Self-employed retirement plans Raleigh, NC. The freedom of running your own company in Raleigh, NC is one of the best aspects of working for yourself. Even so, this flexibility sometimes brings with potential drawbacks, especially regarding planning for retirement, as you don't have access to employer-sponsored retirement plans. Only 13% of self-employed individuals have a workplace retirement plan, but many should consider understanding their retirement options. In addition to enjoying a more comfortable retirement, partnering with a financial advisor in Raleigh, NC to create your self-employed retirement plan offers significant tax advantages that allow you to move your business forward.
Few Raleigh, NC investment consulting and retirement planning firms truly grasp the challenges faced by entrepreneurs quite like Correct Capital. Our company’s founder grew up with a father who was a small business owner himself (check out our story here), and our firm take pride in supporting entrepreneurs with their retirement planning needs. We know that your professional and personal aspirations extend well past simple financial figures, and we strive to create customized solutions aligned with your vision. Keep reading to learn more about your self-employed retirement plan options in Raleigh, NC, or give us a call at Correct Capital at 877-930-401k or contact us online to consult with a self-employed financial advisor in Raleigh, NC today.
Why Raleigh, NC Self-Employed Individuals Should Have a Retirement Plan
Retirement plans for self-employed individuals help prepare you for the future, they also deliver immediate benefits today. From flexible contributions to substantial tax savings, consulting a financial advisor in Raleigh, NC helps you create your retirement plan to fit your specific needs.
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 option to adjust how much you save:
- Customizable Contributions: Save extra during profitable years and reduce savings when your earnings dip, so your plan fits your financial situation.
- Roth Options: Opting for a Roth Solo 401(k) lets you settle taxes at the time of contribution, allowing you to withdraw tax-free later—a smart decision if you expect your tax rate is likely to rise in the future.
Save Money on Taxes
Plans designed for the self-employed provide significant tax benefits:
- Tax-Deductible Contributions: Contributions to a Solo 401(k) lower your taxable income, allowing you to keep more of your income.
- Tax-Deferred Growth: Investments grow tax-free until withdrawal, giving your money more time to grow.
- State-Specific Incentives: Depending on where you live, you might access additional tax breaks as a business owner. These state-level incentives make these plans even more beneficial.
- Retirement Savings Contributions Credit (Saver’s Credit): Qualified participants can claim a tax credit of up to 50% of the first $2,000 contributed a retirement plan, cutting down your tax bill even more.
Protect Your Savings With Smart Investments
Building a secure retirement isn’t only about how much you save—it’s also linked to the way you invest:
- Diversified Portfolios: Distributing your investments across a mix of stocks, bonds, and alternatives can help minimize exposure to risk while still growing your nest egg.
- Emergency Back-Up: Supplementing your retirement savings with a dedicated business safety net helps you avoid tapping into your nest egg during financial hardships and facing tax penalties.
Plan for the Future of Your Raleigh, NC Business
Retirement planning can assist you prepare for what’s next with your Raleigh, NC business:
- Selling Your Business: If you’re planning to sell, plans like SEP IRAs or Solo 401(k)s remain yours and are not part of the sale. These savings can provide the reliable income you’ll need in the future. It’s important to note that while the sale of a business usually creates a capital gain, deposits into these plans are capped at annual limits (e.g., a maximum of $7,000 for IRAs or as much as $70,000 for Solo 401(k)s, including catch-up contributions, according to plan rules).
- Minimizing Taxes: Making the most of retirement savings can reduce the taxes you might face when you pass on your business.
- Succession Planning: If you’re passing the business on, your retirement savings provide financial security as you make this shift. You can also work with a financial advisor who specializes in succession planning and retirement accounts to minimize tax burdens on the sale.
With the proper savings strategy, you gain control over your financial future, reduce your tax burden, and establish a strong framework for both your retirement and your business goals.
Why Start a Self-Employed Retirement Plan in Raleigh, NC Now?
