Self-employed retirement plans Providence, RI. The independence of owning your own business in Providence, RI is one of the greatest advantages of having a self-directed career. That said, this independence can come with a lack of security, particularly regarding building your retirement fund, since you don't have the benefit of a workplace retirement plan. Only 13% of self-employed individuals have a workplace retirement plan, yet countless could benefit from exploring their options. In addition to enjoying a more comfortable retirement, seeking advice from a financial advisor in Providence, RI to establish your self-employed retirement plan offers significant tax advantages that enable both you and your business to thrive.
Few Providence, RI financial advisory and retirement planning firms are as attuned to the requirements of small business owners as well as Correct Capital. Our founder's father was a small business owner himself (learn more about our story here), and we are deeply experienced in helping businesses with their retirement planning needs. We know that your professional and personal aspirations extend well past basic numbers, and we strive to provide personalized solutions aligned with your vision. Read on to discover about your self-employed retirement plan options in Providence, RI, or give us a call at Correct Capital at 877-930-401k or contact us online to talk to a self-employed financial advisor in Providence, RI today.
Why Providence, RI Self-Employed Individuals Should Have a Retirement Plan
Retirement plans for self-employed individuals are essential for preparing you for the future, they also offer tangible benefits today. Offering flexibility in contributions to significant tax savings, consulting a financial advisor in Providence, RI enables you to design your retirement plan to fit your individual circumstances.
Flexibility That Fits Your Income
When your earnings vary from year to year, 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 successful years and scale back when your earnings dip, so that your plan works with your cash flow.
- Roth Options: A Roth Solo 401(k) lets you handle taxes upfront, enabling you to withdraw your savings tax-free down the road—a smart decision if you believe your tax rate will increase in the future.
Save Money on Taxes
Plans designed for the self-employed deliver significant tax benefits:
- Tax-Deductible Contributions: Contributions to a SIMPLE IRA reduce what you owe in taxes, so you can keep more of your earnings.
- Tax-Deferred Growth: Investments grow tax-free until withdrawal, which gives your money more time to accumulate.
- State-Specific Incentives: Depending on where you live, you might access state-specific deductions as a business owner. These regional incentives can make these plans even more advantageous.
- Retirement Savings Contributions Credit (Saver’s Credit): Eligible individuals can apply for a 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 isn’t only about how much you save—it’s also linked to the way you invest:
- Diversified Portfolios: Spreading your investments across varied stocks, bonds, and alternatives can help mitigate financial risk while helping to grow your retirement fund.
- Emergency Back-Up: Combining your retirement strategy and a business emergency fund helps you avoid using your retirement funds during challenging periods and risking extra costs.
Plan for the Future of Your Providence, RI Business
Retirement planning enables you to think through what’s next with your Providence, RI business:
- Selling Your Business: When selling your business, accounts such as SEP IRAs or Solo 401(k)s stay in your name and don’t transfer with the business. These plans can provide the financial stability you’ll need later on. Remember that while selling your business results in a capital gain, deposits into these plans are capped at annual limits (e.g., as much as $7,000 for IRAs or up to $70,000 for Solo 401(k)s, factoring in catch-up contributions, depending on plan details).
- Minimizing Taxes: Making the most of retirement savings minimizes the taxes you might face when you transfer your business.
- Succession Planning: Whether you’re transferring ownership, your nest egg provide the funds you need as you make this shift. You might want to partner with a financial advisor with expertise in succession and retirement planning to reduce taxes associated with the transaction.
With the best-fit retirement strategy, you manage your financial future, reduce your tax burden, and establish a solid base for both your retirement and your business goals.
Why Start a Self-Employed Retirement Plan in Providence, RI Now?
Time is one of the most crucial assets for building your retirement fund. Getting a head start not only lets you accumulate a larger nest egg but also minimizes the pressure of saving aggressively in the future. This is why it is beneficial to start now:
The Cost of Waiting
Putting off saving for retirement can have a substantial impact on the savings you’ll have when you retire. The biggest reason is compound interest—the concept where your investments grow, and those returns, subsequently, generate even more returns. The greater time span your money has to grow, the more significant the impact 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 begins contributing $5,000 annually at age 30.
- Taylor delays savings until age 40 but puts away $7,500 annually to bridge the gap.
By age 65, assuming 7% annual return:
- Alex invests $180,000 and accumulates $691,184.39*.
- Taylor invests $195,500 but achieves a total of only $474,367.78*.
How Early Contributions Grow
Small, consistent savings invested steadily may result in impressive growth. Take a look at this scenario showing the power of compound interest:
- Starting at age 25: If you invest $200 per month in a retirement plan with an average annual return of 7%, you’ll accumulate $497,303.29* by age 65.
- Starting at age 35: Investing 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.
Saving early, the lower your annual savings needs each year to achieve your retirement goals.
*The figures provided in this example represent estimates derived from NerdWallet’s Compound Interest Calculator, assuming 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 meant to provide general guidance and are not a promise of future results. Actual results may vary due to elements like market conditions, fees, and individual circumstances. We recommend consulting a financial advisor for guidance tailored to your needs.
Take Control of Your Financial Future
If you’re self-employed in Providence, RI, it can be tempting to focus more on reinvesting in your business over saving for retirement. Even so, initiating a plan now gives you the chance to:
- Leverage tax-free future growth or withdrawals without taxes in the future.
- Benefit from adjustable savings that align with your earnings.
- Establish a financial cushion that provides security, no matter how your business changes.
The sooner you start, the less you’ll have to worry about making up for lost time later in life. Saving for retirement now means taking control of your financial future and allowing yourself the ability to focus on your dreams—both for your retirement years and your Providence, RI business.
