Self-employed retirement plans San Diego, CA. The independence of owning your own business in San Diego, CA is one of the greatest advantages of being self-employed. However, this freedom often comes with potential drawbacks, particularly regarding retirement savings, because you don't have access to employer-sponsored retirement plans. Only 13% of self-employed individuals have a workplace retirement plan, yet countless could benefit from exploring their options. In addition to enjoying a financially stable retirement, seeking advice from a financial advisor in San Diego, CA to create your self-employed retirement plan offers significant tax advantages that help your business to grow and succeed.
Few San Diego, CA financial advisory and retirement planning firms truly grasp the challenges faced by small business owners better than Correct Capital. Our company’s founder grew up with a father who was a small business owner himself (learn more about our story here), and we take pride in assisting business owners in their retirement planning needs. We understand that your business and retirement aspirations extend well past just monetary concerns, and we work tirelessly to provide tailored solutions aligned with your vision. Continue exploring to find out about your self-employed retirement plan options in San Diego, CA, or reach out to Correct Capital at 877-930-401k or contact us online to consult with a self-employed financial advisor in San Diego, CA today.
Why San Diego, 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 immediate benefits today. Offering flexibility in contributions to considerable tax savings, partnering with a financial advisor in San Diego, CA helps you design your retirement plan to suit your unique financial situation.
Flexibility That Fits Your Income
If your income changes annually, a plan like a SEP IRA or Solo 401(k) provides the option to tailor how much you save:
- Customizable Contributions: Contribute more during high-income years and reduce savings when income is lower, so that your plan aligns with your cash flow.
- Roth Options: A Roth Solo 401(k) lets you handle taxes upfront, so you can withdraw without tax penalties in the future—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 provide powerful tax benefits:
- Tax-Deductible Contributions: Contributions to a SIMPLE IRA reduce what you owe in taxes, so you can keep more of your income.
- Tax-Deferred Growth: Investments grow tax-free until withdrawal, providing your money more time to accumulate.
- State-Specific Incentives: Depending on where you live, you may be eligible for additional credits as a business owner. These regional incentives can make these plans even more valuable.
- Retirement Savings Contributions Credit (Saver’s Credit): Eligible individuals can claim a tax 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
Planning for a safe retirement goes beyond just how much you save—it’s also about how you invest:
- Diversified Portfolios: Spreading your investments across different stocks, bonds, and alternatives can help mitigate financial risk while continuing to build your nest egg.
- Emergency Back-Up: Supplementing your retirement savings with a dedicated business safety net ensures you don’t using your retirement funds during challenging periods and facing tax penalties.
Plan for the Future of Your San Diego, CA Business
A thoughtful retirement strategy can assist you prepare for what’s next with your San Diego, CA business:
- Selling Your Business: When selling your business, plans like SEP IRAs or Solo 401(k)s remain yours and won’t be included in the sale. These accounts offer the financial stability you’ll need in the future. Keep in mind 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, with catch-up contributions, according to plan rules).
- Minimizing Taxes: Strategically planning your contributions can reduce the taxes you are required to pay when you transfer your business.
- Succession Planning: Whether you’re transferring ownership, your nest egg offer the funds you need through the transition. You may also partner with a financial advisor with expertise in succession and retirement planning to minimize tax burdens during the sale.
With the right retirement plan, you gain control over 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 San Diego, CA Now?
Time is one of the most important assets when it comes to saving for retirement. Starting early not only lets you accumulate a larger nest egg but also reduces the stress of playing catch-up as you get older. The following are reasons why it makes sense to begin today:
The Cost of Waiting
Delaying your retirement savings can have a significant impact on the savings you’ll have when you reach retirement age. The biggest reason is compound interest—the concept where your investments grow, and those returns, in turn, generate even more returns. The more time your money has to grow, the larger the effect of this compounding process.
Example: Taylor and Alex 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 postpones starting contributions to age 40 but saves $7,500 annually to catch up.
By age 65, assuming 7% annual return:
- Alex invests $180,000 and ends up with $691,184.39*.
- Taylor puts in $195,500 but accumulates just $474,367.78*.
How Early Contributions Grow
Small, consistent savings contributed over time may result in impressive growth. Consider this example showing the impact of compound interest:
- Starting at age 25: By investing $200 per month in a retirement plan with an average annual return of 7%, you’ll grow to approximately $497,303.29* by age 65.
- Starting at age 35: Saving the same $200 per month would result in 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 lower your annual savings needs each year to reach your retirement goals.
*The numbers shown in this scenario represent estimates derived from 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. These examples are for illustrative purposes only and cannot predict actual future outcomes. Actual results may vary based 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
If you’re self-employed in San Diego, CA, it might seem easier to focus more on reinvesting in your business rather than saving for retirement. However, starting a plan now allows you to:
- Leverage tax-free future growth or withdrawals without taxes in the future.
- Benefit from flexible contributions that change with your cash flow.
- Build a long-term safety measure that provides security, no matter how your business evolves.
The sooner you start, the less you’ll be required to worry about catching up later in life. Building your retirement savings today means gaining control over your financial future and giving yourself the ability to turn your attention to your goals—both for your future retirement and your San Diego, CA business.
