Self-employed retirement plans Santa Ana, CA. The independence of owning your own business in Santa Ana, CA is one of the greatest advantages of having a self-directed career. However, this independence sometimes brings with certain challenges, especially in terms of planning for retirement, as you don't have the benefit of a workplace retirement plan. Only 13% of self-employed individuals have a workplace retirement plan, but many could benefit from looking into other possibilities. In addition to having a more secure retirement, partnering with a financial advisor in Santa Ana, CA to create your self-employed retirement plan delivers significant tax advantages that help you to move your business forward.
Few Santa Ana, CA financial advisory and retirement planning firms are as attuned to the requirements 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 (check out our story here), and Correct Capital take pride in supporting entrepreneurs with their retirement planning needs. We understand that your business and retirement aspirations go far beyond basic numbers, and we strive to offer tailored solutions to meet your unique goals. Read on to discover 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 consult 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 help prepare you for the future, they also provide real benefits today. Offering flexibility in contributions to significant tax savings, partnering with a financial advisor in Santa Ana, CA allows you to create your retirement plan to suit your specific needs.
Flexibility That Fits Your Income
For those with fluctuating income over time, a plan like a SEP IRA or Solo 401(k) offers the option to adjust how much you save:
- Customizable Contributions: Contribute more during profitable years and scale back when income is lower, so your plan aligns with your current income.
- Roth Options: Opting for a Roth Solo 401(k) lets you handle taxes upfront, enabling you to withdraw your savings tax-free down the road—an advantageous choice if you expect your tax rate is likely to rise in the future.
Save Money on Taxes
Plans designed for the self-employed offer valuable tax benefits:
- Tax-Deductible Contributions: Contributions to a SEP IRA lower your taxable income, allowing you to keep more of your earnings.
- Tax-Deferred Growth: Your savings grow untaxed until withdrawn, giving your money more time to compound.
- State-Specific Incentives: Depending on where you live, you may be eligible for extra credits as a self-employed individual. These regional incentives help make these plans even more valuable.
- Retirement Savings Contributions Credit (Saver’s Credit): Qualified participants can take advantage of a credit of up to 50% of the first $2,000 they contribute a retirement plan, cutting down your tax bill even more.
Protect Your Savings With Smart Investments
Building a secure retirement isn’t only about how much you save—it’s also about how you invest:
- Diversified Portfolios: Allocating your investments across a mix of asset classes like stocks and bonds can help minimize exposure to risk while helping to grow your nest egg.
- Emergency Back-Up: Combining your retirement strategy and a dedicated business safety net ensures you don’t using your retirement funds during tough times and risking extra costs.
Plan for the Future of Your Santa Ana, CA Business
Retirement planning also helps you think through what’s next with your Santa Ana, CA business:
- Selling Your Business: For those considering a sale, retirement accounts like SEP IRAs and Solo 401(k)s remain yours and don’t transfer with the business. These savings ensure the steady income you’ll need later on. Keep in mind that while selling a business often leads to a capital gain, retirement plan contributions are subject to yearly maximums (e.g., up to $7,000 for IRAs or up to $70,000 for Solo 401(k)s, including catch-up contributions, based on plan compensation).
- Minimizing Taxes: Strategically planning your contributions can reduce the taxes you might face when you transfer your business.
- Succession Planning: For those winding down or handing over their business, your nest egg offer financial security through the transition. You can also partner with a financial advisor with expertise in succession and retirement planning to minimize tax burdens associated with the transaction.
With the proper savings strategy, you gain control over your financial future, reduce your tax burden, and create a secure foundation for both your retirement and your business goals.
Why Start a Self-Employed Retirement Plan in Santa Ana, CA Now?
Time is one of the most important resources in retirement planning. Getting a head start not only helps you grow a bigger financial cushion but also reduces the financial burden of catching up later in life. The following are reasons why it makes sense to begin today:
The Cost of Waiting
Delaying your retirement savings may cause a major impact on the amount you’ll have when you reach retirement age. The main reason is compound interest—the concept where your investments earn returns, and those returns, subsequently, generate even more returns. The longer your money has to grow, the greater the effect of compounding.
Example: Two individuals, Alex and Taylor are both self-employed individuals. They each aim to save $500,000 for retirement by age 65:
- Alex begins contributing $5,000 annually at age 30.
- Taylor waits until age 40 but contributes $7,500 annually to catch up.
By age 65, using a projected 7% annual return:
- Alex puts in $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
Even modest contributions made consistently can lead to significant growth. Consider this example showing the impact of compounding:
- Starting at age 25: Putting aside $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 would result in only $235,412.97* by age 65—a difference of over $260,000, just from a 10-year delay.
Starting sooner, the less you need to save each year to achieve your retirement goals.
*The numbers shown in this scenario are estimates derived from NerdWallet’s Compound Interest Calculator, based on a 7% annual return. These calculations involved multiplying yearly deposits by the years contributed. The scenarios provided are for illustrative purposes only and cannot predict actual future outcomes. Actual results may vary based on elements like market conditions, fees, and personal factors. We recommend consulting a financial advisor for custom recommendations.
Take Control of Your Financial Future
As a self-employed person in Santa Ana, CA, it is often the case that you put more emphasis on reinvesting in your business instead of saving for retirement. That said, beginning a plan now gives you the chance to:
- Take advantage of tax-deferred growth or penalty-free withdrawals later on.
- Benefit from adjustable savings that adapt to your income.
- Build a safety net that provides security, no matter how your business develops.
Getting started now, the less you’ll need to worry about making up for lost time later in life. Building your retirement savings today means managing your financial future and giving yourself the ability to turn your attention to your goals—both for your retirement years and your Santa Ana, CA business.
