Self-employed retirement plans Riverside, CA. The freedom of being your own boss in Riverside, CA is one of the greatest advantages of working for yourself. That said, this freedom sometimes brings with certain challenges, notably regarding planning for retirement, as you don't have access to employer-sponsored retirement plans. Only 13% of self-employed individuals have a workplace retirement plan, but many could benefit from looking into other possibilities. In addition to achieving a more secure retirement, partnering with a financial advisor in Riverside, CA to set up your self-employed retirement plan can provide significant tax advantages that enable both you and your business to thrive.
Few Riverside, CA financial advisory and retirement planning firms truly grasp the challenges faced by small business owners as well as 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 we are deeply experienced in assisting business owners in their retirement planning needs. We know that your professional and personal aspirations aren’t limited to simple financial figures, and we work tirelessly to provide customized solutions to meet your unique goals. Continue exploring to find out about your self-employed retirement plan options in Riverside, CA, or reach out to Correct Capital at 877-930-401k or contact us online to talk to a small business financial advisor in Riverside, CA today.
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Why Riverside, 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 real benefits today. Offering flexibility in contributions to substantial tax savings, consulting a financial advisor in Riverside, CA allows you to customize your retirement plan to align with your unique financial situation.
Flexibility That Fits Your Income
If your income changes from year to year, a plan like a SEP IRA or Solo 401(k) provides the freedom to adjust how much you save:
- Customizable Contributions: Contribute more during successful years and scale back when revenues are down, ensuring your plan aligns with your financial situation.
- Roth Options: Choosing a Roth Solo 401(k) lets you handle taxes upfront, enabling you to withdraw tax-free later—a wise move if you anticipate your tax rate to be higher in the future.
Save Money on Taxes
Self-employed retirement plans provide significant tax benefits:
- Tax-Deductible Contributions: Contributions to a SEP IRA shrink your tax liability, helping you keep more of your hard-earned money.
- Tax-Deferred Growth: Your savings grow untaxed until withdrawn, providing your money more time to accumulate.
- State-Specific Incentives: In some states, you could qualify for additional deductions as a self-employed individual. These regional incentives can make these plans even more beneficial.
- Retirement Savings Contributions Credit (Saver’s Credit): Qualified participants can apply for a credit of up to 50% of the first $2,000 they contribute a retirement plan, further reducing your tax bill even more.
Protect Your Savings With Smart Investments
Creating a stable future requires more than how much you save—it’s also about how you invest:
- Diversified Portfolios: Spreading your investments across varied stocks, bonds, and other assets can help minimize exposure to risk while helping to grow your retirement fund.
- Emergency Back-Up: Pairing your retirement plan with a financial buffer for your business prevents you from using your retirement funds during tough times and risking extra costs.
Plan for the Future of Your Riverside, CA Business
Preparing for retirement also helps you think through what’s next with your Riverside, CA business:
- Selling Your Business: When selling your business, plans like SEP IRAs or Solo 401(k)s remain yours and are not part of the sale. These accounts can provide the financial stability you’ll need in the future. It’s important to note that while selling a business often leads to a capital gain, retirement plan contributions are subject to yearly maximums (e.g., a maximum of $7,000 for IRAs or a maximum of $70,000 for Solo 401(k)s, factoring in catch-up contributions, depending on plan details).
- Minimizing Taxes: Strategically planning your contributions helps lower the taxes you’ll owe when you pass on your business.
- Succession Planning: For those winding down or handing over their business, your retirement accounts provide a stable foundation during the change. You might want to work with a financial advisor experienced in both succession and retirement strategies to minimize tax burdens on the sale.
With the right retirement plan, you can take control of your financial future, cut down your tax obligations, and establish a secure foundation for both your retirement and your business goals.
Why Start a Self-Employed Retirement Plan in Riverside, CA Now?
