Self-employed retirement plans Rancho Cucamonga, CA. The independence of running your own company in Rancho Cucamonga, CA is one of the greatest advantages of working for yourself. However, this flexibility often comes with certain challenges, notably when it comes to planning for retirement, because you don't have the benefit of employer-sponsored retirement plans. Only 13% of self-employed individuals have a workplace retirement plan, but many should consider looking into other possibilities. In addition to achieving a more comfortable retirement, partnering with a financial advisor in Rancho Cucamonga, CA to create your self-employed retirement plan offers significant tax advantages that help your business to grow and succeed.
Few Rancho Cucamonga, CA wealth management and retirement planning firms understand the needs of self-employed individuals better than Correct Capital. Our founder's father was a small business owner himself (learn more about our story here), and we have a rich history of helping businesses with their retirement planning needs. We understand that your professional and personal aspirations aren’t limited to just monetary concerns, and we strive to offer tailored solutions to meet your unique goals. Keep reading to learn more about your self-employed retirement plan options in Rancho Cucamonga, CA, or call Correct Capital at 877-930-401k or contact us online to consult with a entrepreneurial financial advisor in Rancho Cucamonga, CA today.
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Why Rancho Cucamonga, CA Self-Employed Individuals Should Have a Retirement Plan
Retirement plans for self-employed individuals help prepare you for the future, they also deliver tangible benefits today. From flexible contributions to significant tax savings, consulting a financial advisor in Rancho Cucamonga, CA enables you to customize your retirement plan to suit your individual circumstances.
Flexibility That Fits Your Income
When your earnings vary over time, a plan like a SEP IRA or Solo 401(k) gives you the freedom to adjust how much you save:
- Customizable Contributions: Set aside more during profitable years and reduce savings when income is lower, so that your plan aligns with your cash flow.
- Roth Options: Opting for a Roth Solo 401(k) lets you pay taxes on contributions now, enabling you to withdraw tax-free later—a smart decision if you expect your tax rate will increase in the future.
Save Money on Taxes
Retirement plans for self-employed individuals offer powerful tax benefits:
- Tax-Deductible Contributions: Contributions to a SEP IRA lower your taxable income, allowing you to keep more of your income.
- 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: Based on your location, you could qualify for state-specific credits as a self-employed individual. These state-level incentives help make these plans even more valuable.
- Retirement Savings Contributions Credit (Saver’s Credit): Eligible individuals 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 requires more than how much you save—it’s also linked to the way you invest:
- Diversified Portfolios: Spreading your investments across a mix of asset classes like stocks and bonds is a smart way to mitigate financial 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 dipping into savings during challenging periods and facing tax penalties.
Plan for the Future of Your Rancho Cucamonga, CA Business
A thoughtful retirement strategy enables you to plan ahead for what’s next with your Rancho Cucamonga, CA business:
- Selling Your Business: If you’re planning to sell, accounts such as SEP IRAs or Solo 401(k)s remain yours and won’t be included in the sale. These plans ensure the financial stability you’ll need later on. It’s important to note that while the sale of a business usually creates a capital gain, contributions to retirement accounts are subject to yearly maximums (e.g., as much as $7,000 for IRAs or as much as $70,000 for Solo 401(k)s, with catch-up contributions, depending on plan details).
- Minimizing Taxes: Making the most of retirement savings minimizes the taxes you might face when you pass on your business.
- Succession Planning: If you’re passing the business on, your retirement savings offer financial security during the change. You may also seek advice from a financial advisor with expertise in succession and retirement planning to minimize tax burdens on the sale.
With the best-fit retirement strategy, you manage your financial future, lower your tax bill, and establish a secure foundation for both your retirement and your business goals.
Why Start a Self-Employed Retirement Plan in Rancho Cucamonga, CA Now?
