Self-employed retirement plans Sacramento, CA. The independence of being your own boss in Sacramento, CA is one of the best aspects of working for yourself. However, this flexibility can come with a lack of security, especially when it comes to building your retirement fund, since you don't have access to 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 achieving a more comfortable retirement, partnering with a financial advisor in Sacramento, CA to set up your self-employed retirement plan can provide significant tax advantages that allow both you and your business to thrive.
Few Sacramento, CA investment consulting and retirement planning firms are as attuned to the requirements of entrepreneurs quite like Correct Capital. The father of our founder was a small business owner himself (learn more about our story here), and Correct Capital have a rich history of assisting business owners in their retirement planning needs. We understand that your goals for your business and retirement aren’t limited to basic numbers, and we are dedicated to provide tailored solutions that reflect your objectives. Continue exploring to find out about your self-employed retirement plan options in Sacramento, CA, or give us a call at Correct Capital at 877-930-401k or contact us online to talk to a small business financial advisor in Sacramento, CA today.
Schedule a Meeting With an Advisor Today
Correct Capital Wealth Management's office is physically located in St. Louis, MO, but we serve clients throughout the United States in both personal financial planning and corporate retirement plans.
Schedule a 15-Minute Introductory Call
Why Sacramento, CA Self-Employed Individuals Should Have a Retirement Plan
Retirement plans for self-employed individuals are essential for preparing you for the future, they also deliver real benefits today. Offering flexibility in contributions to significant tax savings, working with a financial advisor in Sacramento, CA helps you create your retirement plan to align with your specific needs.
Flexibility That Fits Your Income
If your income changes annually, a plan like a SEP IRA or Solo 401(k) offers the freedom to tailor how much you save:
- Customizable Contributions: Save extra during high-income years and scale back when income is lower, ensuring your plan fits your financial situation.
- Roth Options: A Roth Solo 401(k) lets you handle taxes upfront, allowing you to withdraw tax-free later—a smart decision if you expect your tax rate to be higher in the future.
Save Money on Taxes
Self-employed retirement plans provide valuable tax benefits:
- Tax-Deductible Contributions: Contributions to a SEP IRA shrink your tax liability, allowing you to keep more of your income.
- Tax-Deferred Growth: Investments grow tax-free until withdrawal, which gives your money more time to grow.
- State-Specific Incentives: Based on your location, you might access extra credits as a sole proprietor. These regional incentives help 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 contributed a retirement plan, further reducing 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 about how you invest:
- Diversified Portfolios: Distributing your investments across different asset classes like stocks and bonds serves to mitigate financial risk while helping to grow your nest egg.
- Emergency Back-Up: Pairing your retirement plan with a dedicated business safety net ensures you don’t using your retirement funds during tough times and facing tax penalties.
Plan for the Future of Your Sacramento, CA Business
Preparing for retirement also helps you plan ahead for what’s next with your Sacramento, CA business:
- Selling Your Business: If you’re planning to sell, plans like SEP IRAs or Solo 401(k)s remain yours and won’t be included in the sale. These savings offer the steady income you’ll need in the future. It’s important to note that while selling your business results in a capital gain, retirement plan contributions are subject to yearly maximums (e.g., up to $7,000 for IRAs or a maximum of $70,000 for Solo 401(k)s, including catch-up contributions, based on plan compensation).
- Minimizing Taxes: Strategically planning your contributions minimizes the taxes you are required to pay when you sell your business.
- Succession Planning: If you’re passing the business on, your retirement accounts offer the funds you need through the transition. You may also partner with 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 solid base for both your retirement and your business goals.
Why Start a Self-Employed Retirement Plan in Sacramento, CA Now?
There’s no denying that time is one of the most valuable resources in retirement planning. Starting early not only allows you to build a bigger financial cushion but also reduces the stress of saving aggressively in the future. Here’s why it pays to take action now:
The Cost of Waiting
Delaying your retirement savings can have a significant impact on the amount 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 longer your money has to grow, the larger the effect of this growth.
Example: Two individuals, Alex and Taylor are both self-employed professionals. Their shared goal is to save $500,000 for retirement by age 65:
- Alex initiates savings of $5,000 annually at age 30.
- Taylor waits until age 40 but contributes $7,500 annually to bridge the gap.
By age 65, with an assumption of 7% annual return:
- Alex contributes $180,000 and achieves a total of $691,184.39*.
- Taylor invests $195,500 but achieves a total of only $474,367.78*.
How Early Contributions Grow
Small, consistent savings contributed over time may result in substantial growth. Consider this example showing the power of compound interest:
- 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: Saving the same $200 per month leaves you with 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 reach your retirement goals.
*These calculations are 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 do not guarantee future performance. Your individual results may differ based on elements like market conditions, fees, and your unique situation. We recommend consulting a financial advisor for custom recommendations.
Take Control of Your Financial Future
If you’re self-employed in Sacramento, CA, it might seem easier to put more emphasis on reinvesting in your business instead of saving for retirement. Even so, starting a plan now allows you to:
- Take advantage of tax-free future growth or tax-free withdrawals in the future.
- Take advantage of adjustable savings that adapt to your income.
- Establish a long-term safety measure that offers peace of mind, no matter how your business develops.
Starting early, the less you’ll need to worry about catching up later in life. Taking steps toward your retirement goals today means gaining control over your financial future and creating for yourself the opportunity to concentrate on your goals—both for your future retirement and your Sacramento, CA business.
