Self-employed retirement plans Richmond, VA. The freedom of owning your own business in Richmond, VA is one of the best aspects of being self-employed. However, this independence sometimes brings with potential drawbacks, especially when it comes to retirement savings, as you don't have the benefit of a workplace retirement plan. Only 13% of self-employed individuals have a workplace retirement plan, although many should consider understanding their retirement options. In addition to having a financially stable retirement, partnering with a financial advisor in Richmond, VA to set up your self-employed retirement plan delivers significant tax advantages that help you to move your business forward.
Few Richmond, VA wealth management and retirement planning firms understand the needs of small business owners quite like Correct Capital. Our founder's father was a small business owner himself (read more of our story here), and we have a rich history of helping businesses with their retirement planning needs. We know that your goals for your business and retirement go far beyond just monetary concerns, and we strive to provide customized solutions aligned with your vision. 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 speak with a small business financial advisor in Richmond, VA today.
Schedule a Meeting With an Advisor Today
Correct Capital Wealth Management's office is physically located in St. Louis, MO, but we serve clients throughout the United States in both personal financial planning and corporate retirement plans.
Schedule a 15-Minute Introductory Call
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 deliver immediate benefits today. Offering flexibility in contributions to substantial tax savings, consulting a financial advisor in Richmond, VA allows you to create your retirement plan to fit your specific needs.
Flexibility That Fits Your Income
If your income changes from year to year, a plan like a SEP IRA or Solo 401(k) offers the option to tailor how much you save:
- Customizable Contributions: Set aside more during profitable years and reduce savings when your earnings dip, so your plan works with your current income.
- Roth Options: A Roth Solo 401(k) lets you pay taxes on contributions now, enabling you to withdraw without tax penalties in the future—a wise move if you believe your tax rate will increase in the future.
Save Money on Taxes
Self-employed retirement plans provide valuable tax benefits:
- Tax-Deductible Contributions: Contributions to a SIMPLE IRA lower your taxable income, helping you keep more of your earnings.
- Tax-Deferred Growth: You won't pay taxes on investment growth until you withdraw it, which gives your money more time to grow.
- State-Specific Incentives: In some states, you could qualify for additional tax breaks as a sole proprietor. These regional incentives can make these plans even more advantageous.
- Retirement Savings Contributions Credit (Saver’s Credit): Eligible individuals can claim a tax credit of up to 50% of the first $2,000 they contribute a retirement plan, helping to lower your tax bill even more.
Protect Your Savings With Smart Investments
Planning for a safe retirement goes beyond just how much you save—it’s also about how you invest:
- Diversified Portfolios: Distributing your investments across varied stocks, bonds, and alternatives serves to minimize exposure to risk while helping to grow your savings.
- Emergency Back-Up: Supplementing your retirement savings with a financial buffer for your business prevents you from dipping into savings during tough times and incurring penalties.
Plan for the Future of Your Richmond, VA Business
A thoughtful retirement strategy enables you to prepare for what’s next with your Richmond, VA business:
- Selling Your Business: For those considering a sale, plans like SEP IRAs or Solo 401(k)s remain your personal assets and don’t transfer with the business. These plans ensure the steady income you’ll need later on. Remember that while the sale of a business usually creates a capital gain, retirement plan contributions are subject to yearly maximums (e.g., up to $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: Strategically planning your contributions helps lower the taxes you are required to pay when you pass on your business.
- Succession Planning: Whether you’re transferring ownership, your nest egg provide the funds you need during the change. You may 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 manage your financial future, cut down your tax obligations, and establish a strong framework for both your retirement and your business goals.
Why Start a Self-Employed Retirement Plan in Richmond, VA Now?
Time remains one of the most crucial resources for building your retirement fund. Starting early not only allows you to build a bigger financial cushion but also lowers the stress of playing catch-up as you get older. Here’s why it pays to take action now:
The Cost of Waiting
Delaying your retirement savings may cause a substantial impact on the amount you’ll have when you reach retirement age. The primary reason is compound interest—the concept where your investments generate earnings, and those returns, subsequently, earn even more returns. The longer your money has to grow, the greater the benefit of this growth.
Example: Two individuals, Alex and Taylor are both self-employed professionals. They each aim to save $500,000 for retirement by age 65:
- Alex starts saving $5,000 annually at age 30.
- Taylor waits until age 40 but contributes $7,500 annually to bridge the gap.
By age 65, with an assumption of 7% annual return:
- Alex contributes $180,000 and achieves a total of $691,184.39*.
- Taylor puts in $195,500 but only ends up with $474,367.78*.
How Early Contributions Grow
Small, consistent savings invested steadily can lead to impressive growth. Here’s a simple scenario showing the effect of compound interest:
- Starting at age 25: If you invest $200 per month in a retirement plan with an projected return of 7%, you’ll accumulate $497,303.29* by age 65.
- Starting at age 35: Contributing the same $200 per month would result in only $235,412.97* by age 65—a difference of over $260,000, all because of a 10-year delay.
Starting sooner, the less effort required each year to achieve your retirement goals.
*The numbers shown in this scenario are estimates derived from 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. This information is meant to provide general guidance and cannot predict actual future outcomes. Outcomes may change based on elements like market conditions, fees, and personal factors. Always consult a financial advisor for guidance tailored to your needs.
Take Control of Your Financial Future
As a self-employed person in Richmond, VA, it can be tempting to prioritize reinvesting in your business instead of saving for retirement. That said, initiating a plan now gives you the chance to:
- Benefit from tax-free future growth or penalty-free withdrawals later on.
- Benefit from contribution flexibility that change with your cash flow.
- Establish a long-term safety measure that offers peace of mind, no matter how your business evolves.
