To you, your business is more than "just a business", and your Pomona, CA financial advisors should provide more than simply sound financial advice. With Correct Capital, we focus on building a relationship with our clients and their businesses to deliver personalized self-employed retirement plans. All our clients in Pomona, CA 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, contact Correct Capital now at 877-930-401k or contact us online.
