Self-employed retirement plans Santa Ana, CA. The flexibility of owning your own business in Santa Ana, CA offers many benefits of working for yourself. That said, this flexibility sometimes brings with potential drawbacks, notably in terms of retirement savings, as you don't have access to retirement programs through an employer. Only 13% of self-employed individuals have a workplace retirement plan, although many should consider looking into other possibilities. In addition to achieving a more comfortable retirement, working with a financial advisor in Santa Ana, CA to establish your self-employed retirement plan delivers significant tax advantages that allow both you and your business to thrive.
Few Santa Ana, CA investment consulting and retirement planning firms understand the needs of self-employed individuals as well as 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 our firm are deeply experienced in assisting business owners in their retirement planning needs. We recognize that your professional and personal aspirations extend well past just monetary concerns, and we work tirelessly to offer tailored solutions aligned with your vision. Keep reading to learn more about your self-employed retirement plan options in Santa Ana, CA, or reach out to Correct Capital at 877-930-401k or contact us online to speak with a small business financial advisor in Santa Ana, CA today.
Why Santa Ana, CA Self-Employed Individuals Should Have a Retirement Plan
Retirement plans for self-employed individuals not only prepare you for the future, they also provide real benefits today. With customizable contribution options to significant tax savings, working with a financial advisor in Santa Ana, CA enables you to design your retirement plan to suit your individual circumstances.
Flexibility That Fits Your Income
When your earnings vary annually, a plan like a SEP IRA or Solo 401(k) gives you the freedom to tailor how much you save:
- Customizable Contributions: Set aside more during high-income years and scale back when your earnings dip, ensuring your plan fits your financial situation.
- Roth Options: Opting for a Roth Solo 401(k) lets you pay taxes on contributions now, so you can withdraw without tax penalties in the future—a smart decision if you expect your tax rate will increase in the future.
Save Money on Taxes
Retirement plans for self-employed individuals deliver valuable tax benefits:
- Tax-Deductible Contributions: Contributions to a Solo 401(k) shrink your tax liability, allowing you to keep more of your hard-earned money.
- Tax-Deferred Growth: Investments grow tax-free until withdrawal, which gives your money more time to compound.
- State-Specific Incentives: Based on your location, you may be eligible for state-specific deductions as a sole proprietor. These state-level incentives make these plans even more beneficial.
- 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
Creating a stable future isn’t only about how much you save—it’s also linked to the way you invest:
- Diversified Portfolios: Distributing your investments across different asset classes like stocks and bonds can help minimize exposure to risk while helping to grow your retirement fund.
- Emergency Back-Up: Supplementing your retirement savings with a financial buffer for your business helps you avoid using your retirement funds during financial hardships and facing tax penalties.
Plan for the Future of Your Santa Ana, CA Business
Preparing for retirement also helps you think through what’s next with your Santa Ana, CA business:
- Selling Your Business: When selling your business, accounts such as SEP IRAs or Solo 401(k)s remain your personal assets and won’t be included in the sale. These plans can provide the reliable income you’ll need in the future. Keep in mind that while the sale of a business usually creates a capital gain, contributions to retirement accounts are restricted by contribution limits (e.g., as much as $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: Using retirement contributions wisely minimizes the taxes you are required to pay when you pass on your business.
- Succession Planning: Whether you’re transferring ownership, your retirement accounts provide a stable foundation through the transition. You might want to seek advice from a financial advisor experienced in both succession and retirement strategies to minimize tax burdens during the sale.
With the best-fit retirement strategy, you manage your financial future, reduce your tax burden, and build a secure foundation for both your retirement and your business goals.
Why Start a Self-Employed Retirement Plan in Santa Ana, CA Now?