The sooner you start, the less you’ll be required to worry about playing catch-up later in life. Taking steps toward your retirement goals today means taking control of your financial future and creating for yourself the ability to turn your attention to your dreams—both for your future retirement and your Richmond, VA business.
Types of Self-Employed Retirement Plans
Multiple retirement savings options designed for self-employed individuals in Richmond, VA, each with its own benefits and trade-offs. A financial advisor will guide you to evaluate the advantages and disadvantages of each plan and determine the one ideal for your circumstances. Generally speaking, your self-employed retirement plan options in Richmond, VA include:
Traditional or Roth IRA
Plan Overview: Individual Retirement Accounts (IRAs), as explained here, represent long-term savings plans that offer specific tax advantages. 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 retirement withdrawals that qualify, including earnings, are exempt from taxes. In both cases, withdrawals don’t incur penalties provided you are at least 59½.
Eligibility: Unlike plans linked to your job, both traditional and Roth IRAs are accessible for individuals with a source of 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: The Simplified Employee Pension IRA offers a way to save for retirement that allows self-employed individuals to contribute a percentage of their net earnings. Contributions can only be made by an employer, so, as a independent business owner, you (the employee) would not be able to contribute above 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 set monetary value or a percentage of wages to employee accounts. This type of plan is a good option for entrepreneurs facing fluctuating revenue streams. Unlike other plans, SEP IRAs lack the high fees associated with starting or maintaining other plans.
SEPs operate like traditional 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 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
For self-employed individuals, the contribution you can make is based on a special calculation.
Solo 401(k)
Plan Overview: A Solo 401(k) plan, also called 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. This type of plan function similarly to traditional employer-managed 401(k) plans, and let you make contributions as both an employee or an employer with pre-tax money. This offers more savings compared to SEPs or IRAs; however, the extra savings options often come with more restricted investment choices. 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 can set up and contribute to a solo 401(k).
Contribution Limits: As a self-employed individual with a solo 401(k) plan, you have the ability to make two types of contributions:
- Employee contributions of up to 100% of your self-employed earnings, up to the annual contribution limit. For 2025, the limits will be $23,500, or $31,000 if you are 50 or older, or $34,750 for those who turn 60-63 in 2025.
- Employer profit-sharing contributions (as an employer) cannot exceed 25% of your net earnings from self-employment, which is defined as net profit minus half of your self-employment tax and the employee contributions you made.
The total contribution cannot exceed $70,000, or $77,500 for individuals aged 50+ (for 2025), $81,250 for individuals turning 60-63 in 2025.
Individual Defined Benefit Plan
Plan Overview: A defined benefit plan is a retirement option that provides a fixed, predetermined benefit to entrepreneurs upon retirement. As opposed to defined contribution plans, this plan is not influenced by market performance, but allows self-employed individuals to know the precise amount they'll have in retirement. This option is best suited for wealthier professionals who aim to accumulate a large amount for retirement and are prepared to contribute substantial contributions. Contributions are tax deferred, and withdrawals incur taxes as income in retirement.
Eligibility: Entrepreneurs managing a one-person company or with less than five employees may establish an individual defined benefit plan, but it's typically suggested for individuals aged 50+ who make $250,000 or more annually. Typically, good candidates for defined benefit plans are:
- Business owners or partners who want to invest 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
- Business leaders over age 40 who wish to accelerate savings or increase their retirement contributions rapidly
Contribution Limits: The cap on contributions is calculated by an actuary using your financial situation, age, and savings targets. 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 experienced with retirement plans for the self-employed can be an important asset for those working for themselves. They have the expertise to help guide you through the challenges of retirement planning and develop a personalized approach that reflects your aspirations. Your advisor in Richmond, VA will evaluate your financial situation, determine how much risk you’re comfortable with, and assist you in making informed decisions about saving and investing for retirement. Part of what we do for you includes:
- Guide you in choosing a plan that aligns with your objectives and circumstances
- Customize the plan to your needs even further
- Adopt a written plan 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 as needed
- Deliver continuous support and financial insights throughout your retirement planning process
- Boost your retirement earnings by optimizing your social security benefits
Self-Employed Retirement Plans in Richmond, VA: Correct Capital's Process
Self-employed individuals in Richmond, VA who don’t have the time or expertise to manage their own retirement planning independently can become overwhelmed when faced with their available plans. Through our team at Correct Capital, our Richmond, VA financial advisors take on the majority of your savings plan setup for you, and strive to ensure meeting your financial objectives as straightforward as possible for you. We are here to assist you in setting up your self-employed retirement plan in a quick, four-step process:
- Schedule a Call: A quick 20-minute call is all it takes, a member of our advisor team can determine if we're a good fit for you and your business. This initial call lets us understand what you're looking for with zero commitment or extensive time commitment on your part.
- Gather Information: Once we mutually decide to continue, we'll request information, including how many employees you have (if any), your current financial situation, and your retirement goals. This allows us to put together a personalized strategy that aligns with your goals.
- Review Your Plan: After we put together a plan from the information you provide, we'll sit down with you and go over your plan thoroughly to make sure it's clear and explain its fit to your circumstances.
- Implementation and Monitoring: When we finalize on your plan, we'll put everything in place so you can initiate your savings journey. Throughout our relationship, we'll have regular meetings and review your strategy to ensure it stays suited to your needs.
Our Richmond, VA financial advisors and retirement plan consultants serve 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 Richmond, VA 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 Richmond, VA
To you, your business is more than "just a business", and your Richmond, VA financial advisors must deliver more than basic financial recommendations. At Correct Capital, we focus on building a relationship with our clients and their businesses to create personalized self-employed retirement plans. To every client in Richmond, VA, 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.
