Self-employed retirement plans Pomona, CA. The independence of owning your own business in Pomona, CA is one of the greatest advantages of working for yourself. That said, this independence can come with a lack of security, especially regarding retirement savings, because you don't have access to retirement programs through an employer. Only 13% of self-employed individuals have a workplace retirement plan, yet countless could benefit from looking into other possibilities. In addition to enjoying a more secure retirement, working with a financial advisor in Pomona, CA to establish your self-employed retirement plan offers significant tax advantages that enable you to move your business forward.
Few Pomona, CA financial advisory and retirement planning firms truly grasp the challenges faced by small business owners better than Correct Capital. Our founder's father was a small business owner himself (check out our story here), and we are deeply experienced in assisting business owners in their retirement planning needs. We recognize that your business and retirement aspirations go far beyond just monetary concerns, and we strive to provide tailored solutions to meet your unique goals. Keep reading to learn more 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 speak with a small business financial advisor in Pomona, CA today.
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 deliver immediate benefits today. Offering flexibility in contributions to significant tax savings, partnering with a financial advisor in Pomona, CA helps you design your retirement plan to suit your specific needs.
Flexibility That Fits Your Income
For those with fluctuating income over time, a plan like a SEP IRA or Solo 401(k) gives you the flexibility to adjust how much you save:
- Customizable Contributions: Save extra during successful years and reduce savings when your earnings dip, ensuring your plan fits your financial situation.
- Roth Options: A Roth Solo 401(k) lets you pay taxes on contributions now, enabling you to withdraw without tax penalties in the future—a wise move if you expect your tax rate is likely to rise in the future.
Save Money on Taxes
Self-employed retirement plans offer significant tax benefits:
- Tax-Deductible Contributions: Contributions to a Solo 401(k) shrink your tax liability, allowing you to keep more of your hard-earned money.
- Tax-Deferred Growth: Your savings grow untaxed until withdrawn, which gives your money more time to compound.
- State-Specific Incentives: Based on your location, you could qualify for state-specific tax breaks as a business owner. These local incentives can make these plans even more advantageous.
- 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, further reducing 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 linked to the way you invest:
- Diversified Portfolios: Spreading your investments across varied stocks, bonds, and other assets can help minimize exposure to risk while still growing your savings.
- Emergency Back-Up: Supplementing your retirement savings with a dedicated business safety net prevents you from tapping into your nest egg during challenging periods and risking extra costs.
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: When selling your business, retirement accounts like SEP IRAs and Solo 401(k)s remain yours and won’t be included in the sale. These savings can provide the reliable income you’ll need during retirement. It’s important to note 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 up to $70,000 for Solo 401(k)s, factoring in catch-up contributions, according to plan rules).
- Minimizing Taxes: Strategically planning your contributions minimizes the taxes you might face when you pass on your business.
- Succession Planning: Whether you’re transferring ownership, your retirement savings ensure the funds you need as you make this shift. You may also work with a financial advisor who specializes in succession planning and retirement accounts to minimize tax burdens during the sale.
With the right retirement plan, you can take control of your financial future, reduce your tax burden, and create a secure foundation for both your retirement and your business goals.
Why Start a Self-Employed Retirement Plan in Pomona, CA Now?
There’s no denying that time is one of the most crucial resources for building your retirement fund. Getting a head start not only lets you accumulate a larger nest egg but also lowers the stress of saving aggressively in the future. This is why it makes sense to begin today:
The Cost of Waiting
Delaying your retirement savings could lead to a significant impact on the amount you’ll have when you stop working. The primary reason is compound interest—the concept where your investments generate earnings, and those returns, in turn, accumulate even more returns. The longer your money has to grow, the larger the impact of compounding.
Example: Alex and Taylor are both self-employed professionals. Their shared goal is 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 contributes $7,500 annually to bridge the gap.
By age 65, using a projected 7% annual return:
- Alex invests $180,000 and achieves a total of $691,184.39*.
- Taylor contributes $195,500 but achieves a total of only $474,367.78*.
How Early Contributions Grow
Even modest contributions contributed over time can lead to substantial growth. Consider this example showing the effect of compounding:
- 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: Investing the same $200 per month yields only $235,412.97* by age 65—a shortfall of over $260,000, simply due to a 10-year delay.
Saving early, the less you need to save each year to meet your retirement goals.
*The numbers shown in this scenario represent estimates calculated using NerdWallet’s Compound Interest Calculator, based on a 7% annual return. These calculations involved multiplying yearly deposits by the years contributed. The scenarios provided are for illustrative purposes only and do not guarantee future performance. Actual results may vary depending on elements like market conditions, fees, and your unique situation. Always consult a financial advisor for guidance tailored to your needs.
Take Control of Your Financial Future
If you’re self-employed in Pomona, CA, it is often the case that you prioritize reinvesting in your business rather than saving for retirement. Even so, starting a plan now enables you to:
- Take advantage of tax-deferred growth or penalty-free withdrawals later on.
- Benefit from contribution flexibility that align with your income.
- Create a safety net that provides security, no matter how your business changes.
Starting early, the less you’ll be required to worry about playing catch-up later in life. Saving for retirement now means managing your financial future and allowing yourself the ability to focus on your dreams—both for your golden years and your Pomona, CA business.