Time remains one of the most crucial resources for building your retirement fund. Getting a head start not only lets you accumulate a bigger financial cushion but also reduces the financial burden of saving aggressively in the future. The following are reasons why it is beneficial to start now:
The Cost of Waiting
Putting off saving for retirement may cause a major impact on the amount you’ll have when you retire. The biggest reason is compound interest—the powerful process where your investments generate earnings, and those returns, in turn, accumulate even more returns. The longer your money has to grow, the larger the effect of compounding.
Example: Alex and Taylor are both self-employed individuals. They each aim 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 catch up.
By age 65, using a projected 7% annual return:
- Alex puts in $180,000 and ends up with $691,184.39*.
- Taylor puts in $195,500 but only ends up with $474,367.78*.
How Early Contributions Grow
Small, consistent savings contributed over time may result in substantial growth. Consider this example showing the effect of compound interest:
- Starting at age 25: By investing $200 per month in a retirement plan with an expected yearly growth rate of 7%, you’ll end up with $497,303.29* by age 65.
- Starting at age 35: Investing the same $200 per month would result in only $235,412.97* by age 65—a difference of over $260,000, all because of a 10-year delay.
Starting sooner, the lower your annual savings needs each year to reach your retirement goals.
*These calculations 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 meant to provide general guidance and are not a promise of future results. Actual results may vary based on factors such as market conditions, fees, and personal factors. Always consult a financial advisor for guidance tailored to your needs.
Take Control of Your Financial Future
If you’re self-employed in Santa Ana, CA, it might seem easier to focus more on reinvesting in your business over saving for retirement. Even so, beginning a plan now gives you the chance to:
- Leverage tax-deferred growth or tax-free withdrawals down the road.
- Take advantage of adjustable savings that change with your income.
- Create a long-term safety measure that offers peace of mind, no matter how your business evolves.
Getting started now, the less you’ll need to worry about catching up later in life. Building your retirement savings today means managing your financial future and creating for yourself the ability to concentrate on your objectives—both for your future retirement and your Santa Ana, CA business.
Types of Self-Employed Retirement Plans
A variety of retirement savings options designed for entrepreneurs in Santa Ana, CA, each with its own pros and cons. A financial advisor is available to help you evaluate the advantages and disadvantages of each plan and identify the one most suitable for your needs. Typically, your self-employed retirement plan options in Santa Ana, 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, contributions are typically tax-deductible, and investment earnings grow tax-deferred, but money taken out during retirement are subject to income tax. In contrast, Roth IRAs require contributions are made with after-tax income, but retirement withdrawals that qualify, including earnings, are tax-free. In both types of accounts, 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 accessible for individuals with taxable earnings.
Contribution Limits: For 2025, annual contribution limits for IRAs remain $7,000, or $8,000 if you qualify for catch-up contributions.
Simplified Employee Pension Plan (SEP IRA)
Plan Overview: The Simplified Employee Pension IRA serves as a retirement savings option that allows those who are self-employed to set aside a portion of their self-employment income. Contributions can only be made by an employer, so, as a sole proprietor, you (the employee) would not be able to contribute above the 25% you (the employer) allocate. 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 set monetary value or a percentage of wages to employee accounts. SEP IRAs works well for businesses that experience cycles of high revenue and low revenue. Compared to other retirement options, SEP IRAs don’t have the high fees associated with starting or maintaining other plans.
SEPs operate like conventional IRAs, where the contributions are tax-deferred and money withdrawn is subject to income tax.
Eligibility: Employers of any type, including self-employed individuals can establish 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
If you’re self-employed, the allowable contribution 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 savings option for the self-employed meant for companies that have no employees or if the only employee is your spouse. These plans are similar to employer-sponsored 401(k) plans, and let you make contributions as both an employee or an employer with pre-tax money. This provides more savings compared to SEPs or IRAs; however, the extra savings options may be offset by 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 are eligible to open 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 self-employed earnings, capped at the annual contribution limit. In 2025, those limits are $23,500, or $31,000 if you are 50 or older, or $34,750 for individuals aged 60-63 in 2025.
