Self-employed retirement plans Riverside, CA. The flexibility of owning your own business in Riverside, CA offers many benefits of having a self-directed career. That said, this freedom sometimes brings with potential drawbacks, particularly regarding retirement savings, as 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 should consider understanding their retirement options. In addition to having a more secure retirement, working with a financial advisor in Riverside, CA to create your self-employed retirement plan delivers significant tax advantages that help your business to grow and succeed.
Few Riverside, CA financial advisory and retirement planning firms are as attuned to the requirements of small business owners better than Correct Capital. Our founder's father was a small business owner himself (check out our story here), and we are deeply experienced in assisting business owners in their retirement planning needs. We recognize that your goals for your business and retirement extend well past just monetary concerns, and we work tirelessly to offer personalized solutions aligned with your vision. Keep reading to learn more about your self-employed retirement plan options in Riverside, CA, or give us a call at Correct Capital at 877-930-401k or contact us online to speak with a small business financial advisor in Riverside, CA today.
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 offer real benefits today. From flexible contributions to substantial tax savings, partnering with a financial advisor in Riverside, CA allows you to customize your retirement plan to fit your unique financial situation.
Flexibility That Fits Your Income
When your earnings vary 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: Save extra during profitable years and scale back when revenues are down, so your plan fits your current income.
- Roth Options: A Roth Solo 401(k) lets you pay taxes on contributions now, so you can withdraw without tax penalties in the future—an advantageous choice if you believe your tax rate will increase in the future.
Save Money on Taxes
Self-employed retirement plans offer valuable tax benefits:
- Tax-Deductible Contributions: Contributions to a SIMPLE IRA reduce what you owe in taxes, helping you keep more of your income.
- Tax-Deferred Growth: You won't pay taxes on investment growth until you withdraw it, providing your money more time to compound.
- State-Specific Incentives: Based on your location, you may be eligible for additional credits as a business owner. These regional incentives make these plans even more advantageous.
- 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 put into a retirement plan, helping to lower 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: Distributing your investments across different stocks, bonds, and other assets is a smart way to reduce risk while continuing to build your nest egg.
- Emergency Back-Up: Combining your retirement strategy and a business emergency fund prevents you from tapping into your nest egg during tough times and risking extra costs.
Plan for the Future of Your Riverside, CA Business
Retirement planning also helps you prepare for what’s next with your Riverside, CA business:
- Selling Your Business: When selling your business, accounts such as SEP IRAs or Solo 401(k)s remain your personal assets and won’t be included in the sale. These plans offer the reliable income you’ll need during retirement. Remember that while the sale of a business usually creates a capital gain, contributions to retirement accounts 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, according to plan rules).
- Minimizing Taxes: Making the most of retirement savings can reduce the taxes you might face when you sell your business.
- Succession Planning: Whether you’re transferring ownership, your nest egg offer the funds you need through the transition. You may also seek advice from a financial advisor with expertise in succession and retirement planning to help with taxes during the sale.
With the right retirement plan, 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 Riverside, CA Now?
Time remains one of the most crucial factors when it comes to saving for retirement. Beginning sooner rather than later not only helps you grow a more substantial retirement fund but also reduces the financial burden of playing catch-up as you get older. The following are reasons why it makes sense to begin today:
The Cost of Waiting
Waiting to start your retirement fund could lead to a substantial 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, subsequently, generate even more returns. The greater time span your money has to grow, the larger the benefit of this compounding process.
Example: Two individuals, Alex and Taylor are both entrepreneurs. Both of them want to save $500,000 for retirement by age 65:
- Alex starts saving $5,000 annually at age 30.
- Taylor delays savings until age 40 but puts away $7,500 annually to bridge the gap.
By age 65, using a projected 7% annual return:
- Alex contributes $180,000 and ends up with $691,184.39*.
- Taylor contributes $195,500 but only ends up with $474,367.78*.
How Early Contributions Grow
Even modest contributions made consistently may result in significant growth. Consider this example showing the effect of compounding:
- Starting at age 25: By investing $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 gap of over $260,000, all because of a 10-year delay.
The earlier you begin, the less you need to save each year to meet your retirement goals.
*These calculations represent estimates generated with NerdWallet’s Compound Interest Calculator, assuming a 7% annual return. These calculations involved multiplying yearly deposits by the years contributed. This information is for illustrative purposes only and are not a promise of future results. Your individual results may differ depending on elements like market conditions, fees, and your unique situation. Always consult a financial advisor for custom recommendations.
Take Control of Your Financial Future
For self-employed individuals in Riverside, CA, it might seem easier to focus more on reinvesting in your business rather than saving for retirement. That said, beginning a plan now gives you the chance to:
- Take advantage of growth that is tax-deferred or tax-free withdrawals in the future.
- Take advantage of flexible contributions that change with your cash flow.
- Build a financial cushion that ensures stability, no matter how your business evolves.
Starting early, the less you’ll be required to worry about catching up later in life. Taking steps toward your retirement goals today means taking control of your financial future and giving yourself the freedom to turn your attention to your goals—both for your golden years and your Riverside, CA business.
