Self-employed retirement plans Pomona, CA. The freedom of being your own boss in Pomona, CA is one of the greatest advantages of having a self-directed career. However, this flexibility often comes with potential drawbacks, especially in terms of planning for retirement, as you don't have the option of retirement programs through an employer. Only 13% of self-employed individuals have a workplace retirement plan, yet countless would be better off understanding their retirement options. In addition to enjoying a more comfortable retirement, working with a financial advisor in Pomona, CA to create your self-employed retirement plan delivers significant tax advantages that allow your business to grow and succeed.
Few Pomona, CA financial advisory and retirement planning firms truly grasp the challenges faced by small business owners better than Correct Capital. The father of our founder was a small business owner himself (learn more about our story here), and Correct Capital take pride in helping businesses with their retirement planning needs. We recognize that your business and retirement aspirations go far beyond simple financial figures, and we work tirelessly to provide customized solutions aligned with your vision. Read on to discover about your self-employed retirement plan options in Pomona, CA, or give us a call at 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 help prepare you for the future, they also offer real benefits today. With customizable contribution options to significant tax savings, working with a financial advisor in Pomona, CA helps you create your retirement plan to align with 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 freedom to adjust how much you save:
- Customizable Contributions: Contribute more during high-income years and reduce savings when income is lower, so your plan aligns with your current income.
- Roth Options: A Roth Solo 401(k) lets you handle taxes upfront, so you can withdraw your savings tax-free down the road—a wise move if you expect 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 Solo 401(k) lower your taxable income, helping you keep more of your income.
- Tax-Deferred Growth: Your savings grow untaxed until withdrawn, which gives your money more time to compound.
- State-Specific Incentives: Depending on where you live, you might access state-specific tax breaks as a self-employed individual. These local incentives help make these plans even more advantageous.
- Retirement Savings Contributions Credit (Saver’s Credit): Those who meet the requirements can take advantage of a credit of up to 50% of the first $2,000 contributed a retirement plan, further reducing 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 a mix of asset classes like stocks and bonds is a smart way to minimize exposure to risk while continuing to build your retirement fund.
- Emergency Back-Up: Pairing your retirement plan with a financial buffer for your business ensures you don’t tapping into your nest egg during financial hardships and incurring penalties.
Plan for the Future of Your Pomona, CA Business
Retirement planning can assist you think through what’s next with your Pomona, CA business:
- Selling Your Business: If you’re planning to sell, retirement accounts like SEP IRAs and Solo 401(k)s remain your personal assets and won’t be included in the sale. These savings 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 a maximum of $70,000 for Solo 401(k)s, including catch-up contributions, based on plan compensation).
- Minimizing Taxes: Making the most of retirement savings can reduce 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 offer a stable foundation through the transition. You may also partner with a financial advisor who specializes in succession planning and retirement accounts to help with taxes during the sale.
With the proper savings strategy, you manage your financial future, cut down your tax obligations, and establish 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 important resources for building your retirement fund. Beginning sooner rather than later not only allows you to build a more substantial retirement fund but also reduces the stress of saving aggressively in the future. Here’s why it pays to take action now:
The Cost of Waiting
Waiting to start your retirement fund can have a substantial impact on the savings you’ll have when you reach retirement age. The biggest reason is compound interest—the financial principle where your investments generate earnings, and those returns, in turn, accumulate even more returns. The longer your money has to grow, the greater the benefit of this growth.
Example: Alex and Taylor are both self-employed individuals. Their shared goal is 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 catch up.
By age 65, using a projected 7% annual return:
- Alex contributes $180,000 and achieves a total of $691,184.39*.
- Taylor invests $195,500 but only ends up with $474,367.78*.
How Early Contributions Grow
Regular, modest investments invested steadily may result in substantial growth. Here’s a simple scenario showing the effect of compound interest:
- Starting at age 25: Putting aside $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 would result in only $235,412.97* by age 65—a shortfall of over $260,000, all because of a 10-year delay.
Saving early, the less effort required each year to achieve your retirement goals.
*The numbers shown in this scenario are based on estimates derived from NerdWallet’s Compound Interest Calculator, based on a 7% annual return. The contributions were calculated by multiplying the annual deposit amount by the total number of years contributions were made. The scenarios provided are for illustrative purposes only and are not a promise of future results. Actual results may vary depending on elements like market conditions, fees, and personal factors. Be sure to speak with a financial advisor for custom recommendations.
Take Control of Your Financial Future
As a self-employed person in Pomona, CA, it might seem easier to focus more on reinvesting in your business instead of saving for retirement. However, beginning a plan now allows you to:
- Leverage growth that is tax-deferred or tax-free withdrawals down the road.
- Take advantage of flexible contributions that adapt to your earnings.
- Establish a safety net that ensures stability, no matter how your business evolves.
Getting started now, the less you’ll have to worry about catching up later in life. Taking steps toward your retirement goals today means gaining control over your financial future and creating for yourself the ability 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 entrepreneurs in Pomona, CA, each with its own advantages and considerations. A financial advisor will guide you to understand the pros and cons of each plan and choose the one best suited for your unique situation. In most cases, your self-employed retirement plan options in Pomona, CA include:
Traditional or Roth IRA
Plan Overview: IRAs, or Individual Retirement Accounts, are retirement savings vehicles that provide key tax perks. In a conventional IRA, contributions are typically tax-deductible, and returns grow free of current taxes, but money taken out during retirement are taxable. In contrast, Roth IRA contributions using income already taxed, but retirement withdrawals that qualify, including earnings, are exempt from taxes. In both types of accounts, withdrawals don’t incur penalties as long as you are at least 59½.
