Self-employed retirement plans Rancho Cucamonga, CA. The freedom of owning your own business in Rancho Cucamonga, CA is one of the best aspects of working for yourself. However, this flexibility often comes with a lack of security, notably regarding planning for retirement, because you don't have the benefit of a workplace retirement plan. Only 13% of self-employed individuals have a workplace retirement plan, yet countless should consider exploring their options. In addition to achieving a more comfortable retirement, seeking advice from a financial advisor in Rancho Cucamonga, CA to set up your self-employed retirement plan offers significant tax advantages that enable you to move your business forward.
Few Rancho Cucamonga, 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 (read more of our story here), and Correct Capital take pride in supporting entrepreneurs with their retirement planning needs. We recognize that your business and retirement aspirations extend well past simple financial figures, and we are dedicated to offer personalized solutions to meet your unique goals. Keep reading to learn more about your self-employed retirement plan options in Rancho Cucamonga, CA, or give us a call at Correct Capital at 877-930-401k or contact us online to consult with a entrepreneurial financial advisor in Rancho Cucamonga, CA today.
Why Rancho Cucamonga, 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 considerable tax savings, working with a financial advisor in Rancho Cucamonga, CA helps you create your retirement plan to fit your individual circumstances.
Flexibility That Fits Your Income
When your earnings vary over time, a plan like a SEP IRA or Solo 401(k) provides the option to adjust how much you save:
- Customizable Contributions: Set aside more during high-income years and scale back when your earnings dip, ensuring your plan works with your financial situation.
- Roth Options: Opting for a Roth Solo 401(k) lets you pay taxes on contributions now, enabling you to withdraw your savings tax-free down the road—a wise move if you anticipate your tax rate will increase in the future.
Save Money on Taxes
Retirement plans for self-employed individuals deliver valuable tax benefits:
- Tax-Deductible Contributions: Contributions to a Solo 401(k) shrink your tax liability, helping you keep more of your income.
- Tax-Deferred Growth: Investments grow tax-free until withdrawal, which gives your money more time to compound.
- State-Specific Incentives: In some states, you may be eligible for extra deductions as a self-employed individual. These state-level incentives help make these plans even more beneficial.
- Retirement Savings Contributions Credit (Saver’s Credit): Those who meet the requirements can apply for 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 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 alternatives is a smart way to reduce risk while still growing your nest egg.
- Emergency Back-Up: Supplementing your retirement savings with a financial buffer for your business helps you avoid tapping into your nest egg during tough times and facing tax penalties.
Plan for the Future of Your Rancho Cucamonga, CA Business
Retirement planning also helps you prepare for what’s next with your Rancho Cucamonga, CA business:
- Selling Your Business: For those considering a sale, accounts such as SEP IRAs or Solo 401(k)s remain yours and don’t transfer with the business. These savings ensure 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, contributions to retirement accounts are subject to yearly maximums (e.g., a maximum of $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’ll owe when you sell your business.
- Succession Planning: If you’re passing the business on, your nest egg provide a stable foundation through the transition. You might want to work with a financial advisor with expertise in succession and retirement planning to minimize tax burdens associated with the transaction.
With the right retirement plan, you can take control of your financial future, lower your tax bill, and create a solid base for both your retirement and your business goals.
Why Start a Self-Employed Retirement Plan in Rancho Cucamonga, CA Now?
There’s no denying that time is one of the most crucial resources in retirement planning. Starting early not only lets you accumulate a bigger financial cushion but also minimizes the financial burden of saving aggressively in the future. The following are reasons why it is beneficial to start now:
The Cost of Waiting
Delaying your retirement savings may cause a substantial impact on the savings you’ll have when you reach retirement age. The primary reason is compound interest—the concept where your investments earn returns, and those returns, then, earn even more returns. The greater time span your money has to grow, the more significant the effect of compounding.
Example: Taylor and Alex are both self-employed professionals. They each aim to save $500,000 for retirement by age 65:
- Alex begins contributing $5,000 annually at age 30.
- Taylor waits until age 40 but saves $7,500 annually to make up for lost time.
By age 65, using a projected 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
Even modest contributions invested steadily may result in significant growth. Consider this example showing the impact of compounding:
- Starting at age 25: Putting aside $200 per month in a retirement plan with an expected yearly growth rate 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.
Starting sooner, the lower your annual savings needs each year to reach your retirement goals.
*These calculations are estimates calculated using NerdWallet’s Compound Interest Calculator, assuming a 7% annual return. Annual deposits were multiplied by the number of years to estimate total contributions. These examples are meant to provide general guidance and are not a promise of future results. Outcomes may change depending on variables including market conditions, fees, and personal factors. Be sure to speak with a financial advisor for personalized advice.
Take Control of Your Financial Future
As a self-employed person in Rancho Cucamonga, CA, it is often the case that you put more emphasis on reinvesting in your business over saving for retirement. However, starting a plan now enables you to:
- Take advantage of tax-deferred growth or tax-free withdrawals down the road.
- Benefit from adjustable savings that adapt to your earnings.
- Build a financial cushion that ensures stability, 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. Taking steps toward your retirement goals today means gaining control over your financial future and creating for yourself the freedom to focus on your goals—both for your golden years and your Rancho Cucamonga, CA business.