Types of Self-Employed Retirement Plans
There are several retirement savings options open for self-employed individuals in Riverside, CA, each with its own benefits and trade-offs. A financial advisor can help you understand the pros and cons of each plan and determine the one most suitable for your unique situation. Typically, your self-employed retirement plan options in Riverside, CA consist of:
Traditional or Roth IRA
Plan Overview: IRAs, or Individual Retirement Accounts, are financial tools for retirement that offer key tax perks. In a traditional IRA, the money you contribute is often tax-deductible, and earnings grow without immediate taxation, but withdrawals in retirement are subject to income tax. In contrast, with Roth IRAs, you contribute from post-tax earnings, but retirement withdrawals that qualify, including earnings, are tax-free. In both accounts, withdrawals come without penalties provided you are at least 59½.
Eligibility: Unlike plans linked to your job, IRAs, including traditional and Roth options are available to anyone with taxable earnings.
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: A Simplified Employee Pension (SEP) IRA is a retirement plan that allows those who are self-employed to set aside a portion of their self-employment income. Contributions are strictly employer contributions an employer, so, as a sole proprietor, you (the employee) are limited to contributions from the employer role more than 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. You may choose to contribute a set monetary value or a percentage of wages to employee accounts. A SEP IRA works well for businesses that experience cycles of high revenue and low revenue. In contrast to some alternatives, SEP IRAs are free of expensive setup or ongoing fees.
SEPs function like standard IRAs, where you contribute pre-tax dollars and withdrawals are taxed as income.
Eligibility: Any employer, including the self-employed can open 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 allowable contribution 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 self-employed retirement plan meant for companies that have no employees or where the only employee is a spouse. These plans are similar to standard 401(k) plans, and allow you to contribute as both an employee or an employer with pre-tax money. This allows for more savings compared to SEPs or IRAs; however, the extra savings options may be offset by more constrained investment avenues. Using a solo 401(k), you can make either traditional or Roth deferrals, which offer the same tax benefits as their IRA contribution counterparts.
Eligibility: Solo 401(k)s are available solely to business owners and their spouses may establish 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:
- Deferrals as an employee of up to 100% of your self-employed earnings, 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 for those who turn 60-63 in 2025.
- Employer profit-sharing contributions (as an employer) cannot exceed 25% of your net 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 if you're over age 50 (for 2025), $81,250 for individuals turning 60-63 in 2025.
Individual Defined Benefit Plan
Plan Overview: The defined benefit plan is a retirement option that guarantees a pre-established payout to business owners 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 strategy is best suited for higher-income professionals who aim to accumulate a substantial amount for retirement and can commit to making sizeable contributions. Contributions are tax deferred, and withdrawals are taxed as income in retirement.
Eligibility: Any self-employed individual operating a solo business or with less than five employees may establish an individual defined benefit plan, but it's typically advised for people above age 50 who earn at least $250,000 a year. In most cases, good candidates for defined benefit plans include:
- Entrepreneurs who desire to contribute more than $70,000 (or $77,500 for those aged 50+)
- Companies already contributing 3-4% but are open to increasing contributions
- Companies showing consistent profit patterns
- Business leaders over age 40 who wish to accelerate savings or increase their retirement contributions rapidly
Contribution Limits: The maximum allowable contribution is calculated by an actuary determined by your financial situation, age, and savings targets. Limits on 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 specialized in self-employed retirement plans serves as an invaluable resource for entrepreneurs. They have the expertise to help guide you through the challenges of retirement planning and develop a personalized approach that reflects your aspirations. A financial advisor in Riverside, CA will review your finances, understand your risk tolerance, and assist you in choosing wisely about saving and investing for retirement. A key 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
- Formalize a plan in writing that complies with IRS regulations
- Organize a trust plan to manage your assets
- Make sure you understand the plan's terms
- Monitor and adjust your plan when necessary
- 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 Riverside, CA: Correct Capital's Process
Self-employed individuals in Riverside, CA who aren’t equipped with the time or understanding to oversee their self-employed retirement plan independently can become overwhelmed as they look at their options. Through our team at Correct Capital, our Riverside, CA financial advisors handle the bulk of your retirement strategy for you, and strive to ensure meeting your financial objectives as easy 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: It only takes 20 minutes, a member of our advisor team can help understand if we're suited to your needs for you and your business. This brief introduction lets us learn about your needs with no pressure or major time investment on your part.
- Gather Information: Once we mutually decide to continue, we'll gather information, including how many employees you have (if any), your existing financial picture, and your future objectives. This allows us to put together a tailored approach that aligns with your goals.
- Review Your Plan: When we finalize a plan based on the information you provide, we'll meet with you and discuss your plan in detail to ensure you understand it and understand how it best correlates to your needs.
- 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 check in and review your strategy to keep it tailored to your evolving circumstances.
Our Riverside, CA financial advisors and retirement plan consultants act as fiduciary advisors, who are obligated to they are legally and ethically bound to act in your best interest.
Other financial advisory services we offer in Riverside, CA include:
- 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
- High-Net-Worth Wealth Management
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 must deliver more than simply sound financial advice. At Correct Capital, we take the time to get to know our clients and their businesses to provide customized self-employed retirement plans. We offer all our Riverside, CA 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, call Correct Capital today at 877-930-401k or contact us online.