Types of Self-Employed Retirement Plans
There are several retirement savings options open for those working for themselves in San Diego, CA, each providing its own pros and cons. A financial advisor can help you understand the benefits and drawbacks of each choice and choose the one best suited for your needs. Typically, your self-employed retirement plan options in San Diego, CA are:
Traditional or Roth IRA
Plan Overview: Individual Retirement Accounts (IRAs), as explained here, represent long-term savings plans that include distinct tax benefits. In a conventional IRA, you can usually deduct your contributions from taxable income, and earnings grow without immediate taxation, but withdrawals in retirement are subject to income tax. In contrast, Roth IRAs require contributions from post-tax earnings, but eligible distributions during retirement, including earnings, are exempt from taxes. In both cases, withdrawals don’t incur penalties provided you are at least 59½.
Eligibility: While many retirement plans, such as 401(k)s, are tied to employment, both traditional and Roth IRAs are open to those with a source of 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 offers a way to save for retirement that permits entrepreneurs to save a percentage of their net business profits. Contributions are strictly employer contributions an employer, so, as a self-employed individual, you (the employee) would not be able to contribute more than the 25% you (the employer) allocate. If you have employees, you must contribute the same amount for them as you do for yourself. You have the flexibility to contribute a set monetary value or a percentage of wages to employee accounts. SEP IRAs may be ideal for businesses that experience periods of inconsistent earnings. Compared to other retirement options, SEP IRAs are free of expensive setup or ongoing fees.
SEPs operate like traditional IRAs, where contributions are made with pre-tax money and withdrawals are taxed as income.
Eligibility: Both employers and 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
If you’re self-employed, 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 are similar to employer-sponsored 401(k) plans, and let you make contributions as both the employer and the employee with pre-tax money. This provides more savings than SEPs or IRAs; however, the increased savings potential can be balanced by more limited investment options. 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: Only 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:
- Deferrals as an employee of up to 100% of your self-employment income, subject 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) cannot exceed 25% of your net self-employment income, which is your net profit minus half of your self-employment tax and the employee contributions you made.
Your combined contributions must not surpass $70,000, or $77,500 for those aged 50 and older (in 2025), $81,250 if you attain age 60-63 in 2025.
Individual Defined Benefit Plan
Plan Overview: A defined benefit plan offers a structured retirement solution that delivers a fixed, predetermined benefit to entrepreneurs 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 professionals who aim to accumulate a significant sum for retirement and can commit to making substantial contributions. Contributions grow tax-free until withdrawal, and withdrawals incur taxes as income in retirement.
Eligibility: Any self-employed individual operating a solo business or with a small staff of under five may establish an individual defined benefit plan, but it's typically advised for those over 50 who make $250,000 or more annually. Typically, good candidates for defined benefit plans are:
- Partners or owners who aim to deposit more than $70,000 (or $77,500 for those aged 50+)
- Companies already contributing 3-4% with plans to contribute more
- Businesses with proven consistent profit patterns
- Entrepreneurs over age 40 who wish to accelerate savings or boost savings within a short timeframe
Contribution Limits: The maximum allowable contribution must be determined by an actuary based on your income, age, and retirement goals. Allowable contributions are adjusted each year.
The Importance of a Financial Advisor in San Diego, CA for Your Self-Employed Retirement Plan
A financial advisor in San Diego, CA experienced with retirement plans for the self-employed is an invaluable resource for those working for themselves. They bring the skills needed to understand the intricacies of saving for retirement and develop a customized plan that reflects your aspirations. An expert in your area will assess where you stand financially, determine how much risk you’re comfortable with, and assist you in choosing wisely about saving and investing for retirement. Included in what we do for you involves:
- Help you choose a plan that aligns with your objectives and circumstances
- Customize the plan to your needs even further
- Formalize a plan in writing that complies with IRS regulations
- Arrange a trust plan for assets
- Make sure you understand the plan's terms
- Monitor and adjust your plan as needed
- Offer continued financial education and guidance as you continue on the road to retirement
- Maximize what you receive in retirement by optimizing your social security benefits
Self-Employed Retirement Plans in San Diego, CA: Correct Capital's Process
Entrepreneurs in San Diego, CA who aren’t equipped with the time or understanding to handle their self-employed retirement plan themselves can become overwhelmed as they look at their options. With Correct Capital, our San Diego, CA financial advisors take on the bulk of your retirement strategy for you, and strive to ensure meeting your retirement goals as hassle-free as possible for you. We are here to assist you in setting up your self-employed retirement plan in four simple steps:
- Schedule a Call: A quick 20-minute call is all it takes, a member of our advisor team will assess if our services align for you and your business. This short conversation lets us get a sense of your goals with no pressure or extensive time commitment on your part.
- Gather Information: Should we agree to proceed, we'll gather information, including your employee count, your present financial standing, and your future objectives. This helps us create a custom plan suited specifically for your needs.
- Review Your Plan: When we finalize a plan from the information you provide, we'll meet with you and review your plan step by step to ensure you understand it and explain its fit to your circumstances.
- Implementation and Monitoring: After we agree on your plan, we'll put everything in place so you can initiate your savings journey. Throughout our relationship, we'll have regular meetings and monitor your plan to ensure it stays suited to your needs.
Our San Diego, CA financial advisors and retirement plan consultants serve as fiduciary advisors, which means they are required by law and ethical standards to prioritize your needs above all else.
Other financial advisory services we offer in San Diego, 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 San Diego, CA
Your business isn't "just a business" to you, and your San Diego, CA financial advisors need to offer more than basic financial recommendations. At Correct Capital, we make it a priority to understand our clients and their businesses to create customized self-employed retirement plans. We offer all our San Diego, 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.
