Self-employed retirement plans Rochester, NY. The independence of owning your own business in Rochester, NY offers many benefits of being self-employed. That said, this flexibility can come with certain challenges, notably in terms of building your retirement fund, since you don't have the benefit of retirement programs through an employer. Only 13% of self-employed individuals have a workplace retirement plan, although many could benefit from exploring their options. In addition to enjoying a more comfortable retirement, seeking advice from a financial advisor in Rochester, NY to create your self-employed retirement plan offers significant tax advantages that allow your business to grow and succeed.
Few Rochester, NY financial advisory and retirement planning firms understand the needs of self-employed individuals quite like Correct Capital. Our founder's father was a small business owner himself (learn more about our story here), and we have a rich history of helping businesses with their retirement planning needs. We know that your business and retirement aspirations extend well past just monetary concerns, and we are dedicated to create customized solutions to meet your unique goals. Keep reading to learn more about your self-employed retirement plan options in Rochester, NY, or give us a call at Correct Capital at 877-930-401k or contact us online to consult with a small business financial advisor in Rochester, NY today.
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Why Rochester, NY Self-Employed Individuals Should Have a Retirement Plan
Retirement plans for self-employed individuals not only prepare you for the future, they also provide immediate benefits today. Offering flexibility in contributions to significant tax savings, partnering with a financial advisor in Rochester, NY helps you design your retirement plan to align with your individual circumstances.
Flexibility That Fits Your Income
For those with fluctuating income from year to year, a plan like a SEP IRA or Solo 401(k) offers the option to modify how much you save:
- Customizable Contributions: Contribute more during profitable years and cut back when revenues are down, so that your plan fits your cash flow.
- Roth Options: A Roth Solo 401(k) lets you pay taxes on contributions now, enabling you to withdraw tax-free later—a smart decision if you believe your tax rate will increase in the future.
Save Money on Taxes
Plans designed for the self-employed offer powerful tax benefits:
- Tax-Deductible Contributions: Contributions to a SEP IRA shrink your tax liability, so you can keep more of your income.
- Tax-Deferred Growth: Investments grow tax-free until withdrawal, which gives your money more time to compound.
- State-Specific Incentives: In some states, you might access extra tax breaks as a self-employed individual. These state-level incentives help make these plans even more valuable.
- Retirement Savings Contributions Credit (Saver’s Credit): Those who meet the requirements can take advantage of a 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 linked to the way you invest:
- Diversified Portfolios: Distributing your investments across varied stocks, bonds, and other assets can help minimize exposure to risk while helping to grow your savings.
- Emergency Back-Up: Combining your retirement strategy and a business emergency fund helps you avoid tapping into your nest egg during challenging periods and incurring penalties.
Plan for the Future of Your Rochester, NY Business
Preparing for retirement enables you to plan ahead for what’s next with your Rochester, NY business:
- Selling Your Business: When selling your business, retirement accounts like SEP IRAs and Solo 401(k)s remain your personal assets and won’t be included in the sale. These savings can provide the financial stability you’ll need in the future. Keep in mind 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, with catch-up contributions, depending on plan details).
- Minimizing Taxes: Using retirement contributions wisely can reduce the taxes you are required to pay when you pass on your business.
- Succession Planning: If you’re passing the business on, your retirement accounts provide a stable foundation during the change. You may also partner with a financial advisor with expertise in succession and retirement planning to reduce taxes associated with the transaction.
With the right retirement plan, you gain control over your financial future, cut down your tax obligations, and create a strong framework for both your retirement and your business goals.
Why Start a Self-Employed Retirement Plan in Rochester, NY Now?
Time remains one of the most valuable resources when it comes to saving for retirement. Beginning sooner rather than later not only allows you to build a larger nest egg but also lowers the pressure of playing catch-up as you get older. Here’s why it is beneficial to start now:
The Cost of Waiting
Putting off saving for retirement could lead to a substantial impact on the total you’ll have when you stop working. The main reason is compound interest—the concept where your investments generate earnings, and those returns, then, accumulate even more returns. The more time your money has to grow, the greater the benefit of this compounding process.
Example: Two individuals, Alex and Taylor are both self-employed individuals. 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 accumulates $691,184.39*.
- Taylor puts in $195,500 but accumulates just $474,367.78*.
How Early Contributions Grow
Even modest contributions invested steadily can lead to significant growth. Here’s a simple scenario showing the effect of compound interest:
- 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: Saving 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.
The earlier you begin, the lower your annual savings needs each year to meet your retirement goals.
*The figures provided in this example are based on estimates calculated using NerdWallet’s Compound Interest Calculator, based on a 7% annual return. Annual deposits were multiplied by the number of years to estimate total contributions. The scenarios provided are intended as illustrative examples and are not a promise of future results. Outcomes may change based 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 Rochester, NY, it is often the case that you focus more on reinvesting in your business over saving for retirement. Even so, initiating a plan now enables you to:
- Benefit from tax-deferred growth or withdrawals without taxes down the road.
- Take advantage of contribution flexibility that change with your income.
- Create a financial cushion that ensures stability, no matter how your business changes.
The sooner you start, the less you’ll have to worry about catching up later in life. Saving for retirement now means managing your financial future and creating for yourself the ability to focus on your objectives—both for your golden years and your Rochester, NY business.