Time is one of the most crucial assets when it comes to saving for retirement. Beginning sooner rather than later not only helps you grow a larger nest egg but also reduces the stress of saving aggressively in the future. This is why it is beneficial to start now:
The Cost of Waiting
Waiting to start your retirement fund can have a significant impact on the savings you’ll have when you stop working. The biggest reason is compound interest—the concept where your investments grow, and those returns, in turn, accumulate even more returns. The longer your money has to grow, the more significant the impact of compounding.
Example: Taylor and Alex are both entrepreneurs. They each aim 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 bridge the gap.
By age 65, with an assumption of 7% annual return:
- Alex invests $180,000 and accumulates $691,184.39*.
- Taylor contributes $195,500 but accumulates just $474,367.78*.
How Early Contributions Grow
Regular, modest investments contributed over time can lead to impressive growth. Consider this example showing the effect of consistent growth:
- Starting at age 25: If you invest $200 per month in a retirement plan with an average annual return of 7%, you’ll end up with $497,303.29* by age 65.
- Starting at age 35: Investing the same $200 per month leaves you with 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.
*The numbers shown in this scenario represent estimates derived from NerdWallet’s Compound Interest Calculator, assuming a 7% annual return. These calculations involved multiplying yearly deposits by the years contributed. This information is meant to provide general guidance and are not a promise of future results. Your individual results may differ depending on factors such as market conditions, fees, and your unique situation. We recommend consulting a financial advisor for guidance tailored to your needs.
Take Control of Your Financial Future
If you’re self-employed in Riverside, CA, it might seem easier to focus more on reinvesting in your business instead of saving for retirement. Even so, initiating a plan now enables you to:
- Take advantage of tax-deferred growth or tax-free withdrawals in the future.
- Take advantage of adjustable savings that align with your earnings.
- Create a financial cushion that offers peace of mind, no matter how your business develops.
Getting started now, the less you’ll be required to worry about playing catch-up later in life. Saving for retirement now means gaining control over your financial future and creating for yourself the ability to focus on your dreams—both for your retirement years and your Riverside, CA business.
Types of Self-Employed Retirement Plans
A variety of retirement savings options available for self-employed individuals in Riverside, CA, each providing its own advantages and considerations. A financial advisor can help you understand the pros and cons of each choice and choose the one most suitable for your needs. In most cases, your self-employed retirement plan options in Riverside, CA consist of:
Traditional or Roth IRA
Plan Overview: IRAs, or Individual Retirement Accounts, are retirement savings vehicles that offer distinct tax benefits. In a traditional 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 are made with after-tax income, but retirement withdrawals that qualify, including earnings, are exempt from taxes. In both accounts, withdrawals come without penalties as long as you are at least 59½.
Eligibility: While many retirement plans, such as 401(k)s, are tied to employment, IRAs, including traditional and Roth options are available to anyone with an earned income.
Contribution Limits: For 2025, annual contribution limits for IRAs are capped at $7,000, or $8,000 if you're 50 or older.
Simplified Employee Pension Plan (SEP IRA)
Plan Overview: SEP IRAs serves as a retirement savings option that permits self-employed individuals to contribute a percentage of their net earnings. Contributions are strictly employer contributions an employer, so, as a independent business owner, you (the employee) would not be able to contribute beyond 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. 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 businesses that experience fluctuating revenue streams. In contrast to some alternatives, SEP IRAs don’t have expensive setup or ongoing fees.
SEPs work like conventional 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 must not exceed:
- 25% of compensation, or
- $70,000 for 2025
As a self-employed person, the allowable contribution is based on a special calculation.
Solo 401(k)
Plan Overview: The Solo 401(k), commonly known as an Individual 401(k) or one-participant 401(k) plan, is a savings option for the self-employed meant for businesses with no employees or if the only employee is your spouse. These plans function similarly to employer-sponsored 401(k) plans, and let you make contributions as both an employer and an employee with pre-tax money. This provides more savings compared to SEPs or IRAs; however, the increased savings potential can be balanced by 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: Solo 401(k)s are available solely to business owners and their spouses are eligible to open and contribute to a solo 401(k).
