Self-employed retirement plans Riverside, CA. The flexibility of being your own boss in Riverside, CA is one of the best aspects of having a self-directed career. However, this independence often comes with a lack of security, particularly in terms of planning for retirement, since you don't have the option of employer-sponsored retirement plans. Only 13% of self-employed individuals have a workplace retirement plan, although many should consider looking into other possibilities. In addition to having a financially stable retirement, partnering with a financial advisor in Riverside, CA to create your self-employed retirement plan delivers significant tax advantages that enable both you and your business to thrive.
Few Riverside, CA investment consulting and retirement planning firms understand the needs of self-employed individuals quite like Correct Capital. The father of our founder was a small business owner himself (learn more about our story here), and we are deeply experienced in assisting business owners in their retirement planning needs. We recognize that your professional and personal aspirations go far beyond basic numbers, and we work tirelessly to create personalized solutions that reflect your objectives. Keep reading to learn more 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 speak with a entrepreneurial financial advisor in Riverside, CA today.
Why Riverside, CA Self-Employed Individuals Should Have a Retirement Plan
Retirement plans for self-employed individuals help prepare you for the future, they also deliver tangible benefits today. Offering flexibility in contributions to substantial tax savings, working with a financial advisor in Riverside, CA allows you to customize your retirement plan to align with your individual circumstances.
Flexibility That Fits Your Income
When your earnings vary annually, a plan like a SEP IRA or Solo 401(k) gives you the option to modify how much you save:
- Customizable Contributions: Save extra during profitable years and scale back when your earnings dip, ensuring your plan works with your financial situation.
- Roth Options: Opting for a Roth Solo 401(k) lets you handle taxes upfront, enabling you to withdraw your savings tax-free down the road—an advantageous choice if you believe your tax rate to be higher in the future.
Save Money on Taxes
Plans designed for the self-employed deliver powerful tax benefits:
- Tax-Deductible Contributions: Contributions to a SIMPLE IRA reduce what you owe in taxes, helping you keep more of your earnings.
- Tax-Deferred Growth: Investments grow tax-free until withdrawal, which gives your money more time to accumulate.
- State-Specific Incentives: In some states, you may be eligible for additional tax breaks as a sole proprietor. These local incentives help 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, cutting down 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 linked to the way you invest:
- Diversified Portfolios: Spreading your investments across a mix of stocks, bonds, and other assets serves to reduce risk while helping to grow your savings.
- Emergency Back-Up: Pairing your retirement plan with a financial buffer for your business prevents you from tapping into your nest egg during financial hardships and risking extra costs.
Plan for the Future of Your Riverside, CA Business
Preparing for retirement can assist you think through what’s next with your Riverside, CA business:
- Selling Your Business: For those considering a sale, retirement accounts like SEP IRAs and Solo 401(k)s remain your personal assets and won’t be included in the sale. These plans ensure the steady income you’ll need during retirement. Remember that while selling your business results in a capital gain, contributions to retirement accounts are subject to yearly maximums (e.g., as much as $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: Strategically planning your contributions minimizes the taxes you’ll owe when you pass on your business.
- Succession Planning: For those winding down or handing over their business, your retirement savings provide a stable foundation as you make this shift. You may also partner with 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, lower your tax bill, and create a secure foundation 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. Starting early not only allows you to build a bigger financial cushion but also minimizes the financial burden of catching up later in life. Here’s why it is beneficial to start now:
The Cost of Waiting
Putting off saving for retirement may cause a significant impact on the total you’ll have when you reach retirement age. The primary reason is compound interest—the concept where your investments grow, and those returns, subsequently, earn even more returns. The more time your money has to grow, the larger the benefit of compounding.
Example: Alex and Taylor are both self-employed individuals. Their shared goal is 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 saves $7,500 annually to make up for lost time.
By age 65, with an assumption of 7% annual return:
- Alex contributes $180,000 and ends up with $691,184.39*.
- Taylor puts in $195,500 but accumulates just $474,367.78*.
How Early Contributions Grow
Regular, modest investments made consistently can lead to substantial growth. Take a look at this scenario 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 end up with $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 shortfall of over $260,000, simply due to a 10-year delay.
The earlier you begin, the less effort required each year to reach your retirement goals.
*The numbers shown in this scenario are based on estimates calculated using 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. The scenarios provided are for illustrative purposes only and cannot predict actual future outcomes. Your individual results may differ 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
For self-employed individuals in Riverside, CA, it is often the case that you focus more on reinvesting in your business over saving for retirement. That said, beginning a plan now gives you the chance to:
- Leverage tax-deferred growth or withdrawals without taxes in the future.
- Take advantage of flexible contributions that align with your income.
- Create a financial cushion that offers peace of mind, no matter how your business changes.
Getting started now, the less you’ll need to worry about making up for lost time later in life. Taking steps toward your retirement goals today means gaining control over your financial future and giving yourself the freedom to turn your attention to your objectives—both for your retirement years and your Riverside, CA business.