Types of Self-Employed Retirement Plans
A variety of retirement savings options available for those working for themselves in Providence, RI, each providing its own advantages and considerations. A financial advisor is available to help you learn about the advantages and disadvantages of each plan and determine the one ideal for your unique situation. In most cases, your self-employed retirement plan options in Providence, RI are:
Traditional or Roth IRA
Plan Overview: IRAs, or Individual Retirement Accounts, are financial tools for retirement that offer key tax perks. In a traditional 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 are made with after-tax income, but retirement withdrawals that qualify, including earnings, are tax-free. In both cases, withdrawals don’t incur penalties if you are at least 59½.
Eligibility: Unlike plans linked to your job, IRAs, including traditional and Roth options are accessible for individuals with a source of 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 permits entrepreneurs to set aside a portion of their self-employment income. Contributions must come from an employer, so, as a sole proprietor, you (the employee) are limited to contributions from the employer role above the 25% you (the employer) already contributed. If you have employees, you must contribute the same amount for them as you do for yourself. You may choose to contribute a flat-dollar amount or a percentage of wages to employee accounts. This type of plan may be ideal for companies with 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 operate like conventional 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 are capped at the lower of:
- 25% of compensation, or
- $70,000 for 2025
If you’re self-employed, the contribution you can make is based on a special calculation.
Solo 401(k)
Plan Overview: A Solo 401(k) plan, commonly known as an Individual 401(k) or one-participant 401(k) plan, is a savings option for the self-employed meant for companies that have no employees or if the only employee is your spouse. Solo 401(k)s operate much like standard 401(k) plans, and allow you to contribute as both an employee or an employer with pre-tax money. This provides more savings compared to SEPs or IRAs; however, the increased savings potential can be balanced by more constrained investment avenues. 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: This plan is exclusively for 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:
- Employee contributions of up to 100% of your self-employed earnings, up to the annual contribution limit. In 2025, those limits are $23,500, or $31,000 if you are 50 or older, or $34,750 for individuals aged 60-63 in 2025.
- Profit-sharing contributions (as an employer) are limited to 25% of your adjusted self-employment income, which is your net profit minus half of your self-employment tax and the elective deferrals you made.
Total contributions are capped at $70,000, or $77,500 if you're over age 50 (in 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 pre-established payout to self-employed individuals upon retirement. As opposed to defined contribution plans, a defined benefit plan doesn't fluctuate based on investment returns, but lets individuals clearly understand exactly how much they'll get in retirement. This strategy is ideal for high-earning professionals who want to save a significant sum for retirement and are willing to make sizeable contributions. Contributions offer tax-deferred growth, and withdrawals incur taxes as income in retirement.
Eligibility: Entrepreneurs managing a one-person company or with a small staff of under five are eligible to open an individual defined benefit plan, but it's generally suggested for people above age 50 who earn at least $250,000 a year. Typically, good candidates for defined benefit plans tend to be:
- Entrepreneurs who aim to deposit more than $70,000 (or $77,500 for those aged 50+)
- Companies already contributing 3-4% but are open to increasing contributions
- Businesses showing consistent profit patterns
- Business leaders over age 40 who desire to "catch up" or increase their retirement contributions rapidly
Contribution Limits: The contribution limit requires calculation from an actuary based on your earnings, age, and retirement objectives. Contribution limits are adjusted each year.
The Importance of a Financial Advisor in Providence, RI for Your Self-Employed Retirement Plan
Partnering with an advisor in Providence, RI specialized in self-employed retirement plans is an essential partner for entrepreneurs. They offer the knowledge to assist understand the intricacies of saving for retirement and design a tailored strategy that reflects your aspirations. Your advisor in Providence, RI will assess where you stand financially, understand your risk tolerance, and assist you in making informed decisions about saving and investing for retirement. A key part of what we do for you involves:
- Guide you in choosing a plan that best fits your needs and goals
- Customize the plan to fit you personally even further
- Formalize a plan in writing as required by IRS rules
- Arrange a trust plan for assets
- Make sure you understand the plan's terms
- Review and modify your plan when necessary
- Offer continued financial education and guidance throughout your retirement planning process
- Increase your retirement income by maximizing your social security benefits
Self-Employed Retirement Plans in Providence, RI: Correct Capital's Process
Providence, RI business owners who aren’t equipped with the time or understanding to oversee their retirement savings strategy on their own may end up overwhelmed as they look at their options. Through our team at Correct Capital, our Providence, RI financial advisors manage the bulk of your retirement strategy for you, to help make meeting your retirement goals as straightforward as possible for you. We are here to assist you in setting up your self-employed retirement plan in four simple steps:
- Schedule a Call: It only takes 20 minutes, a member of our advisor team can help understand if our services align for you and your business. This initial call helps us get a sense of your goals with no pressure or significant effort on your part.
- Gather Information: Should we agree to proceed, we'll gather information, including whether you have employees, your current financial situation, and your retirement goals. This allows us to put together a tailored approach that aligns with your goals.
- Review Your Plan: After we put together a plan using the information you provide, we'll schedule a meeting and review your plan thoroughly to ensure you understand it and understand how it best correlates to your needs.
- Implementation and Monitoring: After we agree on your plan, we'll set everything up so you can initiate your savings journey. As time goes on, we'll meet with you and monitor your plan to make sure it remains aligned with your goals.
Our Providence, RI financial advisors and retirement plan consultants serve as fiduciary advisors, which means they are committed by law and ethics to act in your best interest.
Other financial advisory services we offer in Providence, RI 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 Providence, RI
You don't see your business as "just a business", and your Providence, RI financial advisors must deliver more than basic financial recommendations. Correct Capital takes pride in, we take the time to get to know our clients and their businesses to deliver tailored self-employed retirement plans. To every client in Providence, RI, we provide our I.O.U. promise: everything we recommend 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.