Types of Self-Employed Retirement Plans
A variety of retirement savings options available for entrepreneurs in Rancho Cucamonga, CA, each with its own pros and cons. A financial advisor will guide you to learn about the advantages and disadvantages of each plan and choose the one most suitable for your circumstances. In most cases, your self-employed retirement plan options in Rancho Cucamonga, CA are:
Traditional or Roth IRA
Plan Overview: Individual Retirement Accounts (IRAs), as explained here, represent long-term savings plans that provide distinct tax benefits. In a standard IRA, contributions are typically tax-deductible, and returns grow free of current taxes, but retirement distributions are taxable. In contrast, Roth IRAs require contributions from post-tax earnings, but retirement withdrawals that qualify, including earnings, are not taxed. In both cases, withdrawals don’t incur penalties as long as you are at least 59½.
Eligibility: Unlike plans linked to your job, both traditional and Roth IRAs are accessible for individuals with an earned income.
Contribution Limits: For 2025, annual contribution limits for IRAs are capped at $7,000, or $8,000 if you qualify for catch-up contributions.
Simplified Employee Pension Plan (SEP IRA)
Plan Overview: SEP IRAs serves as a retirement savings option that permits those who are self-employed to set aside a portion of their self-employment income. Contributions must come from an employer, so, as a independent business owner, you (the employee) cannot make additional contributions above the 25% you (the employer) allocate. If you have employees, you are obligated to 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. SEP IRAs may be ideal for companies with fluctuating revenue streams. Compared to other retirement options, SEP IRAs lack costly startup or administrative fees.
SEPs operate like traditional IRAs, where contributions are made with pre-tax money and withdrawals are taxed as income.
Eligibility: Both employers and self-employed individuals can open a SEP.
Contribution Limits: Contribution limits for employees in a SEP IRA must not exceed:
- 25% of compensation, or
- $70,000 for 2025
For self-employed individuals, the amount eligible to be contributed is based on a special calculation.
Solo 401(k)
Plan Overview: A Solo 401(k) plan, sometimes referred to 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 when the sole employee is your spouse. These plans function similarly to standard 401(k) plans, and enable contributions as both an employer and an employee with pre-tax money. This allows for more savings compared to SEPs or IRAs; however, the extra savings options can be balanced by more limited investment options. Using a solo 401(k), 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: 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-employment income, capped at the annual contribution limit. For 2025, the limits will be $23,500, or $31,000 if you're over 50, or $34,750 if you attain age 60-63 in 2025.
- Profit-sharing contributions (as an employer) cannot exceed 25% of your adjusted self-employment income, which is your net profit minus half of your self-employment tax and the employee contributions 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: Defined benefit plans offers a structured retirement solution that provides a fixed, predetermined benefit to entrepreneurs upon retirement. Unlike defined contribution plans mentioned above, a defined benefit plan doesn't fluctuate based on investment returns, but allows self-employed individuals to know the precise amount they'll get in retirement. This option is ideal for wealthier entrepreneurs who are focused on saving a large amount for retirement and are willing to make sizeable contributions. Contributions offer tax-deferred growth, and withdrawals are taxed as income during retirement.
Eligibility: Entrepreneurs managing a one-person company or with less than five employees can open an individual defined benefit plan, but it's most commonly recommended for individuals aged 50+ who earn at least $250,000 a year. Generally, good candidates for defined benefit plans tend to be:
- Entrepreneurs who aim to deposit more than $70,000 (or $77,500 for individuals 50 and older)
- Companies already contributing 3-4% with plans to contribute more
- Companies 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 using your financial situation, age, and savings targets. Limits on contributions are adjusted each year.
The Importance of a Financial Advisor in Rancho Cucamonga, CA for Your Self-Employed Retirement Plan
Partnering with an advisor in Rancho Cucamonga, CA experienced with retirement plans for the self-employed is an important asset for entrepreneurs. They have the expertise to help understand the intricacies of saving for retirement and craft a tailored strategy that reflects your aspirations. Your advisor in Rancho Cucamonga, CA will review your finances, 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 includes:
- Assist in selecting a plan that aligns with your objectives and circumstances
- Customize the plan to your specific situation even further
- Adopt a written plan in accordance with IRS guidelines
- Organize a trust plan to manage your assets
- Make sure you understand the plan's terms
- Track and fine-tune your plan to keep it aligned with your goals
- Provide ongoing education and advice 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
Self-employed individuals in Rancho Cucamonga, CA who don’t have the time or expertise to manage their retirement savings strategy themselves often feel overwhelmed by their available plans. At Correct Capital, our Rancho Cucamonga, CA financial advisors handle the bulk of your retirement strategy for you, and strive to ensure meeting your future savings targets as easy 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: In just 20 minutes, 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 significant effort on your part.
- Gather Information: Should we agree to proceed, we'll request information, including your employee count, your present financial standing, and your long-term savings targets. This helps us create a custom plan designed just for you.
- Review Your Plan: After we put together a plan from the information you provide, we'll schedule a meeting and review your plan in detail to ensure you understand it and show how it aligns with your goals.
- Implementation and Monitoring: When we finalize on your plan, we'll put everything in place so you can start saving. As time goes on, we'll check in and track your progress to make sure it remains aligned with your goals.
Our Rancho Cucamonga, CA financial advisors and retirement plan consultants act as fiduciary advisors, which means they are committed by law and ethics to prioritize your needs above all else.
Other financial advisory services we offer in Rancho Cucamonga, CA include:
- Investment Management
- 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
You don't see your business as "just a business", and your Rancho Cucamonga, CA financial advisors should provide more than just good financial guidance. At Correct Capital, we take the time to get to know our clients and their businesses to create tailored self-employed retirement plans. To every client in Rancho Cucamonga, CA, 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, contact Correct Capital now at 877-930-401k or contact us online.