Time remains one of the most important factors for building your retirement fund. Getting a head start not only lets you accumulate a bigger financial cushion but also reduces the pressure of catching up later in life. This is why it pays to take action now:
The Cost of Waiting
Putting off saving for retirement can have a substantial impact on the total you’ll have when you stop working. The main reason is compound interest—the concept where your investments generate earnings, and those returns, subsequently, 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 entrepreneurs. 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 catch up.
By age 65, with an assumption of 7% annual return:
- Alex invests $180,000 and achieves a total of $691,184.39*.
- Taylor invests $195,500 but accumulates just $474,367.78*.
How Early Contributions Grow
Regular, modest investments contributed over time can lead to substantial growth. Here’s a simple scenario showing the impact of consistent growth:
- Starting at age 25: Putting aside $200 per month in a retirement plan with an expected yearly growth rate of 7%, you’ll end up with $497,303.29* by age 65.
- Starting at age 35: Saving 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.
Starting sooner, the less you need to save 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. Annual deposits were multiplied by the number of years to estimate total contributions. The scenarios provided are meant to provide general guidance and are not a promise of future results. Outcomes may change due to variables including market conditions, fees, and individual circumstances. Always consult a financial advisor for custom recommendations.
Take Control of Your Financial Future
For self-employed individuals in Rancho Cucamonga, CA, it can be tempting to put more emphasis on reinvesting in your business rather than saving for retirement. That said, initiating a plan now gives you the chance to:
- Benefit from tax-deferred growth or penalty-free withdrawals in the future.
- Benefit from adjustable savings that align with your cash flow.
- Establish a financial cushion that ensures stability, no matter how your business evolves.
Getting started now, the less you’ll need to worry about catching up later in life. Saving for retirement now means gaining control over your financial future and allowing yourself the ability to focus on your objectives—both for your retirement years and your Rancho Cucamonga, CA business.
Types of Self-Employed Retirement Plans
A variety of retirement savings options open for those working for themselves in Rancho Cucamonga, CA, each with its own advantages and considerations. A financial advisor can help you learn about the advantages and disadvantages of each plan and determine the one ideal for your needs. In most cases, your self-employed retirement plan options in Rancho Cucamonga, CA consist of:
Traditional or Roth IRA
Plan Overview: Individual Retirement Accounts (IRAs), as explained here, represent financial tools for retirement that include distinct tax benefits. 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, Roth IRAs require contributions from post-tax earnings, but retirement withdrawals that qualify, including earnings, are not taxed. In both accounts, withdrawals are penalty-free provided you are at least 59½.
Eligibility: Unlike 401(k)s, which are employer-sponsored, traditional and Roth IRAs are open to those 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: SEP IRAs offers a way to save for retirement that enables entrepreneurs to contribute a percentage of their net earnings. Contributions are strictly employer contributions 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, 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. This type of plan may be ideal for businesses that experience periods of inconsistent earnings. Unlike other plans, SEP IRAs lack costly startup or administrative fees.
SEPs operate like standard IRAs, where contributions are made with pre-tax money and withdrawals are taxed as income.
Eligibility: Employers of any type, including self-employed individuals can open 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: Solo 401(k)s, sometimes referred to as an Individual 401(k) or one-participant 401(k) plan, is a retirement savings plan designed for companies that have no employees or where the only employee is a spouse. These plans function similarly to traditional employer-managed 401(k) plans, and allow you to contribute as both the employer and the employee with pre-tax money. This provides more savings versus SEPs or IRAs; however, the additional opportunities may be offset by more limited investment options. In a solo 401(k) plan, you can make either traditional or Roth deferrals, which share the same tax benefits as their IRA contribution counterparts.
Eligibility: Solo 401(k)s are available solely to 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 have the ability to make two types of contributions:
- Deferrals as an employee of up to 100% of your earned income from self-employment, up to the annual contribution limit. The contribution limits for 2025 include $23,500, or $31,000 if you're over 50, or $34,750 if you attain age 60-63 in 2025.