Types of Self-Employed Retirement Plans
Multiple retirement savings options open for self-employed individuals in Rochester, NY, each offering its own pros and cons. 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 Rochester, NY consist of:
Traditional or Roth IRA
Plan Overview: IRAs, or Individual Retirement Accounts, are financial tools for retirement that include key tax perks. In a conventional IRA, contributions are typically tax-deductible, and earnings grow without immediate taxation, but retirement distributions are subject to income tax. In contrast, with Roth IRAs, you contribute 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 401(k)s, which are employer-sponsored, traditional and Roth IRAs are open to those 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: The Simplified Employee Pension IRA serves as a retirement savings option that permits self-employed individuals to contribute a percentage of their net earnings. Contributions must come from an employer, so, as a self-employed individual, you (the employee) are limited to contributions from the employer role beyond the 25% you (the employer) already contributed. If you have employees, you are obligated to contribute the same amount for them as you do for yourself. You have the flexibility to contribute a flat-dollar amount or a percentage of wages to employee accounts. This type of plan may be ideal for entrepreneurs facing cycles of high revenue and low revenue. In contrast to some alternatives, SEP IRAs are free of costly startup or administrative fees.
SEPs function like conventional IRAs, where the contributions are tax-deferred and retirement distributions are taxable.
Eligibility: Employers of any type, including self-employed individuals can open 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 contribution you can make is based on a special calculation.
Solo 401(k)
Plan Overview: Solo 401(k)s, 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. Solo 401(k)s function similarly to employer-sponsored 401(k) plans, and enable contributions as both an employee or an employer with pre-tax money. This provides more savings compared to SEPs or IRAs; however, the additional opportunities can be balanced by more limited investment options. In a solo 401(k) plan, you can make either traditional or Roth deferrals, which share the same tax benefits as their IRA contribution counterparts.
Eligibility: Solo 401(k)s are available solely to business owners and their spouses can set up and contribute to a solo 401(k).
Contribution Limits: If you are self-employed 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-employment income, capped at the annual contribution limit. The contribution limits for 2025 include $23,500, or $31,000 if you're over 50, or $34,750 for individuals aged 60-63 in 2025.
- Profit-sharing contributions (as an employer) must not surpass 25% of your net self-employment income, which is your net profit minus half of your self-employment tax and the deferrals you made.
Total contributions are capped at $70,000, or $77,500 for individuals aged 50+ (as of 2025), $81,250 for individuals turning 60-63 in 2025.
Individual Defined Benefit Plan
Plan Overview: Defined benefit plans offers a structured retirement solution that guarantees a set amount to self-employed individuals upon retirement. As opposed to defined contribution plans, investment returns don’t affect the payout, but lets individuals clearly understand what they'll receive in retirement. This strategy is ideal for wealthier entrepreneurs who are focused on saving a large amount for retirement and are willing to make sizeable contributions. Contributions offer tax-deferred growth, and withdrawals are taxable as income during retirement.
Eligibility: Entrepreneurs managing a one-person company or employing fewer than five people are eligible to open an individual defined benefit plan, but it's generally advised for people above age 50 who make $250,000 or more annually. Typically, good candidates for defined benefit plans are:
- Entrepreneurs who aim to deposit more than $70,000 (or $77,500 for individuals 50 and older)
- Organizations that already put in 3-4% but are open to increasing contributions
- Businesses that have demonstrated consistent profit patterns
- Entrepreneurs over age 40 who aim to quickly build retirement 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 Rochester, NY for Your Self-Employed Retirement Plan
Working with a financial advisor in Rochester, NY focused on self-employed retirement strategies serves as an essential partner for self-employed individuals. They bring the skills needed to understand the intricacies of saving for retirement and develop a customized plan that aligns with your goals. An expert in your area will review your finances, determine how much risk you’re comfortable with, and help you in making informed decisions about saving and investing for retirement. Included in what we do for you involves:
- Guide you in choosing a plan that suits your unique requirements
- Customize the plan to your needs even further
- Create a written plan in accordance with IRS guidelines
- Organize a trust plan to manage your assets
- Help you understand the plan's terms
- Monitor and adjust your plan to keep it aligned with your goals
- Deliver continuous support and financial insights to help you navigate your retirement journey
- Increase your retirement income by making the most of your social security
Self-Employed Retirement Plans in Rochester, NY: Correct Capital's Process
Self-employed individuals in Rochester, NY who lack the time, interest, or knowledge to manage their retirement savings strategy on their own may end up overwhelmed as they look at their options. With Correct Capital, our Rochester, NY financial advisors manage the majority of your retirement planning for you, and strive to ensure meeting your future savings targets as hassle-free as possible for you. We will guide you in creating 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 short conversation allows us to learn about your needs with no pressure or major time investment on your part.
- Gather Information: Once we mutually decide to continue, we'll request information, including whether you have employees, your existing financial picture, and your retirement goals. This enables us to craft a tailored approach that aligns with your goals.
- Review Your Plan: When we finalize a plan based on the information you provide, we'll schedule a meeting and go over your plan in detail to ensure you understand it and understand how it best correlates to your needs.
- Implementation and Monitoring: Once we've agreed on your plan, we'll put everything in place so you can start saving. As time goes on, we'll meet with you and monitor your plan to keep it tailored to your evolving circumstances.
Our Rochester, NY financial advisors and retirement plan consultants act as fiduciary advisors, who are obligated to they are legally and ethically bound to prioritize your needs above all else.
Other financial advisory services we offer in Rochester, NY include:
- 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 Rochester, NY
Your business isn't "just a business" to you, and your Rochester, NY financial advisors should provide more than simply sound financial advice. At Correct Capital, we focus on building a relationship with our clients and their businesses to provide personalized self-employed retirement plans. We offer all our Rochester, NY clients our I.O.U. promise: all guidance we provide will be independent, objective, and unbiased. To get started on your self-employment retirement plan, contact Correct Capital now at 877-930-401k or contact us online.
