Self-employed retirement plans San Bernardino, CA. The independence of running your own company in San Bernardino, CA offers many benefits of being self-employed. However, this freedom can come with a lack of security, notably when it comes to building your retirement fund, because you don't have access to a workplace retirement plan. Only 13% of self-employed individuals have a workplace retirement plan, yet countless would be better off exploring their options. In addition to enjoying a financially stable retirement, partnering with a financial advisor in San Bernardino, CA to set up your self-employed retirement plan offers significant tax advantages that help you to move your business forward.
Few San Bernardino, CA wealth management and retirement planning firms understand the needs of entrepreneurs quite like Correct Capital. Our company’s founder grew up with a father who was a small business owner himself (check out our story here), and we take pride in supporting entrepreneurs with their retirement planning needs. We understand that your business and retirement aspirations aren’t limited to basic numbers, and we are dedicated to provide tailored solutions aligned with your vision. Read on to discover about your self-employed retirement plan options in San Bernardino, CA, or reach out to Correct Capital at 877-930-401k or contact us online to talk to a entrepreneurial financial advisor in San Bernardino, CA today.
Why San Bernardino, 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 tangible benefits today. Offering flexibility in contributions to considerable tax savings, working with a financial advisor in San Bernardino, CA enables you to customize your retirement plan to suit your individual circumstances.
Flexibility That Fits Your Income
If your income changes from year to year, a plan like a SEP IRA or Solo 401(k) gives you the freedom to adjust how much you save:
- Customizable Contributions: Contribute more during successful years and scale back when income is lower, so your plan fits your financial situation.
- Roth Options: Choosing a Roth Solo 401(k) lets you handle taxes upfront, so you can withdraw your savings tax-free down the road—a wise move if you believe your tax rate to be higher in the future.
Save Money on Taxes
Plans designed for the self-employed offer significant tax benefits:
- Tax-Deductible Contributions: Contributions to a SEP IRA reduce what you owe in taxes, helping you keep more of your earnings.
- Tax-Deferred Growth: Investments grow tax-free until withdrawal, providing your money more time to compound.
- State-Specific Incentives: Depending on where you live, you could qualify for extra tax breaks as a sole proprietor. These regional incentives make these plans even more beneficial.
- Retirement Savings Contributions Credit (Saver’s Credit): Those who meet the requirements can claim a tax credit of up to 50% of the first $2,000 put into a retirement plan, further reducing your tax bill even more.
Protect Your Savings With Smart Investments
Creating a stable future goes beyond just how much you save—it’s also about how you invest:
- Diversified Portfolios: Spreading your investments across a mix of stocks, bonds, and alternatives can help reduce risk while continuing to build your retirement fund.
- Emergency Back-Up: Supplementing your retirement savings with a financial buffer for your business helps you avoid tapping into your nest egg during tough times and incurring penalties.
Plan for the Future of Your San Bernardino, CA Business
Preparing for retirement also helps you think through what’s next with your San Bernardino, CA 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 offer 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, contributions to retirement accounts are restricted by contribution limits (e.g., up to $7,000 for IRAs or up to $70,000 for Solo 401(k)s, factoring in catch-up contributions, based on plan compensation).
- Minimizing Taxes: Using retirement contributions wisely can reduce the taxes you are required to pay when you transfer your business.
- Succession Planning: Whether you’re transferring ownership, your nest egg provide the funds you need during the change. You can also work with a financial advisor experienced in both succession and retirement strategies to reduce taxes on the sale.
With the best-fit retirement strategy, 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 San Bernardino, CA Now?
Time is one of the most valuable resources in retirement planning. Beginning sooner rather than later not only lets you accumulate a more substantial retirement fund but also reduces the stress of playing catch-up as you get older. This is why it pays to take action 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 primary reason is compound interest—the concept where your investments grow, and those returns, subsequently, accumulate even more returns. The more time your money has to grow, the larger the impact of this compounding process.
Example: Two individuals, Alex and Taylor are both entrepreneurs. Their shared goal is 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, with an assumption of 7% annual return:
- Alex puts in $180,000 and ends up with $691,184.39*.
- Taylor invests $195,500 but accumulates just $474,367.78*.
How Early Contributions Grow
Regular, modest investments contributed over time may result in significant growth. Here’s a simple scenario showing the effect of compounding:
- Starting at age 25: By investing $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.
The earlier you begin, the lower your annual savings needs each year to reach your retirement goals.
*The figures provided in this example represent estimates calculated using NerdWallet’s Compound Interest Calculator, assuming a 7% annual return. The contributions were calculated by multiplying the annual deposit amount by the total number of years contributions were made. The scenarios provided are intended as illustrative examples and are not a promise of future results. Actual results may vary depending on factors such as market conditions, fees, and your unique situation. Always consult a financial advisor for custom recommendations.
Take Control of Your Financial Future
As a self-employed person in San Bernardino, 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 allows you to:
- Take advantage of tax-deferred growth or withdrawals without taxes in the future.
- Enjoy adjustable savings that adapt to your earnings.
- Establish a safety net that ensures stability, no matter how your business evolves.
Getting started now, the less you’ll have to worry about catching up later in life. Saving for retirement now means gaining control over your financial future and allowing yourself the ability to focus on your goals—both for your future retirement and your San Bernardino, CA business.