Types of Self-Employed Retirement Plans
Multiple retirement savings options designed for those working for themselves in Pomona, CA, each with its own pros and cons. A financial advisor is available to help you understand the pros and cons of each choice and choose the one most suitable for your unique situation. Generally speaking, your self-employed retirement plan options in Pomona, CA include:
Traditional or Roth IRA
Plan Overview: Individual Retirement Accounts (IRAs), as explained here, represent financial tools for retirement that provide specific tax advantages. In a traditional IRA, the money you contribute is often tax-deductible, and earnings grow without immediate taxation, but withdrawals in retirement are taxable. In contrast, Roth IRAs require contributions from post-tax earnings, but retirement withdrawals that qualify, including earnings, are tax-free. In both cases, withdrawals are penalty-free provided you are at least 59½.
Eligibility: While many retirement plans, such as 401(k)s, are tied to employment, both traditional and Roth IRAs are available to anyone with an earned 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 serves as a retirement savings option that allows those who are self-employed to set aside a portion of their self-employment income. Contributions must come from an employer, so, as a sole proprietor, you (the employee) would not be able to contribute beyond the 25% you (the employer) allocate. If you have employees, it's required to 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. A SEP IRA may be ideal for businesses that experience cycles of high revenue and low revenue. Compared to other retirement options, SEP IRAs lack costly startup or administrative fees.
SEPs work like standard IRAs, where the contributions are tax-deferred and money withdrawn is subject to income tax.
Eligibility: Employers of any type, including self-employed individuals can establish a SEP.
Contribution Limits: Contribution limits for employees in a SEP IRA must not exceed:
- 25% of compensation, or
- $70,000 for 2025
As a self-employed person, the amount eligible to be contributed 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 savings option for the self-employed intended for businesses without employees or if the only employee is your spouse. This type of plan operate much like traditional employer-managed 401(k) plans, and let you make contributions as both the employer and the employee with pre-tax money. This provides more savings compared to SEPs or IRAs; however, the extra savings options may be offset by more limited investment options. With this type of plan, you can make either traditional or Roth deferrals, which offer 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 have the ability to make two types of contributions:
- Employee contributions of up to 100% of your self-employment income, capped at 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 net earnings from self-employment, which is calculated as net profits less half of your self-employment tax and the elective deferrals you made.
The total contribution cannot exceed $70,000, or $77,500 for individuals aged 50+ (in 2025), $81,250 for individuals turning 60-63 in 2025.
Individual Defined Benefit Plan
Plan Overview: Defined benefit plans is a retirement option that guarantees a pre-established payout to self-employed individuals upon retirement. In contrast to the plans discussed earlier, investment returns don’t affect the payout, but lets individuals clearly understand exactly how much they'll have in retirement. This strategy is recommended for wealthier professionals who want to save a significant sum for retirement and are willing to make substantial contributions. Contributions grow tax-free until withdrawal, and withdrawals are taxed as income during retirement.
Eligibility: Self-employed professionals running an owner-only business or with a small staff of under five are eligible to open an individual defined benefit plan, but it's most commonly advised for people above age 50 who make $250,000 or more annually. Typically, good candidates for defined benefit plans tend to be:
- Partners or owners who want to invest more than $70,000 (or $77,500 if over age 50)
- Companies already contributing 3-4% and are willing to do more
- Companies that have demonstrated consistent profit patterns
- Partners or owners over age 40 who wish to accelerate savings or increase their retirement contributions rapidly
Contribution Limits: The maximum allowable contribution is calculated by an actuary determined by your earnings, age, and retirement objectives. Contribution limits are updated yearly.
The Importance of a Financial Advisor in Pomona, CA for Your Self-Employed Retirement Plan
Working with a financial advisor in Pomona, CA experienced with retirement plans for the self-employed can be an important asset for those working for themselves. They offer the knowledge to assist guide you through the challenges of retirement planning and craft a customized plan that aligns with your goals. A financial advisor in Pomona, CA will evaluate your financial situation, determine how much risk you’re comfortable with, and assist you in selecting the best options about saving and investing for retirement. A key part of what we do for you features:
- Guide you in choosing a plan that suits your unique requirements
- Tailor the plan to your needs even further
- Formalize a plan in writing as required by IRS rules
- Organize a trust plan to manage your assets
- Help you understand 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
- Boost your retirement earnings 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 manage their own retirement planning independently can become overwhelmed as they look at their options. With Correct Capital, our Pomona, CA financial advisors take on the majority of your savings plan setup for you, to help make meeting your financial objectives 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 will assess if our services align for you and your business. This brief introduction lets us understand what you're looking for with no pressure or significant effort on your part.
- Gather Information: If we both decide to move forward, we'll ask for information, including your employee count, your present financial standing, and your long-term savings targets. This enables us to craft a custom plan suited specifically for your needs.
- Review Your Plan: After we put together a plan based on the information you provide, we'll sit down with you and go over your plan in detail to help you fully grasp it and understand how it best correlates to your needs.
- Implementation and Monitoring: When we finalize on your plan, we'll set everything up so you can begin contributing. As time goes on, we'll have regular meetings and monitor your plan 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 legally and ethically bound to act in your best interest.
Other financial advisory services we offer in Pomona, CA 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 Pomona, CA
To you, your business is more than "just a business", and your Pomona, CA financial advisors need to offer more than just good financial guidance. With Correct Capital, we focus on building a relationship with our clients and their businesses to create personalized self-employed retirement plans. To every client in Pomona, CA, 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, reach out to Correct Capital at 877-930-401k or contact us online.