Contribution Limits: If you are self-employed with a solo 401(k) plan, you can make two types of contributions:
- Employee contributions of up to 100% of your earned income from self-employment, up to the annual contribution limit. In 2025, those limits are $23,500, or $31,000 if you are 50 or older, or $34,750 for individuals aged 60-63 in 2025.
- Contributions as an employer (as an employer) are limited to 25% of your net earnings from self-employment, which is calculated as net profits less half of your self-employment tax and the employee contributions you made.
Total contributions are capped at $70,000, or $77,500 for individuals aged 50+ (for 2025), $81,250 if you attain age 60-63 in 2025.
Individual Defined Benefit Plan
Plan Overview: Defined benefit plans is a retirement option that delivers 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 what they'll have in retirement. This plan is best suited for higher-income entrepreneurs who are focused on saving a large amount for retirement and are prepared to contribute sizeable contributions. Contributions offer tax-deferred growth, and withdrawals are taxable as income upon retirement.
Eligibility: Entrepreneurs operating a solo business or employing fewer than five people can open an individual defined benefit plan, but it's typically suggested for those over 50 who earn at least $250,000 a year. Generally, good candidates for defined benefit plans are:
- Partners or owners who want to invest more than $70,000 (or $77,500 if over age 50)
- Organizations that already put in 3-4% with plans to contribute more
- Companies with proven 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 requires calculation from an actuary determined by your income, age, and retirement goals. Allowable contributions are updated yearly.
The Importance of a Financial Advisor in Riverside, CA for Your Self-Employed Retirement Plan
Partnering with an advisor in Riverside, CA experienced with retirement plans for the self-employed is an invaluable resource for entrepreneurs. They bring the skills needed to guide you through the challenges of retirement planning and develop a personalized approach that reflects your aspirations. Your advisor in Riverside, CA will assess where you stand financially, understand your risk tolerance, and guide you in making informed decisions about saving and investing for retirement. Part of what we do for you involves:
- Help you choose a plan that aligns with your objectives and circumstances
- Customize the plan to your needs even further
- Formalize a plan in writing that complies with IRS regulations
- Set up an asset trust plan
- Make sure you understand the plan's terms
- Monitor and adjust your plan as needed
- Deliver continuous support and financial insights throughout your retirement planning process
- Increase your retirement income by maximizing your social security benefits
Self-Employed Retirement Plans in Riverside, CA: Correct Capital's Process
Riverside, CA business owners who aren’t equipped with the time or understanding to oversee their self-employed retirement plan themselves may end up overwhelmed as they look at their choices. At Correct Capital, our Riverside, CA financial advisors manage the majority of your savings plan setup for you, working to make meeting your future savings targets as straightforward as possible for you. We can help you get set up your self-employed retirement plan in a quick, four-step process:
- Schedule a Call: In just 20 minutes, a member of our advisor team can determine if we're suited to your needs for you and your business. This short conversation lets us get a sense of your goals with no obligation or extensive time commitment on your part.
- Gather Information: Should we agree to proceed, we'll gather information, including whether you have employees, your present financial standing, and your long-term savings targets. This allows us to put together a personalized strategy suited specifically for your needs.
- Review Your Plan: Once we've developed a plan using the information you provide, we'll meet with you and discuss your plan step by step to make sure it's clear and explain its fit to your circumstances.
- Implementation and Monitoring: When we finalize on your plan, we'll set everything up so you can initiate your savings journey. As time goes on, we'll have regular meetings and track your progress to keep it tailored to your evolving circumstances.
Our Riverside, CA financial advisors and retirement plan consultants act as fiduciary advisors, which means they are required by law and ethical standards to prioritize your needs above all else.
Other financial advisory services we offer in Riverside, 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 Riverside, CA
You don't see your business as "just a business", and your Riverside, CA financial advisors need to offer more than simply sound financial advice. Correct Capital takes pride in, we focus on building a relationship with our clients and their businesses to provide tailored self-employed retirement plans. To every client in Riverside, CA, we provide our I.O.U. promise: everything we recommend will be independent, objective, and unbiased. To begin on your self-employment retirement plan, reach out to Correct Capital at 877-930-401k or contact us online.