Types of Self-Employed Retirement Plans
There are several retirement savings options available for those working for themselves in Riverside, CA, each offering its own advantages and considerations. A financial advisor is available to help you learn about the benefits and drawbacks of each option and identify the one ideal 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 provide specific tax advantages. In a conventional IRA, the money you contribute is often tax-deductible, and investment earnings grow tax-deferred, but money taken out during retirement are subject to income tax. In contrast, with Roth IRAs, you contribute using income already taxed, but eligible distributions during retirement, including earnings, are exempt from taxes. In both cases, withdrawals are penalty-free as long as you are at least 59½.
Eligibility: Unlike 401(k)s, which are employer-sponsored, both traditional and Roth IRAs are accessible for individuals 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: The Simplified Employee Pension IRA offers a way to save for retirement that allows entrepreneurs to save a percentage of their net business profits. Contributions can only be made by an employer, so, as a independent business owner, you (the employee) are limited to contributions from the employer role above the 25% you (the employer) already contributed. If you have employees, it's required to 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 works well for companies with periods of inconsistent earnings. Compared to other retirement options, SEP IRAs don’t have the high fees associated with starting or maintaining other plans.
SEPs work like conventional IRAs, where you contribute pre-tax dollars and withdrawals are taxed as income.
Eligibility: Both employers and self-employed individuals can establish 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 allowable contribution is based on a special calculation.
Solo 401(k)
Plan Overview: A Solo 401(k) plan, sometimes referred to as an Individual 401(k) or one-participant 401(k) plan, is a retirement savings plan meant for businesses without employees or when the sole employee is your spouse. These plans are similar to employer-sponsored 401(k) plans, and enable contributions as both an employee or an employer with pre-tax money. This offers more savings than SEPs or IRAs; however, the additional opportunities may be offset by more limited investment options. With this type of plan, you can make either traditional or Roth deferrals, which have the same tax benefits as their IRA contribution counterparts.
Eligibility: This plan is exclusively for 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 are allowed to make two types of contributions:
- Elective deferrals (as an employee) of up to 100% of your self-employed earnings, up to the annual contribution limit. In 2025, those limits are $23,500, or $31,000 for those aged 50 and above, or $34,750 for individuals aged 60-63 in 2025.
- Employer profit-sharing contributions (as an employer) must not surpass 25% of your net self-employment income, which is defined as net profit minus half of your self-employment tax and the deferrals you made.
Total contributions are capped at $70,000, or $77,500 if you're over age 50 (as of 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 delivers a set amount to business owners upon retirement. As opposed to defined contribution plans, a defined benefit plan doesn't fluctuate based on investment returns, but lets individuals clearly understand what they'll get in retirement. This strategy is recommended for higher-income professionals who are focused on saving a large amount for retirement and are willing to make substantial contributions. Contributions grow tax-free until withdrawal, and withdrawals are taxed as income in retirement.
Eligibility: Any self-employed individual running an owner-only business or with a small staff of under five may establish an individual defined benefit plan, but it's typically recommended for people above age 50 who make $250,000 or more annually. Typically, good candidates for defined benefit plans tend to be:
- Business owners or partners who want to invest more than $70,000 (or $77,500 for individuals 50 and older)
- Businesses currently investing 3-4% but are open to increasing contributions
- Organizations that have demonstrated consistent profit patterns
- Entrepreneurs over age 40 who aim to quickly build retirement savings or boost savings within a short timeframe
Contribution Limits: The contribution limit must be determined by an actuary determined by your financial situation, age, and savings targets. Contribution limits change annually.
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 can be an important asset for self-employed individuals. They offer the knowledge to assist guide you through the challenges of retirement planning and develop a personalized approach that reflects your aspirations. A financial advisor in Riverside, CA will assess where you stand financially, identify your risk preferences, and help you in selecting the best options about saving and investing for retirement. Part of what we do for you includes:
- Help you choose a plan that suits your unique requirements
- Further adapt the plan to your specific situation even further
- Formalize a plan in writing that complies with IRS regulations
- Organize a trust plan to manage your assets
- Ensure you comprehend 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 maximizing your social security benefits
Self-Employed Retirement Plans in Riverside, CA: Correct Capital's Process
Self-employed individuals in Riverside, CA who lack the time, interest, or knowledge to manage their self-employed retirement plan on their own often feel overwhelmed as they look at their available plans. Through our team at Correct Capital, our Riverside, CA financial advisors take on the majority of your savings plan setup for you, to help make meeting your retirement goals as hassle-free as possible for you. We can help you get set up your self-employed retirement plan in just four 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 brief introduction helps us understand what you're looking for with no pressure or major time investment on your part.
- Gather Information: If we both decide to move forward, we'll request information, including how many employees you have (if any), your existing financial picture, and your retirement goals. This helps us create a tailored approach 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 thoroughly to help you fully grasp it and explain its fit to your circumstances.
- Implementation and Monitoring: Once we've agreed on your plan, we'll implement the necessary steps so you can begin contributing. Over the course of our partnership, 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, which means they are legally and ethically bound to act in your best interest.
Other financial advisory services we offer in Riverside, CA include:
- Roth Conversion
- Investment Management
- 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
Your business isn't "just a business" to you, and your Riverside, CA financial advisors must deliver more than simply sound financial advice. With Correct Capital, we take the time to get to know our clients and their businesses to deliver personalized 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.
