Self-employed retirement plans Scottsdale, AZ. The independence of running your own company in Scottsdale, AZ is one of the best aspects of working for yourself. However, this flexibility often comes with a lack of security, particularly regarding planning for retirement, 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 exploring their options. In addition to having a more secure retirement, seeking advice from a financial advisor in Scottsdale, AZ to set up your self-employed retirement plan delivers significant tax advantages that enable your business to grow and succeed.
Few Scottsdale, AZ financial advisory and retirement planning firms understand the needs of entrepreneurs as well as Correct Capital. Our founder's father was a small business owner himself (learn more about our story here), and our firm are deeply experienced in supporting entrepreneurs with their retirement planning needs. We know that your goals for your business and retirement extend well past simple financial figures, and we work tirelessly to create personalized solutions that reflect your objectives. Keep reading to learn more about your self-employed retirement plan options in Scottsdale, AZ, or call Correct Capital at 877-930-401k or contact us online to speak with a entrepreneurial financial advisor in Scottsdale, AZ today.
Why Scottsdale, AZ 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. With customizable contribution options to considerable tax savings, consulting a financial advisor in Scottsdale, AZ allows you to design your retirement plan to fit your specific needs.
Flexibility That Fits Your Income
When your earnings vary over time, a plan like a SEP IRA or Solo 401(k) gives you the option to tailor how much you save:
- Customizable Contributions: Contribute more during profitable years and scale back when revenues are down, so your plan fits your current income.
- Roth Options: Choosing a Roth Solo 401(k) lets you settle taxes at the time of contribution, allowing 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
Self-employed retirement plans deliver significant tax benefits:
- Tax-Deductible Contributions: Contributions to a Solo 401(k) lower your taxable income, so you can keep more of your hard-earned money.
- Tax-Deferred Growth: Your savings grow untaxed until withdrawn, which gives your money more time to accumulate.
- State-Specific Incentives: In some states, you might access state-specific credits as a business owner. These regional incentives help make these plans even more beneficial.
- Retirement Savings Contributions Credit (Saver’s Credit): Qualified participants can claim a tax credit of up to 50% of the first $2,000 put into a retirement plan, cutting down 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 determined by your investment strategy:
- Diversified Portfolios: Allocating your investments across different asset classes like stocks and bonds can help reduce risk while still growing your retirement fund.
- Emergency Back-Up: Combining your retirement strategy and a financial buffer for your business helps you avoid dipping into savings during financial hardships and risking extra costs.
Plan for the Future of Your Scottsdale, AZ Business
A thoughtful retirement strategy can assist you prepare for what’s next with your Scottsdale, AZ business:
- Selling Your Business: If you’re planning to sell, accounts such as SEP IRAs or Solo 401(k)s remain your personal assets and won’t be included in the sale. These accounts offer the reliable income you’ll need later on. 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 up to $70,000 for Solo 401(k)s, including catch-up contributions, depending on plan details).
- Minimizing Taxes: Using retirement contributions wisely helps lower the taxes you’ll owe when you pass on your business.
- Succession Planning: Whether you’re transferring ownership, your nest egg offer the funds you need through the transition. You may also seek advice from a financial advisor with expertise in succession and retirement planning to help with taxes on the sale.
With the best-fit retirement strategy, you gain control over your financial future, reduce your tax burden, and create a solid base for both your retirement and your business goals.
Why Start a Self-Employed Retirement Plan in Scottsdale, AZ Now?
Time is one of the most crucial resources in retirement planning. Beginning sooner rather than later not only helps you grow a more substantial retirement fund but also reduces the pressure of catching up later in life. This is why it is beneficial to start now:
The Cost of Waiting
Delaying your retirement savings can have a major impact on the savings you’ll have when you stop working. The biggest reason is compound interest—the concept where your investments earn returns, and those returns, subsequently, accumulate even more returns. The greater time span your money has to grow, the greater the impact of compounding.
Example: Alex and Taylor are both self-employed professionals. Both of them want 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 make up for lost time.
By age 65, assuming 7% annual return:
- Alex puts in $180,000 and ends up with $691,184.39*.
- Taylor contributes $195,500 but achieves a total of only $474,367.78*.
How Early Contributions Grow
Small, consistent savings invested steadily can lead to substantial growth. Take a look at this scenario showing the effect of consistent growth:
- Starting at age 25: By investing $200 per month in a retirement plan with an expected yearly growth rate of 7%, you’ll accumulate $497,303.29* by age 65.
- Starting at age 35: Contributing the same $200 per month yields only $235,412.97* by age 65—a difference of over $260,000, simply due to a 10-year delay.
Starting sooner, the less effort required each year to achieve your retirement goals.
