Self-employed retirement plans Richmond, VA. The flexibility of being your own boss in Richmond, VA is one of the best aspects of having a self-directed career. However, this independence often comes with potential drawbacks, particularly in terms of planning for retirement, since you don't have the benefit of retirement programs through an employer. Only 13% of self-employed individuals have a workplace retirement plan, yet countless could benefit from looking into other possibilities. In addition to having a more comfortable retirement, partnering with a financial advisor in Richmond, VA to establish your self-employed retirement plan delivers significant tax advantages that enable you to move your business forward.
Few Richmond, VA investment consulting and retirement planning firms truly grasp the challenges faced by small business owners better than Correct Capital. Our company’s founder grew up with a father who was a small business owner himself (read more of our story here), and Correct Capital take pride in assisting business owners in their retirement planning needs. We know that your professional and personal aspirations aren’t limited to just monetary concerns, and we are dedicated to provide customized solutions to meet your unique goals. Continue exploring to find out about your self-employed retirement plan options in Richmond, VA, or call Correct Capital at 877-930-401k or contact us online to consult with a entrepreneurial financial advisor in Richmond, VA today.
Why Richmond, VA 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 immediate benefits today. Offering flexibility in contributions to substantial tax savings, working with a financial advisor in Richmond, VA allows you to create your retirement plan to align with 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 freedom to adjust how much you save:
- Customizable Contributions: Contribute more during high-income years and reduce savings when income is lower, ensuring your plan works with your current income.
- Roth Options: Choosing a Roth Solo 401(k) lets you pay taxes on contributions now, allowing you to withdraw without tax penalties in the future—a wise move if you expect your tax rate will increase in the future.
Save Money on Taxes
Plans designed for the self-employed provide valuable tax benefits:
- Tax-Deductible Contributions: Contributions to a SIMPLE IRA shrink your tax liability, so you can keep more of your hard-earned money.
- Tax-Deferred Growth: You won't pay taxes on investment growth until you withdraw it, which gives your money more time to accumulate.
- State-Specific Incentives: Based on your location, you may be eligible for extra deductions as a sole proprietor. These local incentives can make these plans even more advantageous.
- Retirement Savings Contributions Credit (Saver’s Credit): Qualified participants 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
Planning for a safe retirement requires more than how much you save—it’s also about how you invest:
- Diversified Portfolios: Distributing your investments across different stocks, bonds, and alternatives can help reduce risk while still growing 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 tough times and incurring penalties.
Plan for the Future of Your Richmond, VA Business
Retirement planning also helps you plan ahead for what’s next with your Richmond, VA 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 accounts offer the reliable income you’ll need later on. Keep in mind that while the sale of a business usually creates a capital gain, deposits into these plans are subject to yearly maximums (e.g., up to $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 minimizes the taxes you might face when you transfer your business.
- Succession Planning: For those winding down or handing over their business, your nest egg ensure the funds you need as you make this shift. You might want to seek advice from a financial advisor experienced in both succession and retirement strategies to reduce taxes on the sale.
With the proper savings strategy, you gain control over your financial future, lower your tax bill, and establish a solid base for both your retirement and your business goals.
Why Start a Self-Employed Retirement Plan in Richmond, VA Now?
There’s no denying that time is one of the most crucial assets in retirement planning. Beginning sooner rather than later not only lets you accumulate a larger nest egg but also lowers the financial burden of catching up later in life. The following are reasons why it is beneficial to start now:
The Cost of Waiting
Delaying your retirement savings could lead to a major impact on the savings you’ll have when you stop working. The primary reason is compound interest—the powerful process where your investments generate earnings, and those returns, then, earn even more returns. The more time your money has to grow, the more significant the benefit of compounding.
Example: Alex and Taylor are both self-employed professionals. Their shared goal is to save $500,000 for retirement by age 65:
- Alex begins contributing $5,000 annually at age 30.
- Taylor postpones starting contributions to 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 accumulates $691,184.39*.
- Taylor puts in $195,500 but accumulates just $474,367.78*.
How Early Contributions Grow
Even modest contributions invested steadily can lead to substantial growth. Consider this example showing the effect of compounding:
- Starting at age 25: If you invest $200 per month in a retirement plan with an projected return of 7%, you’ll grow to approximately $497,303.29* by age 65.
- Starting at age 35: Investing the same $200 per month yields only $235,412.97* by age 65—a gap of over $260,000, just from a 10-year delay.
Starting sooner, the lower your annual savings needs each year to meet your retirement goals.
*These calculations are based on estimates generated with 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. This information is intended as illustrative examples and cannot predict actual future outcomes. Actual results may vary depending on elements like market conditions, fees, and your unique situation. We recommend consulting a financial advisor for custom recommendations.
Take Control of Your Financial Future
As a self-employed person in Richmond, VA, it can be tempting to focus more on reinvesting in your business instead of saving for retirement. Even so, initiating a plan now gives you the chance to:
- Benefit from growth that is tax-deferred or tax-free withdrawals later on.
- Take advantage of flexible contributions that adapt to your earnings.
- Build a financial cushion that provides security, no matter how your business changes.
Starting early, the less you’ll need to worry about making up for lost time later in life. Building your retirement savings today means managing your financial future and creating for yourself the freedom to concentrate on your goals—both for your future retirement and your Richmond, VA business.