Types of Self-Employed Retirement Plans
Multiple retirement savings options available for self-employed individuals in Sacramento, CA, each offering its own pros and cons. A financial advisor can help you learn about the pros and cons of each option and identify the one most suitable for your unique situation. Generally speaking, your self-employed retirement plan options in Sacramento, CA are:
Traditional or Roth IRA
Plan Overview: IRAs, or Individual Retirement Accounts, are long-term savings plans that provide key tax perks. In a traditional IRA, you can usually deduct your contributions from taxable income, and earnings grow without immediate taxation, but money taken out during retirement are taxed as income. In contrast, Roth IRAs require contributions using income already taxed, but retirement withdrawals that qualify, including earnings, are not taxed. In both accounts, withdrawals are penalty-free 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 qualify for catch-up contributions.
Simplified Employee Pension Plan (SEP IRA)
Plan Overview: SEP IRAs is a retirement plan that permits 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 self-employed individual, you (the employee) are limited to contributions from the employer role above the 25% you (the employer) have designated. 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 flat-dollar amount or a percentage of wages to employee accounts. SEP IRAs may be ideal for companies with periods of inconsistent earnings. Compared to other retirement options, SEP IRAs lack expensive setup or ongoing fees.
SEPs work like standard IRAs, where you contribute pre-tax dollars and retirement distributions are taxable.
Eligibility: Any employer, including the self-employed can set up 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: The Solo 401(k), sometimes referred to as an Individual 401(k) or one-participant 401(k) plan, is a savings option for the self-employed intended for companies that have 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 allows for more savings versus SEPs or IRAs; however, the extra savings options often come with more restricted investment choices. 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: This plan is exclusively for business owners and their spouses may establish and contribute to a solo 401(k).
Contribution Limits: As a self-employed individual 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 for those aged 50 and above, or $34,750 for individuals aged 60-63 in 2025.
- Profit-sharing contributions (as an employer) cannot exceed 25% of your net earnings from self-employment, which is defined as net profit minus half of your self-employment tax and the deferrals you made.
The total contribution cannot exceed $70,000, or $77,500 for individuals aged 50+ (in 2025), $81,250 for those aged 60-63 in 2025.
Individual Defined Benefit Plan
Plan Overview: The defined benefit plan offers a structured retirement solution that delivers a fixed, predetermined benefit to self-employed individuals upon retirement. Unlike defined contribution plans mentioned above, investment returns don’t affect the payout, but allows self-employed individuals to know the precise amount they'll receive in retirement. This plan is recommended for higher-income entrepreneurs 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 operating a solo business or employing fewer than five people can open an individual defined benefit plan, but it's generally recommended for those over 50 who earn at least $250,000 a year. Typically, good candidates for defined benefit plans include:
- Partners or owners who desire to contribute more than $70,000 (or $77,500 for individuals 50 and older)
- Businesses currently investing 3-4% and are willing to do more
- Organizations with proven consistent profit patterns
- Partners or owners over age 40 who desire to "catch up" or increase their retirement contributions rapidly
Contribution Limits: The cap on contributions must be determined by an actuary using your income, age, and retirement goals. Contribution limits are adjusted each year.
The Importance of a Financial Advisor in Sacramento, CA for Your Self-Employed Retirement Plan
A financial advisor in Sacramento, CA focused on self-employed retirement strategies can be an essential partner for those working for themselves. They have the expertise to help understand the intricacies of saving for retirement and develop a personalized approach that aligns with your goals. A financial advisor in Sacramento, CA will assess where you stand financially, identify your risk preferences, and help you in making informed decisions about saving and investing for retirement. Part of what we do for you features:
- Guide you in choosing a plan that best fits your needs and goals
- Further adapt the plan to fit you personally even further
- Formalize a plan in writing in accordance with IRS guidelines
- Organize a trust plan to manage your assets
- Help you understand the plan's terms
- Review and modify your plan as needed
- Provide ongoing education and advice to help you navigate your retirement journey
- Increase your retirement income by maximizing your social security benefits
Self-Employed Retirement Plans in Sacramento, CA: Correct Capital's Process
Sacramento, CA business owners who lack the time, interest, or knowledge to manage their own retirement planning on their own can become overwhelmed as they look at their available plans. At Correct Capital, our Sacramento, CA financial advisors take on the lion's share of your savings plan setup for you, to help make meeting your future savings targets 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: It only takes 20 minutes, a member of our advisor team can help understand if we're a good fit for you and your business. This short conversation lets us get a sense of your goals with no pressure or major time investment on your part.
- Gather Information: Should we agree to proceed, we'll ask for information, including whether you have employees, your present financial standing, and your retirement goals. This helps us create a custom plan that aligns with your goals.
- Review Your Plan: After we put together a plan based on the information you provide, we'll sit down with you and go over your plan thoroughly to help you fully grasp it and explain its fit to your circumstances.
- Implementation and Monitoring: After we agree on your plan, we'll set everything up so you can initiate your savings journey. As time goes on, we'll meet with you and monitor your plan to keep it tailored to your evolving circumstances.
Our Sacramento, CA financial advisors and retirement plan consultants serve as fiduciary advisors, who are obligated to they are committed by law and ethics to prioritize your needs above all else.
Other financial advisory services we offer in Sacramento, 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 Sacramento, CA
You don't see your business as "just a business", and your Sacramento, CA financial advisors should provide more than simply sound financial advice. At Correct Capital, we take the time to get to know our clients and their businesses to create personalized self-employed retirement plans. We offer all our Sacramento, 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.