There’s no denying that time is one of the most important factors for building your retirement fund. Starting early not only allows you to build a bigger financial cushion but also minimizes the stress of saving aggressively in the future. This is why it makes sense to begin today:
The Cost of Waiting
Waiting to start your retirement fund may cause a major impact on the amount you’ll have when you retire. The primary reason is compound interest—the powerful process where your investments earn returns, and those returns, in turn, accumulate even more returns. The greater time span your money has to grow, the more significant the impact of this compounding process.
Example: Alex and Taylor are both entrepreneurs. 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 bridge the gap.
By age 65, assuming 7% annual return:
- Alex invests $180,000 and accumulates $691,184.39*.
- Taylor contributes $195,500 but achieves a total of only $474,367.78*.
How Early Contributions Grow
Even modest contributions invested steadily can lead to impressive 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: Saving the same $200 per month would result in only $235,412.97* by age 65—a gap of over $260,000, simply due to a 10-year delay.
Starting sooner, the less you need to save each year to meet your retirement goals.
*The numbers shown in this scenario are based on estimates generated with 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. These examples are intended as illustrative examples and cannot predict actual future outcomes. Outcomes may change based on factors such as market conditions, fees, and your unique situation. Always consult a financial advisor for custom recommendations.
Take Control of Your Financial Future
For self-employed individuals in Raleigh, NC, it is often the case that you put more emphasis on reinvesting in your business rather than saving for retirement. Even so, initiating a plan now allows you to:
- Leverage tax-deferred growth or tax-free withdrawals in the future.
- Take advantage of contribution flexibility that change with your earnings.
- Create a long-term safety measure that offers peace of mind, no matter how your business changes.
The sooner you start, the less you’ll be required to worry about playing catch-up later in life. Saving for retirement now means taking control of your financial future and giving yourself the ability to concentrate on your dreams—both for your retirement years and your Raleigh, NC business.
Types of Self-Employed Retirement Plans
There are several retirement savings options open for self-employed individuals in Raleigh, NC, each offering its own pros and cons. A financial advisor can help you understand the advantages and disadvantages of each option and identify the one best suited for your unique situation. Generally speaking, your self-employed retirement plan options in Raleigh, NC include:
Traditional or Roth IRA
Plan Overview: Individual Retirement Accounts (IRAs), as explained here, represent financial tools for retirement that include key tax perks. In a standard IRA, the money you contribute is often tax-deductible, and returns grow free of current taxes, but withdrawals in retirement are taxed as income. In contrast, with Roth IRAs, you contribute are made with after-tax income, but eligible distributions during retirement, including earnings, are tax-free. In both accounts, withdrawals are penalty-free if you are at least 59½.
Eligibility: Unlike 401(k)s, which are employer-sponsored, traditional and Roth IRAs are accessible for individuals with a source of income.
Contribution Limits: For 2025, annual contribution limits for IRAs remain $7,000, or $8,000 if you're 50 or older.
Simplified Employee Pension Plan (SEP IRA)
Plan Overview: The Simplified Employee Pension IRA is a retirement plan that enables self-employed individuals to contribute a percentage of their net earnings. Contributions are strictly employer contributions an employer, so, as a independent business owner, you (the employee) are limited to contributions from the employer role beyond the 25% you (the employer) have designated. 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 fixed dollar figure or a percentage of wages to employee accounts. A SEP IRA may be ideal for entrepreneurs facing periods of inconsistent earnings. 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 retirement distributions are taxable.
Eligibility: Both employers and self-employed individuals can set up a SEP.
Contribution Limits: Contribution limits for employees in a SEP IRA are the lesser of:
- 25% of compensation, or
- $70,000 for 2025
As a self-employed person, the allowable contribution is based on a special calculation.
Solo 401(k)
Plan Overview: The Solo 401(k), commonly known as an Individual 401(k) or one-participant 401(k) plan, is a retirement savings plan intended for businesses with no employees or when the sole employee is your spouse. Solo 401(k)s are similar to traditional employer-managed 401(k) plans, and enable contributions as both the employer and the employee with pre-tax money. This offers more savings versus 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 share the same tax benefits as their IRA contribution counterparts.
