Self-employed retirement plans Richmond, VA. The flexibility of running your own company in Richmond, VA offers many benefits of being self-employed. Even so, this independence often comes with certain challenges, especially when it comes to planning for retirement, as you don't have the option of a workplace retirement plan. Only 13% of self-employed individuals have a workplace retirement plan, yet countless would be better off 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 offers significant tax advantages that help your business to grow and succeed.
Few Richmond, VA investment consulting and retirement planning firms truly grasp the challenges faced by entrepreneurs better than Correct Capital. Our founder's father was a small business owner himself (check out our story here), and Correct Capital take pride in supporting entrepreneurs with their retirement planning needs. We recognize that your business and retirement aspirations aren’t limited to simple financial figures, and we work tirelessly to offer customized solutions that reflect your objectives. 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.
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 tangible benefits today. With customizable contribution options to significant tax savings, partnering with a financial advisor in Richmond, VA allows you to create your retirement plan to suit your individual circumstances.
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 adjust how much you save:
- Customizable Contributions: Contribute more during successful years and scale back when your earnings dip, so your plan aligns with your financial situation.
- Roth Options: A Roth Solo 401(k) lets you settle taxes at the time of contribution, so you can withdraw your savings tax-free down the road—an advantageous choice if you believe your tax rate will increase in the future.
Save Money on Taxes
Plans designed for the self-employed offer valuable tax benefits:
- Tax-Deductible Contributions: Contributions to a SEP IRA lower your taxable income, helping you keep more of your hard-earned money.
- Tax-Deferred Growth: Investments grow tax-free until withdrawal, giving your money more time to grow.
- State-Specific Incentives: Based on your location, you might access state-specific tax breaks as a self-employed individual. These local incentives can 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, cutting down your tax bill even more.
Protect Your Savings With Smart Investments
Planning for a safe retirement isn’t only about how much you save—it’s also about how you invest:
- Diversified Portfolios: Allocating your investments across different stocks, bonds, and other assets can help reduce risk while still growing your nest egg.
- Emergency Back-Up: Supplementing your retirement savings with a financial buffer for your business ensures you don’t dipping into savings during financial hardships and facing tax penalties.
Plan for the Future of Your Richmond, VA Business
Preparing for retirement enables you to plan ahead 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 stay in your name and won’t be included in the sale. These savings ensure the reliable income you’ll need during retirement. Remember that while selling your business results in a capital gain, retirement plan contributions are capped at annual limits (e.g., a maximum of $7,000 for IRAs or a maximum of $70,000 for Solo 401(k)s, including catch-up contributions, depending on plan details).
- Minimizing Taxes: Making the most of retirement savings can reduce the taxes you might face when you sell your business.
- Succession Planning: If you’re passing the business on, your nest egg offer the funds you need through the transition. You can also 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 manage your financial future, cut down your tax obligations, and build a strong framework 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 valuable factors when it comes to saving for retirement. Getting a head start not only allows you to build a bigger financial cushion but also minimizes the pressure of saving aggressively in the future. Here’s why it is beneficial to start now:
The Cost of Waiting
Delaying your retirement savings may cause a significant impact on the amount you’ll have when you reach retirement age. The biggest reason is compound interest—the powerful process where your investments generate earnings, and those returns, in turn, earn even more returns. The longer your money has to grow, the larger 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 starts saving $5,000 annually at age 30.
- Taylor postpones starting contributions to age 40 but contributes $7,500 annually to catch up.
By age 65, using a projected 7% annual return:
- Alex contributes $180,000 and achieves a total of $691,184.39*.
- Taylor contributes $195,500 but only ends up with $474,367.78*.
How Early Contributions Grow
Regular, modest investments invested steadily can lead to significant growth. Here’s a simple scenario showing the power 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 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 shortfall of over $260,000, simply due to a 10-year delay.
Saving early, the less effort required each year to achieve your retirement goals.
*The figures provided in this example represent estimates derived from NerdWallet’s Compound Interest Calculator, with the assumption of a 7% annual return. These calculations involved multiplying yearly deposits by the years contributed. The scenarios provided are meant to provide general guidance and are not a promise of future results. Your individual results may differ based on variables including market conditions, fees, and individual circumstances. We recommend consulting a financial advisor for personalized advice.
Take Control of Your Financial Future
If you’re self-employed in Richmond, VA, it is often the case that you put more emphasis on reinvesting in your business over saving for retirement. However, beginning a plan now enables you to:
- Take advantage of growth that is tax-deferred or withdrawals without taxes down the road.
- Benefit from contribution flexibility that align with your income.
- Create a financial cushion that ensures stability, no matter how your business evolves.
Starting early, the less you’ll need to worry about playing catch-up later in life. Taking steps toward your retirement goals today means managing your financial future and allowing yourself the ability to focus on your goals—both for your golden years and your Richmond, VA business.
Types of Self-Employed Retirement Plans
A variety of retirement savings options open for entrepreneurs 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 choice and identify the one best suited for your needs. In most cases, your self-employed retirement plan options in Richmond, VA are:
Traditional or Roth IRA
Plan Overview: Individual Retirement Accounts (IRAs), as explained here, represent retirement savings vehicles that offer distinct tax benefits. In a standard IRA, contributions are typically tax-deductible, and earnings grow without immediate taxation, but retirement distributions are taxed as income. In contrast, Roth IRAs require contributions using income already taxed, but qualified withdrawals in retirement, including earnings, are exempt from taxes. In both cases, withdrawals come without penalties provided you are at least 59½.