Types of Self-Employed Retirement Plans
There are several retirement savings options designed for self-employed individuals in Santa Ana, CA, each providing its own benefits and trade-offs. A financial advisor is available to help you evaluate the benefits and drawbacks of each plan and choose the one ideal for your unique situation. Typically, your self-employed retirement plan options in Santa Ana, CA include:
Traditional or Roth IRA
Plan Overview: IRAs, or Individual Retirement Accounts, are long-term savings plans that provide specific tax advantages. In a standard IRA, contributions are typically tax-deductible, and investment earnings grow tax-deferred, but retirement distributions are taxable. In contrast, Roth IRA contributions using income already taxed, but qualified withdrawals in retirement, including earnings, are tax-free. In both types of accounts, withdrawals are penalty-free as long as you are at least 59½.
Eligibility: Unlike plans linked to your job, IRAs, including traditional and Roth options are available to anyone with an earned income.
Contribution Limits: For 2025, annual contribution limits for IRAs are set at $7,000, or $8,000 if you qualify for catch-up contributions.
Simplified Employee Pension Plan (SEP IRA)
Plan Overview: SEP IRAs serves as a retirement savings option that allows entrepreneurs to set aside a portion of their self-employment income. Contributions are strictly employer contributions an employer, so, as a sole proprietor, you (the employee) would not be able to contribute 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 have the flexibility to contribute a fixed dollar figure or a percentage of wages to employee accounts. This type of plan works well for companies with fluctuating revenue streams. Compared to other retirement options, SEP IRAs are free of the high fees associated with starting or maintaining other plans.
SEPs function like traditional IRAs, where you contribute pre-tax dollars and money withdrawn is subject to income tax.
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
For self-employed individuals, the contribution you can make 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 retirement savings plan intended for businesses with no employees or where the only employee is a spouse. Solo 401(k)s operate much like traditional employer-managed 401(k) plans, and let you make contributions as both an employee or an employer with pre-tax money. This offers more savings versus SEPs or IRAs; however, the additional opportunities may be offset by more constrained investment avenues. In a solo 401(k) plan, you can make either traditional or Roth deferrals, which share the same tax benefits as their IRA contribution counterparts.
Eligibility: Solo 401(k)s are available solely to business owners and their spouses are eligible to open and contribute to a solo 401(k).
Contribution Limits: For self-employed individuals with a solo 401(k) plan, you can 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 are 50 or older, or $34,750 if you attain age 60-63 in 2025.
- Employer profit-sharing contributions (as an employer) must not surpass 25% of your net self-employment income, which is calculated as net profits less half of your self-employment tax and the elective deferrals you made.
The total contribution cannot exceed $70,000, or $77,500 if you're over age 50 (for 2025), $81,250 for those aged 60-63 in 2025.
Individual Defined Benefit Plan
Plan Overview: Defined benefit plans offers a structured retirement solution that guarantees a pre-established payout to entrepreneurs upon retirement. In contrast to the plans discussed earlier, investment returns don’t affect the payout, but lets individuals clearly understand the precise amount they'll get in retirement. This option is best suited for high-earning professionals who aim to accumulate a substantial amount for retirement and are willing to make substantial contributions. Contributions are tax deferred, and withdrawals are taxed as income upon retirement.
Eligibility: Any self-employed individual managing a one-person company or with a small staff of under five can open an individual defined benefit plan, but it's typically suggested for people above age 50 who make $250,000 or more annually. Typically, good candidates for defined benefit plans tend to be:
- Entrepreneurs who want to invest more than $70,000 (or $77,500 for those aged 50+)
- Organizations that already put in 3-4% and are willing to do more
- Businesses that have demonstrated consistent profit patterns
- Partners or owners over age 40 who aim to quickly build retirement savings or increase their retirement contributions rapidly
Contribution Limits: The maximum allowable contribution must be determined by an actuary based on your financial situation, age, and savings targets. Limits on contributions are adjusted each year.
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 experienced with retirement plans for the self-employed serves as an essential partner for self-employed individuals. They bring the skills needed to guide you through the challenges of retirement planning and design a tailored strategy that matches your objectives. An expert in your area will evaluate your financial situation, determine how much risk you’re comfortable with, and guide you in selecting the best options about saving and investing for retirement. A key part of what we do for you includes:
- Assist in selecting a plan that best fits your needs and goals
- Further adapt the plan to your specific situation even further
- Create a written plan as required by IRS rules
- Organize a trust plan to manage your assets
- Make sure you understand the plan's terms
- Track and fine-tune your plan as needed
- Provide ongoing education and advice to help you navigate your retirement journey
- Increase your retirement income 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 don’t have the time or expertise to handle their retirement savings strategy themselves 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 retirement strategy for you, to help make meeting your financial objectives as easy as possible for you. We can help you get set 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 can determine if we're suited to your needs for you and your business. This initial call helps 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 current financial situation, and your future objectives. This allows us to put together a tailored approach suited specifically for your needs.
- Review Your Plan: Once we've developed a plan using the information you provide, we'll sit down with you and discuss your plan in detail to ensure you understand it and understand how it best correlates to your needs.
- Implementation and Monitoring: After we agree on your plan, we'll set everything up so you can begin contributing. As time goes on, we'll meet with you and monitor your plan to make sure it remains aligned with your goals.
Our Santa Ana, CA financial advisors and retirement plan consultants act 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 Santa Ana, 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 Santa Ana, CA
To you, your business is more than "just a business", and your Santa Ana, CA financial advisors must deliver more than simply sound financial advice. At Correct Capital, we focus on building a relationship with our clients and their businesses to provide personalized self-employed retirement plans. We offer all our Santa Ana, CA clients our I.O.U. promise: all of the advice you get from us 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.