- Employer profit-sharing contributions (as an employer) cannot exceed 25% of your adjusted self-employment income, which is defined as net profit minus half of your self-employment tax and the employee contributions you made.
The total contribution cannot exceed $70,000, or $77,500 for individuals aged 50+ (for 2025), $81,250 for individuals turning 60-63 in 2025.
Individual Defined Benefit Plan
Plan Overview: Defined benefit plans is a retirement option that guarantees a fixed, predetermined benefit to entrepreneurs upon retirement. As opposed to defined contribution plans, this plan is not influenced by market performance, but allows self-employed individuals to know the precise amount they'll get in retirement. This plan is ideal for higher-income professionals who are focused on saving a significant sum for retirement and are willing to make larger deposits. Contributions are tax deferred, and withdrawals are taxed as income upon retirement.
Eligibility: Entrepreneurs running an owner-only business or with a small staff of under five are eligible to open an individual defined benefit plan, but it's generally advised for people above age 50 who earn at least $250,000 a year. Typically, good candidates for defined benefit plans are:
- Partners or owners who desire to contribute more than $70,000 (or $77,500 if over age 50)
- Companies already contributing 3-4% but are open to increasing contributions
- Companies that have demonstrated consistent profit patterns
- Business leaders over age 40 who aim to quickly build retirement savings or boost savings within a short timeframe
Contribution Limits: The cap on contributions must be determined by an actuary based on your earnings, age, and retirement objectives. Allowable contributions change annually.
The Importance of a Financial Advisor in Santa Ana, CA for Your Self-Employed Retirement Plan
Working with a financial advisor in Santa Ana, CA focused on self-employed retirement strategies serves as an important asset for those working for themselves. They have the expertise to help understand the intricacies of saving for retirement and design a personalized approach that matches your objectives. Your advisor in Santa Ana, CA will review your finances, understand your risk tolerance, and guide you in selecting the best options about saving and investing for retirement. Part of what we do for you includes:
- Guide you in choosing a plan that suits your unique requirements
- Further adapt the plan to your specific situation even further
- Adopt a written plan in accordance with IRS guidelines
- Arrange a trust plan for assets
- Make sure you understand the plan's terms
- Review and modify your plan to keep it aligned with your goals
- Deliver continuous support and financial insights as you continue on the road to retirement
- Boost your retirement earnings by making the most of your social security
Self-Employed Retirement Plans in Santa Ana, CA: Correct Capital's Process
Entrepreneurs in Santa Ana, CA who lack the time, interest, or knowledge to manage their self-employed retirement plan on their own often feel overwhelmed when faced with their choices. Through our team at Correct Capital, our Santa Ana, CA financial advisors manage the bulk of your savings plan setup for you, and strive to ensure meeting your financial objectives 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: It only takes 20 minutes, a member of our advisor team can determine if our services align for you and your business. This short conversation lets us learn about your needs with zero commitment or major time investment on your part.
- Gather Information: If we both decide to move forward, we'll request information, including whether you have employees, your present financial standing, and your retirement goals. This enables us to craft 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 thoroughly to ensure you understand it and show how it aligns with your goals.
- Implementation and Monitoring: Once we've agreed on your plan, we'll put everything in place so you can begin contributing. As time goes on, we'll have regular meetings and monitor your plan to keep it tailored to your evolving circumstances.
Our Santa Ana, CA financial advisors and retirement plan consultants act as fiduciary advisors, who are obligated to they are required by law and ethical standards to prioritize your needs above all else.
Other financial advisory services we offer in Santa Ana, CA include:
- Roth Conversion
- 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 Santa Ana, CA
Your business isn't "just a business" to you, and your Santa Ana, CA financial advisors should provide more than simply sound financial advice. At Correct Capital, we make it a priority to understand our clients and their businesses to create customized self-employed retirement plans. To every client in Santa Ana, CA, we provide 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, call Correct Capital today at 877-930-401k or contact us online.