Eligibility: Only business owners and their spouses may establish and contribute to a solo 401(k).
Contribution Limits: If you are self-employed with a solo 401(k) plan, you can make two types of contributions:
- Employee contributions of up to 100% of your self-employed earnings, capped at 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.
- Employer profit-sharing contributions (as an employer) cannot exceed 25% of your net self-employment income, which is your net profit minus half of your self-employment tax and the deferrals you made.
The total contribution cannot exceed $70,000, or $77,500 if you're over age 50 (for 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 fixed, predetermined benefit to self-employed individuals upon retirement. As opposed to defined contribution plans, investment returns don’t affect the payout, but allows self-employed individuals to know what they'll receive in retirement. This option is ideal for wealthier professionals who are focused on saving a significant sum for retirement and are prepared to contribute larger deposits. Contributions grow tax-free until withdrawal, and withdrawals are taxable as income during retirement.
Eligibility: Entrepreneurs operating a solo business or with less than five employees may establish an individual defined benefit plan, but it's most commonly suggested for people above age 50 who earn at least $250,000 a year. In most cases, good candidates for defined benefit plans are:
- Entrepreneurs who desire to contribute more than $70,000 (or $77,500 for individuals 50 and older)
- Companies already contributing 3-4% with plans to contribute more
- Organizations with proven consistent profit patterns
- Business leaders over age 40 who aim to quickly build retirement savings or increase their retirement contributions rapidly
Contribution Limits: The maximum allowable contribution is calculated by an actuary based on your earnings, age, and retirement objectives. Contribution limits are adjusted each year.
The Importance of a Financial Advisor in Raleigh, NC for Your Self-Employed Retirement Plan
Partnering with an advisor in Raleigh, NC 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 design a personalized approach that aligns with your goals. A financial advisor in Raleigh, NC will review your finances, identify your risk preferences, and help you in making informed decisions about saving and investing for retirement. Included in what we do for you involves:
- Assist in selecting a plan that aligns with your objectives and circumstances
- Customize the plan to your needs even further
- Create a written plan in accordance with IRS guidelines
- Arrange a trust plan for assets
- Help you understand the plan's terms
- Monitor and adjust your plan when necessary
- Offer continued financial education and guidance to help you navigate your retirement journey
- Increase your retirement income by maximizing your social security benefits
Self-Employed Retirement Plans in Raleigh, NC: Correct Capital's Process
Entrepreneurs in Raleigh, NC who don’t have the time or expertise to manage their retirement savings strategy independently may end up overwhelmed when faced with their choices. With Correct Capital, our Raleigh, NC financial advisors manage the lion's share of your retirement strategy for you, to help make meeting your financial objectives as easy as possible for you. We can help you get set up your self-employed retirement plan in just four steps:
- Schedule a Call: It only takes 20 minutes, a member of our advisor team will assess if we're suited to your needs for you and your business. This short conversation lets us understand what you're looking for with no obligation or significant effort on your part.
- Gather Information: Once we mutually decide to continue, we'll ask for information, including how many employees you have (if any), your current financial situation, and your future objectives. This allows us to put together a personalized strategy that aligns with your goals.
- Review Your Plan: Once we've developed a plan based on the information you provide, we'll meet with you and go over your plan thoroughly to help you fully grasp it and explain its fit to your circumstances.
- 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 track your progress to keep it tailored to your evolving circumstances.
Our Raleigh, NC financial advisors and retirement plan consultants serve as fiduciary advisors, which means they are legally and ethically bound to prioritize your needs above all else.
Other financial advisory services we offer in Raleigh, NC 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 Raleigh, NC
To you, your business is more than "just a business", and your Raleigh, NC financial advisors should provide more than basic financial recommendations. Correct Capital takes pride in, we make it a priority to understand our clients and their businesses to provide customized self-employed retirement plans. To every client in Raleigh, NC, we provide our I.O.U. promise: all of the advice you get from us will be independent, objective, and unbiased. To take the first step on your self-employment retirement plan, call Correct Capital today at 877-930-401k or contact us online.