Eligibility: While many retirement plans, such as 401(k)s, are tied to employment, traditional and Roth IRAs are accessible for individuals with an earned 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 entrepreneurs to save a percentage of their net business profits. Contributions must come from an employer, so, as a sole proprietor, you (the employee) cannot make additional contributions above the 25% you (the employer) have designated. If you have employees, you are obligated 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. SEP IRAs may be ideal for companies with cycles of high revenue and low revenue. Compared to other retirement options, SEP IRAs are free of the high fees associated with starting or maintaining other plans.
SEPs work like standard 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 are capped at the lower of:
- 25% of compensation, or
- $70,000 for 2025
As a self-employed person, the amount eligible to be contributed is based on a special calculation.
Solo 401(k)
Plan Overview: The Solo 401(k), sometimes referred to as an Individual 401(k) or one-participant 401(k) plan, is a retirement savings plan intended for companies that have no employees or where the only employee is a spouse. These plans operate much like employer-sponsored 401(k) plans, and enable contributions as both an employer and an employee with pre-tax money. This offers more savings than SEPs or IRAs; however, the additional opportunities often come with more limited investment options. Using a solo 401(k), you can make either traditional or Roth deferrals, which have 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: For self-employed individuals 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-employment income, capped at the annual contribution limit. In 2025, those limits are $23,500, or $31,000 if you're over 50, or $34,750 for individuals aged 60-63 in 2025.
- Contributions as an employer (as an employer) must not surpass 25% of your net self-employment income, which is calculated as net profits less half of your self-employment tax and the deferrals you made.
Your combined contributions must not surpass $70,000, or $77,500 for individuals aged 50+ (for 2025), $81,250 for those aged 60-63 in 2025.
Individual Defined Benefit Plan
Plan Overview: The defined benefit plan represents a type of retirement plan that guarantees a fixed, predetermined benefit to self-employed individuals upon retirement. In contrast to the plans discussed earlier, this plan is not influenced by market performance, but allows self-employed individuals to know exactly how much they'll receive in retirement. This strategy is recommended for wealthier professionals who aim to accumulate a large amount for retirement and are willing to make larger deposits. Contributions are tax deferred, and withdrawals incur taxes as income upon retirement.
Eligibility: Self-employed professionals running an owner-only business or with a small staff of under five may establish an individual defined benefit plan, but it's typically advised for people above age 50 who make $250,000 or more annually. Generally, good candidates for defined benefit plans are:
- Entrepreneurs who want to invest more than $70,000 (or $77,500 for individuals 50 and older)
- Businesses currently investing 3-4% with plans to contribute more
- Businesses with proven consistent profit patterns
- Partners or owners over age 40 who desire to "catch up" or boost savings within a short timeframe
Contribution Limits: The contribution limit must be determined by an actuary based on your financial situation, age, and savings targets. Contribution limits are updated yearly.
The Importance of a Financial Advisor in Richmond, VA for Your Self-Employed Retirement Plan
Working with a financial advisor in Richmond, VA experienced with retirement plans for the self-employed serves as an essential partner for self-employed individuals. They have the expertise to help navigate the complexities of retirement planning and develop a tailored strategy that aligns with your goals. A financial advisor in Richmond, VA will evaluate your financial situation, understand your risk tolerance, and guide you in selecting the best options about saving and investing for retirement. Part of what we do for you features:
- Guide you in choosing a plan that aligns with your objectives and circumstances
- Further adapt the plan to fit you personally even further
- Adopt 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
- Provide ongoing education and advice throughout your retirement planning process
- Increase your retirement income by maximizing your social security benefits
Self-Employed Retirement Plans in Richmond, VA: Correct Capital's Process
Richmond, VA business owners who lack the time, interest, or knowledge to manage their self-employed retirement plan on their own can become overwhelmed when faced with their available plans. With Correct Capital, our Richmond, VA financial advisors take on the bulk of your retirement strategy for you, working to make meeting your future savings targets as hassle-free 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 allows us to understand what you're looking for with no obligation or major time investment on your part.
- Gather Information: If we both decide to move forward, we'll ask for information, including your employee count, your existing financial picture, and your future objectives. This enables us to craft a custom plan suited specifically for your needs.
- Review Your Plan: When we finalize a plan based on the information you provide, we'll meet with you and discuss your plan thoroughly to help you fully grasp it and show how it aligns with your goals.
- Implementation and Monitoring: When we finalize on your plan, we'll set everything up so you can begin contributing. Throughout our relationship, we'll meet with you and track your progress to keep it tailored to your evolving circumstances.
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:
- Family Wealth Planning
- 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
Call Correct Capital for Your Self-Employed Retirement Plan in Richmond, VA
You don't see your business as "just a business", and your Richmond, VA financial advisors should provide more than simply sound financial advice. Correct Capital takes pride in, we make it a priority to understand our clients and their businesses to provide customized self-employed retirement plans. We offer all our Richmond, VA clients our I.O.U. promise: all of the advice you get from us will be independent, objective, and unbiased. To get started on your self-employment retirement plan, reach out to Correct Capital at 877-930-401k or contact us online.
