Self-employed retirement plans San Francisco, CA. The freedom of running your own company in San Francisco, CA offers many benefits of working for yourself. However, this independence sometimes brings with potential drawbacks, particularly in terms of building your retirement fund, as you don't have the option of employer-sponsored retirement plans. Only 13% of self-employed individuals have a workplace retirement plan, yet countless would be better off exploring their options. In addition to having a more secure retirement, partnering with a financial advisor in San Francisco, CA to create your self-employed retirement plan offers significant tax advantages that allow your business to grow and succeed.
Few San Francisco, CA wealth management 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 our firm have a rich history of assisting business owners in their retirement planning needs. We understand that your professional and personal aspirations go far beyond basic numbers, and we work tirelessly to provide customized solutions that reflect your objectives. Keep reading to learn more about your self-employed retirement plan options in San Francisco, CA, or give us a call at Correct Capital at 877-930-401k or contact us online to speak with a entrepreneurial financial advisor in San Francisco, CA today.
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Why San Francisco, 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. With customizable contribution options to considerable tax savings, consulting a financial advisor in San Francisco, CA helps you create your retirement plan to align with your individual circumstances.
Flexibility That Fits Your Income
If your income changes over time, a plan like a SEP IRA or Solo 401(k) offers the option to adjust how much you save:
- Customizable Contributions: Set aside more during profitable years and scale back when your earnings dip, ensuring your plan aligns with your current income.
- Roth Options: Choosing a Roth Solo 401(k) lets you settle taxes at the time of contribution, enabling you to withdraw your savings tax-free down the road—a wise move if you expect your tax rate is likely to rise in the future.
Save Money on Taxes
Retirement plans for self-employed individuals offer significant tax benefits:
- Tax-Deductible Contributions: Contributions to a Solo 401(k) reduce what you owe in taxes, helping you keep more of your income.
- Tax-Deferred Growth: Your savings grow untaxed until withdrawn, which gives your money more time to compound.
- State-Specific Incentives: In some states, you may be eligible for state-specific credits as a sole proprietor. These local 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, further reducing 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 other assets is a smart way to reduce risk while continuing to build your savings.
- Emergency Back-Up: Pairing your retirement plan with a dedicated business safety net helps you avoid using your retirement funds during tough times and incurring penalties.
Plan for the Future of Your San Francisco, CA Business
Preparing for retirement also helps you plan ahead for what’s next with your San Francisco, CA business:
- Selling Your Business: For those considering a sale, plans like SEP IRAs or Solo 401(k)s remain yours and don’t transfer with the business. These accounts ensure the steady income you’ll need in the future. Keep in mind that while selling your business results in a capital gain, deposits into these plans are subject to yearly maximums (e.g., as much as $7,000 for IRAs or as much as $70,000 for Solo 401(k)s, factoring in catch-up contributions, based on plan compensation).
- Minimizing Taxes: Strategically planning your contributions 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 nest egg offer financial security as you make this shift. You may also partner with a financial advisor with expertise in succession and retirement planning to reduce taxes during the sale.
With the best-fit retirement strategy, you gain control over your financial future, lower your tax bill, and build a solid base for both your retirement and your business goals.
Why Start a Self-Employed Retirement Plan in San Francisco, CA Now?
Time remains one of the most crucial factors in retirement planning. Getting a head start not only lets you accumulate a more substantial retirement fund but also minimizes the stress of catching up later in life. The following are reasons 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 retire. The main reason is compound interest—the concept where your investments grow, and those returns, then, accumulate even more returns. The longer your money has to grow, the larger the effect of this growth.
Example: Taylor and Alex are both self-employed individuals. Their shared goal is to save $500,000 for retirement by age 65:
- Alex begins contributing $5,000 annually at age 30.
- Taylor delays savings until age 40 but saves $7,500 annually to make up for lost time.
By age 65, assuming 7% annual return:
- Alex puts in $180,000 and accumulates $691,184.39*.
- Taylor invests $195,500 but only ends up with $474,367.78*.
How Early Contributions Grow
Regular, modest investments made consistently can lead to substantial 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 projected return of 7%, you’ll grow to approximately $497,303.29* by age 65.
- Starting at age 35: Contributing the same $200 per month leaves you with only $235,412.97* by age 65—a difference of over $260,000, simply due to a 10-year delay.
The earlier you begin, the less you need to save each year to reach your retirement goals.
*The numbers shown in this scenario represent estimates calculated using NerdWallet’s Compound Interest Calculator, based on a 7% annual return. The contributions were calculated by multiplying the annual deposit amount by the total number of years contributions were made. This information is 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 individual circumstances. Be sure to speak with a financial advisor for personalized advice.
Take Control of Your Financial Future
If you’re self-employed in San Francisco, CA, it can be tempting to put more emphasis on reinvesting in your business instead of saving for retirement. Even so, beginning a plan now allows you to:
- Benefit from growth that is tax-deferred or tax-free withdrawals later on.
- Take advantage of flexible contributions that change with your cash flow.
- Build a financial cushion that ensures stability, no matter how your business evolves.
Starting early, the less you’ll be required to worry about catching up later in life. Taking steps toward your retirement goals today means taking control of your financial future and creating for yourself the freedom to concentrate on your objectives—both for your retirement years and your San Francisco, CA business.
Types of Self-Employed Retirement Plans
A variety of retirement savings options open for those working for themselves in San Francisco, CA, each offering its own benefits and trade-offs. A financial advisor is available to help you learn about the advantages and disadvantages of each option and identify the one best suited for your unique situation. Typically, your self-employed retirement plan options in San Francisco, CA include:
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, contributions are typically tax-deductible, and returns grow free of current taxes, but withdrawals in retirement are taxed as income. In contrast, with Roth IRAs, you contribute are made with after-tax income, but qualified withdrawals in retirement, including earnings, are exempt from taxes. In both cases, withdrawals are penalty-free provided you are at least 59½.