- Employer profit-sharing contributions (as an employer) are limited to 25% of your adjusted self-employment income, which is defined as net profit minus half of your self-employment tax and the deferrals you made.
Total contributions are capped at $70,000, or $77,500 for individuals aged 50+ (in 2025), $81,250 if you attain age 60-63 in 2025.
Individual Defined Benefit Plan
Plan Overview: A defined benefit plan offers a structured retirement solution that guarantees a fixed, predetermined benefit to entrepreneurs upon retirement. As opposed to defined contribution plans, this plan is not influenced by market performance, but lets individuals clearly understand exactly how much they'll receive in retirement. This option is ideal for higher-income professionals who are focused on saving a significant sum for retirement and can commit to making larger deposits. Contributions grow tax-free until withdrawal, and withdrawals incur taxes as income during retirement.
Eligibility: Any self-employed individual running an owner-only business or with a small staff of under five may establish an individual defined benefit plan, but it's generally recommended 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 aim to deposit more than $70,000 (or $77,500 for those aged 50+)
- Organizations that already put in 3-4% with plans to contribute more
- Businesses showing consistent profit patterns
- Partners or owners over age 40 who wish to accelerate savings or accelerate the retirement savings
Contribution Limits: The cap on contributions must be determined by an actuary based on your earnings, age, and retirement objectives. Limits on contributions are updated yearly.
The Importance of a Financial Advisor in Rancho Cucamonga, CA for Your Self-Employed Retirement Plan
Partnering with an advisor in Rancho Cucamonga, CA focused on self-employed retirement strategies serves as an essential partner for entrepreneurs. They bring the skills needed to understand the intricacies of saving for retirement and craft a tailored strategy that reflects your aspirations. Your advisor in Rancho Cucamonga, CA will evaluate your financial situation, identify your risk preferences, and assist you in choosing wisely about saving and investing for retirement. Part of what we do for you features:
- Assist in selecting a plan that aligns with your objectives and circumstances
- Tailor the plan to your needs even further
- Formalize a plan in writing that complies with IRS regulations
- Organize a trust plan to manage your assets
- Help you understand the plan's terms
- Review and modify your plan when necessary
- Offer continued financial education and guidance to help you navigate your retirement journey
- Maximize what you receive in retirement by maximizing your social security benefits
Self-Employed Retirement Plans in Rancho Cucamonga, CA: Correct Capital's Process
Rancho Cucamonga, CA business owners who don’t have the time or expertise to manage their retirement savings strategy themselves can become overwhelmed as they look at their available plans. With Correct Capital, our Rancho Cucamonga, CA financial advisors handle the bulk of your retirement strategy for you, working to make meeting your future savings targets as hassle-free as possible for you. We can help you get set up your self-employed retirement plan in four simple steps:
- 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 initial call helps us understand what you're looking for with no obligation or extensive time commitment 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 existing financial picture, and your retirement goals. This helps us create a tailored approach that aligns with your goals.
- Review Your Plan: When we finalize a plan using the information you provide, we'll schedule a meeting and review your plan step by step 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 implement the necessary steps so you can initiate your savings journey. Over the course of our partnership, we'll meet with you and track your progress to make sure it remains aligned with your goals.
Our Rancho Cucamonga, CA financial advisors and retirement plan consultants are fiduciary advisors, meaning they are committed by law and ethics to act in your best interest.
Other financial advisory services we offer in Rancho Cucamonga, CA include:
- 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 Rancho Cucamonga, CA
Your business isn't "just a business" to you, and your Rancho Cucamonga, CA financial advisors must deliver more than simply sound financial advice. Correct Capital takes pride in, we focus on building a relationship with our clients and their businesses to deliver tailored self-employed retirement plans. To every client in Rancho Cucamonga, CA, we provide our I.O.U. promise: everything we recommend will be independent, objective, and unbiased. To take the first step on your self-employment retirement plan, contact Correct Capital now at 877-930-401k or contact us online.