Eligibility: Unlike plans linked to your job, IRAs, including traditional and Roth options are open to those with a source of 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: The Simplified Employee Pension IRA is a retirement plan that enables those who are self-employed to contribute a percentage of their net earnings. Contributions must come from an employer, so, as a independent business owner, 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 have the flexibility to contribute a fixed dollar figure or a percentage of wages to employee accounts. A SEP IRA is a good option for businesses that experience periods of inconsistent earnings. Compared to other retirement options, SEP IRAs lack the high fees associated with starting or maintaining other plans.
SEPs operate like standard IRAs, where the contributions are tax-deferred and withdrawals are taxed as income.
Eligibility: Any employer, including the self-employed can set up 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
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 where the only employee is a spouse. These plans function similarly to standard 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 additional opportunities often come with more restricted investment choices. 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: As a self-employed individual with a solo 401(k) plan, you can make two types of contributions:
- Elective deferrals (as an employee) of up to 100% of your self-employed earnings, up to the annual contribution limit. The contribution limits for 2025 include $23,500, or $31,000 for those aged 50 and above, or $34,750 for those who turn 60-63 in 2025.
- Contributions as an employer (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 for those aged 50 and older (in 2025), $81,250 if you attain age 60-63 in 2025.
Individual Defined Benefit Plan
Plan Overview: A defined benefit plan represents a type of retirement plan that delivers a pre-established payout to business owners upon retirement. In contrast to the plans discussed earlier, this plan is not influenced by market performance, but enables participants to determine the precise amount they'll receive in retirement. This strategy is best suited for higher-income self-employed individuals who want to save a substantial amount for retirement and are willing to make larger deposits. Contributions are tax deferred, and withdrawals incur taxes as income in retirement.
Eligibility: Self-employed professionals operating a solo business or with less than five employees can open an individual defined benefit plan, but it's generally suggested for those over 50 who earn at least $250,000 a year. Generally, good candidates for defined benefit plans include:
- Business owners or partners who desire to contribute more than $70,000 (or $77,500 if over age 50)
- Businesses currently investing 3-4% but are open to increasing contributions
- Organizations showing consistent profit patterns
- Partners or owners over age 40 who wish to accelerate savings or boost savings within a short timeframe
Contribution Limits: The maximum allowable contribution is calculated by an actuary based on your income, age, and retirement goals. Limits on contributions change annually.
The Importance of a Financial Advisor in Pomona, CA for Your Self-Employed Retirement Plan
Working with a financial advisor in Pomona, CA specialized in self-employed retirement plans serves as an essential partner for self-employed individuals. They offer the knowledge to assist understand the intricacies of saving for retirement and develop 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 guide you in selecting the best options about saving and investing for retirement. Part of what we do for you features:
- Help you choose a plan that aligns with your objectives and circumstances
- Customize the plan to fit you personally even further
- Adopt a written plan in accordance with IRS guidelines
- Set up an asset trust plan
- Help you understand the plan's terms
- Review and modify your plan as needed
- Provide ongoing education and advice throughout your retirement planning process
- Maximize what you receive in retirement by optimizing your social security benefits
Self-Employed Retirement Plans in Pomona, CA: Correct Capital's Process
Pomona, CA business owners who aren’t equipped with the time or understanding to handle their self-employed retirement plan on their own may end up overwhelmed by their choices. With Correct Capital, our Pomona, CA financial advisors manage the bulk of your savings plan setup for you, and strive to ensure meeting your future savings targets as hassle-free as possible for you. We will guide you in creating your self-employed retirement plan in a quick, four-step process:
- Schedule a Call: A quick 20-minute call is all it takes, a member of our advisor team can help understand if we're suited to your needs for you and your business. This brief introduction allows us to learn about your needs with no obligation or significant effort on your part.
- Gather Information: If we both decide to move forward, we'll request information, including how many employees you have (if any), your current financial situation, and your long-term savings targets. This allows us to put together a tailored approach suited specifically for your needs.
- Review Your Plan: Once we've developed a plan using the information you provide, we'll schedule a meeting and go over your plan in detail to make sure it's clear 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 start saving. Throughout our relationship, we'll check in and track your progress to keep it tailored to your evolving circumstances.
Our Pomona, CA financial advisors and retirement plan consultants serve as fiduciary advisors, which means they are committed by law and ethics to do what's in your best interest.
Other financial advisory services we offer in Pomona, CA include:
- Investment Planning
- Retirement Financial Planning
- Investment Management
- 401(k) Audit
- High-Net-Worth Wealth Management
- Retirement Planner
- Financial Planning
- Retirement Plan Consultants
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 must deliver more than basic financial recommendations. At Correct Capital, we take the time to get to know our clients and their businesses to provide tailored self-employed retirement plans. We offer all our Pomona, CA clients our I.O.U. promise: all of the advice you get from us 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.