Eligibility: Unlike 401(k)s, which are employer-sponsored, 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 for those aged 50+.
Simplified Employee Pension Plan (SEP IRA)
Plan Overview: The Simplified Employee Pension IRA serves as a retirement savings option that permits those who are self-employed to save a percentage of their net business profits. Contributions must come from an employer, so, as a sole proprietor, you (the employee) are limited to contributions from the employer role above 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 fixed dollar figure or a percentage of wages to employee accounts. SEP IRAs is a good option for entrepreneurs facing fluctuating revenue streams. Unlike other plans, SEP IRAs lack expensive setup or ongoing fees.
SEPs function 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 must not exceed:
- 25% of compensation, or
- $70,000 for 2025
If you’re self-employed, the allowable contribution is based on a special calculation.
Solo 401(k)
Plan Overview: Solo 401(k)s, also called an Individual 401(k) or one-participant 401(k) plan, is a self-employed retirement plan meant for businesses without employees or if the only employee is your spouse. This type of plan are similar to standard 401(k) plans, and allow you to contribute as both an employer and an employee with pre-tax money. This provides more savings compared to SEPs or IRAs; however, the increased savings potential often come with more restricted investment choices. In a solo 401(k) plan, you can make either traditional or Roth deferrals, which offer the same tax benefits as their IRA contribution counterparts.
Eligibility: Solo 401(k)s are available solely to business owners and their spouses may establish 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:
- Elective deferrals (as an employee) of up to 100% of your self-employed earnings, subject to the annual contribution limit. The contribution limits for 2025 include $23,500, or $31,000 if you're over 50, or $34,750 if you attain age 60-63 in 2025.
- Profit-sharing contributions (as an employer) are limited to 25% of your net earnings from self-employment, which is defined as net profit minus half of your self-employment tax and the elective deferrals you made.
Your combined contributions must not surpass $70,000, or $77,500 for those aged 50 and older (as of 2025), $81,250 for individuals turning 60-63 in 2025.
Individual Defined Benefit Plan
Plan Overview: The defined benefit plan represents a type of retirement plan that delivers a set amount to business owners upon retirement. In contrast to the plans discussed earlier, a defined benefit plan doesn't fluctuate based on investment returns, but lets individuals clearly understand the precise amount they'll have in retirement. This strategy is recommended for wealthier self-employed individuals who aim to accumulate a substantial amount for retirement and are willing to make larger deposits. Contributions grow tax-free until withdrawal, and withdrawals are taxed as income during retirement.
Eligibility: Entrepreneurs running an owner-only business or with less than five employees are eligible to open an individual defined benefit plan, but it's generally recommended for those over 50 who earn at least $250,000 a year. Generally, good candidates for defined benefit plans are:
- Partners or owners who want to invest more than $70,000 (or $77,500 if over age 50)
- Companies already contributing 3-4% but are open to increasing contributions
- Businesses showing consistent profit patterns
- Business leaders over age 40 who desire to "catch up" or boost savings within a short timeframe
Contribution Limits: The contribution limit requires calculation from an actuary determined by your earnings, age, and retirement objectives. Contribution limits are updated yearly.
The Importance of a Financial Advisor in San Francisco, CA for Your Self-Employed Retirement Plan
Working with a financial advisor in San Francisco, CA specialized in self-employed retirement plans can be an invaluable resource for self-employed individuals. They bring the skills needed to understand the intricacies of saving for retirement and design a customized plan that reflects your aspirations. A financial advisor in San Francisco, CA will evaluate your financial situation, understand your risk tolerance, and assist you in making informed decisions about saving and investing for retirement. A key part of what we do for you features:
- Guide you in choosing a plan that aligns with your objectives and circumstances
- Tailor the plan to your specific situation 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
- Track and fine-tune your plan when necessary
- Provide ongoing education and advice to help you navigate your retirement journey
- Maximize what you receive in retirement by optimizing your social security benefits
Self-Employed Retirement Plans in San Francisco, CA: Correct Capital's Process
Self-employed individuals in San Francisco, CA who don’t have the time or expertise to handle their retirement savings strategy independently can become overwhelmed as they look at their choices. With Correct Capital, our San Francisco, CA financial advisors handle the bulk of your retirement planning for you, and strive to ensure meeting your retirement goals as easy 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: In just 20 minutes, a member of our advisor team will assess if we're suited to your needs for you and your business. This brief introduction lets us get a sense of your goals with no obligation or major time investment on your part.
- Gather Information: Should we agree to proceed, we'll gather information, including whether you have employees, your current financial situation, and your retirement goals. This allows us to put together a tailored approach that aligns with your goals.
- Review Your Plan: Once we've developed a plan using the information you provide, we'll meet with you and review your plan thoroughly to help you fully grasp it and show how it aligns with your goals.
- Implementation and Monitoring: After we agree on your plan, we'll implement the necessary steps so you can start saving. Throughout our relationship, we'll have regular meetings and monitor your plan to make sure it remains aligned with your goals.
Our San Francisco, CA financial advisors and retirement plan consultants serve 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 San Francisco, 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 San Francisco, CA
To you, your business is more than "just a business", and your San Francisco, CA financial advisors must deliver more than basic financial recommendations. With Correct Capital, we focus on building a relationship with our clients and their businesses to deliver personalized self-employed retirement plans. We offer all our San Francisco, CA clients our I.O.U. promise: everything we recommend will be independent, objective, and unbiased. To take the first step on your self-employment retirement plan, reach out to Correct Capital at 877-930-401k or contact us online.