Types of Self-Employed Retirement Plans
A variety of retirement savings options designed for entrepreneurs in San Bernardino, CA, each offering its own advantages and considerations. A financial advisor will guide you to evaluate the benefits and drawbacks of each plan and determine the one most suitable for your circumstances. Generally speaking, your self-employed retirement plan options in San Bernardino, CA are:
Traditional or Roth IRA
Plan Overview: IRAs, or Individual Retirement Accounts, are retirement savings vehicles that offer specific tax advantages. In a standard IRA, the money you contribute is often tax-deductible, and investment earnings grow tax-deferred, but retirement distributions are subject to income tax. In contrast, Roth IRAs require contributions are made with after-tax income, but eligible distributions during retirement, including earnings, are exempt from taxes. In both accounts, withdrawals don’t incur penalties 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 remain $7,000, or $8,000 for those aged 50+.
Simplified Employee Pension Plan (SEP IRA)
Plan Overview: A Simplified Employee Pension (SEP) IRA offers a way to save for retirement that enables entrepreneurs to contribute a percentage of their net earnings. Contributions are strictly employer contributions an employer, so, as a independent business owner, you (the employee) cannot make additional contributions more than 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. It's your choice whether to contribute a flat-dollar amount or a percentage of wages to employee accounts. SEP IRAs is a good option for businesses that experience fluctuating revenue streams. Compared to other retirement options, SEP IRAs are free of the high fees associated with starting or maintaining other plans.
SEPs work like standard IRAs, where the contributions are tax-deferred and retirement distributions are taxable.
Eligibility: Both employers and self-employed individuals 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
As a self-employed person, the amount eligible to be contributed is based on a special calculation.
Solo 401(k)
Plan Overview: Solo 401(k)s, commonly known as an Individual 401(k) or one-participant 401(k) plan, is a savings option for the self-employed intended for businesses with no employees or if the only employee is your spouse. Solo 401(k)s operate much like standard 401(k) plans, and let you make contributions as both an employer and an employee with pre-tax money. This offers more savings than SEPs or IRAs; however, the additional opportunities can be balanced by more restricted investment choices. Using a solo 401(k), you can make either traditional or Roth deferrals, which share the same tax benefits as their IRA contribution counterparts.
Eligibility: This plan is exclusively for 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 have the ability to make two types of contributions:
- Employee contributions of up to 100% of your self-employment income, subject to the annual contribution limit. The contribution limits for 2025 include $23,500, or $31,000 for those aged 50 and above, or $34,750 if you attain age 60-63 in 2025.
- Contributions as an employer (as an employer) are limited to 25% of your adjusted 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 if you're over age 50 (for 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 fixed, predetermined benefit to self-employed individuals upon retirement. As opposed to defined contribution plans, investment returns don’t affect the payout, but enables participants to determine exactly how much they'll receive in retirement. This strategy is ideal for high-earning self-employed individuals who want to save a large amount for retirement and are willing to make sizeable contributions. Contributions are tax deferred, and withdrawals are taxable as income in retirement.
Eligibility: Self-employed professionals managing a one-person company or employing fewer than five people may establish an individual defined benefit plan, but it's typically suggested for individuals aged 50+ who earn at least $250,000 a year. In most cases, good candidates for defined benefit plans include:
- Partners or owners who desire to contribute more than $70,000 (or $77,500 for those aged 50+)
- Businesses currently investing 3-4% with plans to contribute more
- Businesses showing consistent profit patterns
- Business leaders 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 earnings, age, and retirement objectives. Limits on contributions change annually.
The Importance of a Financial Advisor in San Bernardino, CA for Your Self-Employed Retirement Plan
Partnering with an advisor in San Bernardino, CA specialized in self-employed retirement plans serves as an essential partner for entrepreneurs. They bring the skills needed to understand the intricacies of saving for retirement and develop a personalized approach that aligns with your goals. A financial advisor in San Bernardino, CA will evaluate your financial situation, identify your risk preferences, and guide you in making informed decisions about saving and investing for retirement. Part of 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
- Adopt a written plan that complies with IRS regulations
- Arrange a trust plan for assets
- Make sure you understand the plan's terms
- Monitor and adjust your plan when necessary
- Provide ongoing education and advice throughout your retirement planning process
- Boost your retirement earnings by optimizing your social security benefits
Self-Employed Retirement Plans in San Bernardino, CA: Correct Capital's Process
Self-employed individuals in San Bernardino, CA who aren’t equipped with the time or understanding to manage their retirement savings strategy independently often feel overwhelmed as they look at their available plans. Through our team at Correct Capital, our San Bernardino, CA financial advisors handle the lion's share of your retirement strategy for you, working to 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 a quick, four-step process:
- Schedule a Call: It only takes 20 minutes, a member of our advisor team will assess if our services align for you and your business. This initial call helps 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 ask for information, including how many employees you have (if any), your current financial situation, and your long-term savings targets. This helps us create a personalized strategy that aligns with your goals.
- Review Your Plan: After we put together a plan based on the information you provide, we'll schedule a meeting and review your plan step by step 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 implement the necessary steps so you can begin contributing. Throughout our relationship, we'll meet with you and monitor your plan to make sure it remains aligned with your goals.
Our San Bernardino, CA financial advisors and retirement plan consultants are fiduciary advisors, which means they are legally and ethically bound to act in your best interest.
Other financial advisory services we offer in San Bernardino, CA 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 San Bernardino, CA
You don't see your business as "just a business", and your San Bernardino, CA financial advisors should provide more than just good financial guidance. Correct Capital takes pride in, we take the time to get to know our clients and their businesses to deliver customized self-employed retirement plans. All our clients in San Bernardino, CA benefit from our I.O.U. promise: all of the advice you get from us 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.