Types of Self-Employed Retirement Plans
Multiple retirement savings options available for self-employed individuals in Richmond, VA, each with its own pros and cons. A financial advisor is available to help you understand the benefits and drawbacks of each plan and identify the one ideal for your unique situation. Typically, your self-employed retirement plan options in Richmond, VA consist of:
Traditional or Roth IRA
Plan Overview: IRAs, or Individual Retirement Accounts, are retirement savings vehicles that include distinct tax benefits. In a traditional IRA, the money you contribute is often tax-deductible, and investment earnings grow tax-deferred, but retirement distributions are subject to income tax. In contrast, Roth IRA contributions are made with after-tax income, but eligible distributions during retirement, including earnings, are exempt from taxes. In both cases, withdrawals come without penalties as long as you are at least 59½.
Eligibility: Unlike 401(k)s, which are employer-sponsored, both traditional and Roth IRAs are open to those with taxable earnings.
Contribution Limits: For 2025, annual contribution limits for IRAs are set at $7,000, or $8,000 if you're 50 or older.
Simplified Employee Pension Plan (SEP IRA)
Plan Overview: The Simplified Employee Pension IRA offers a way to save for retirement that permits entrepreneurs to save a percentage of their net business profits. Contributions must come from an employer, so, as a self-employed individual, you (the employee) cannot make additional contributions 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 is a good option for businesses that experience periods of inconsistent earnings. Compared to other retirement options, SEP IRAs lack expensive setup or ongoing fees.
SEPs function like traditional IRAs, where the contributions are tax-deferred and money withdrawn is subject to income tax.
Eligibility: Any employer, including the self-employed can establish a SEP.
Contribution Limits: Contribution limits for employees in a SEP IRA are the lesser 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 self-employed retirement plan meant for businesses with no employees or where the only employee is a spouse. These plans function similarly to standard 401(k) plans, and allow you to contribute as both an employer and an employee with pre-tax money. This allows for more savings than SEPs or IRAs; however, the increased savings potential may be offset by more constrained investment avenues. 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: This plan is exclusively for business owners and their spouses are eligible to open and contribute to a solo 401(k).
Contribution Limits: For self-employed individuals 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, subject to the annual contribution limit. For 2025, the limits will be $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) must not surpass 25% of your adjusted self-employment income, which is defined as 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 for individuals aged 50+ (as of 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 provides a set amount to entrepreneurs upon retirement. Unlike defined contribution plans mentioned above, a defined benefit plan doesn't fluctuate based on investment returns, but lets individuals clearly understand exactly how much they'll receive in retirement. This plan is best suited for higher-income self-employed individuals who want to save a large amount for retirement and can commit to making larger deposits. Contributions offer tax-deferred growth, and withdrawals are taxable as income upon retirement.
Eligibility: Self-employed professionals running an owner-only business or employing fewer than five people can open an individual defined benefit plan, but it's typically recommended for those over 50 who earn at least $250,000 a year. In most cases, good candidates for defined benefit plans tend to be:
- Business owners or partners who desire to contribute more than $70,000 (or $77,500 if over age 50)
- Organizations that already put in 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 boost savings within a short timeframe
Contribution Limits: The contribution limit requires calculation from an actuary determined by your income, age, and retirement goals. Allowable contributions change annually.
The Importance of a Financial Advisor in Richmond, VA for Your Self-Employed Retirement Plan
Partnering with an advisor in Richmond, VA focused on self-employed retirement strategies can be an important asset for self-employed individuals. They offer the knowledge to assist understand the intricacies of saving for retirement and develop a customized plan that aligns with your goals. An expert in your area will evaluate your financial situation, identify your risk preferences, and help you in choosing wisely 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
- Tailor the plan to your specific situation even further
- Create a written plan that complies with IRS regulations
- Arrange a trust plan for assets
- Ensure you comprehend the plan's terms
- Monitor and adjust your plan as needed
- Offer continued financial education and guidance throughout your retirement planning process
- Maximize what you receive in retirement by making the most of your social security
Self-Employed Retirement Plans in Richmond, VA: Correct Capital's Process
Self-employed individuals in Richmond, VA who aren’t equipped with the time or understanding to manage their own retirement planning independently may end up overwhelmed as they look at their choices. At Correct Capital, our Richmond, VA financial advisors take on the lion's share 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 four simple steps:
- Schedule a Call: In just 20 minutes, a member of our advisor team can determine if our services align for you and your business. This short conversation helps us get a sense of your goals with no pressure or major time investment on your part.
- Gather Information: Should we agree to proceed, we'll ask for information, including how many employees you have (if any), your current financial situation, and your future objectives. This enables us to craft a custom plan suited specifically for your needs.
- Review Your Plan: After we put together a plan from the information you provide, we'll meet with you and discuss your plan thoroughly to ensure you understand it and show how it aligns with your goals.
- Implementation and Monitoring: When we finalize on your plan, we'll implement the necessary steps so you can start saving. Throughout our relationship, we'll check in and monitor your plan to ensure it stays suited to your needs.
Our Richmond, VA financial advisors and retirement plan consultants act 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 Richmond, VA include:
- Comprehensive Financial Planning
- Retirement Income Planning
- Investment Planning
- Retirement Financial Planning
- Investment Management
- 401(k) Audit
- High-Net-Worth Wealth Management
- Retirement Planner
Call Correct Capital for Your Self-Employed Retirement Plan in Richmond, VA
Your business isn't "just a business" to you, and your Richmond, VA financial advisors must deliver more than basic financial recommendations. With Correct Capital, we focus on building a relationship with our clients and their businesses to create tailored self-employed retirement plans. We offer all our Richmond, VA clients our I.O.U. promise: everything we recommend 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.