*The numbers shown in this scenario are based on estimates derived from NerdWallet’s Compound Interest Calculator, based on a 7% annual return. These calculations involved multiplying yearly deposits by the years contributed. This information is intended as illustrative examples and do not guarantee future performance. Actual results may vary due to elements like market conditions, fees, and personal factors. Be sure to speak with a financial advisor for personalized advice.
Take Control of Your Financial Future
For self-employed individuals in Scottsdale, AZ, it is often the case that you focus more on reinvesting in your business rather than saving for retirement. However, initiating a plan now gives you the chance to:
- Take advantage of tax-deferred growth or tax-free withdrawals in the future.
- Benefit from flexible contributions that align with your income.
- Create 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. Saving for retirement now means taking control of your financial future and allowing yourself the ability to focus on your goals—both for your retirement years and your Scottsdale, AZ business.
Types of Self-Employed Retirement Plans
Multiple retirement savings options designed for entrepreneurs in Scottsdale, AZ, each offering its own advantages and considerations. A financial advisor is available to help you understand the pros and cons of each choice and choose the one most suitable for your circumstances. Typically, your self-employed retirement plan options in Scottsdale, AZ are:
Traditional or Roth IRA
Plan Overview: IRAs, or Individual Retirement Accounts, are retirement savings vehicles that provide key tax perks. In a standard IRA, the money you contribute is often tax-deductible, and earnings grow without immediate taxation, but retirement distributions are subject to income tax. In contrast, with Roth IRAs, you contribute using income already taxed, but eligible distributions during retirement, including earnings, are exempt from taxes. In both types of accounts, withdrawals don’t incur penalties provided you are at least 59½.
Eligibility: Unlike 401(k)s, which are employer-sponsored, 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're 50 or older.
Simplified Employee Pension Plan (SEP IRA)
Plan Overview: The Simplified Employee Pension IRA is a retirement plan that allows entrepreneurs to save a percentage of their net business profits. Contributions are strictly employer contributions an employer, so, as a independent business owner, you (the employee) would not be able to contribute 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 set monetary value or a percentage of wages to employee accounts. SEP IRAs may be ideal for businesses that experience periods of inconsistent earnings. Unlike other plans, SEP IRAs don’t have the high fees associated with starting or maintaining other plans.
SEPs function like conventional IRAs, where you contribute pre-tax dollars and withdrawals are taxed as income.
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
As a self-employed person, the contribution you can make 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 retirement savings plan designed for businesses without employees or when the sole employee is your spouse. This type of plan function similarly to standard 401(k) plans, and enable contributions as both an employer and an employee with pre-tax money. This offers more savings than SEPs or IRAs; however, the increased savings potential often come with more constrained investment avenues. 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 can set up and contribute to a solo 401(k).
Contribution Limits: As a self-employed individual with a solo 401(k) plan, you are allowed to make two types of contributions:
- Employee contributions of up to 100% of your self-employed earnings, up to the annual contribution limit. For 2025, the limits will be $23,500, or $31,000 if you are 50 or older, or $34,750 if you attain age 60-63 in 2025.
- Profit-sharing contributions (as an employer) must not surpass 25% of your net earnings from self-employment, which is calculated as net profits less 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 (in 2025), $81,250 for individuals turning 60-63 in 2025.
Individual Defined Benefit Plan
Plan Overview: The defined benefit plan is a retirement option that guarantees a pre-established payout to business owners upon retirement. In contrast to the plans discussed earlier, investment returns don’t affect the payout, but allows self-employed individuals to know what they'll get in retirement. This option is ideal for wealthier entrepreneurs who aim to accumulate a large amount for retirement and are willing to make larger deposits. Contributions offer tax-deferred growth, and withdrawals are taxed as income upon retirement.
Eligibility: Any self-employed individual managing a one-person company or employing fewer than five people may establish an individual defined benefit plan, but it's generally advised for individuals aged 50+ who earn at least $250,000 a year. Generally, good candidates for defined benefit plans are:
- Entrepreneurs who desire to contribute more than $70,000 (or $77,500 for individuals 50 and older)
- Businesses currently investing 3-4% and are willing to do more
- Companies that have demonstrated consistent profit patterns
- Entrepreneurs over age 40 who wish to accelerate savings or boost savings within a short timeframe
Contribution Limits: The contribution limit must be determined by an actuary using your income, age, and retirement goals. Allowable contributions change annually.
The Importance of a Financial Advisor in Scottsdale, AZ for Your Self-Employed Retirement Plan
Partnering with an advisor in Scottsdale, AZ specialized in self-employed retirement plans can be an important asset for those working for themselves. They offer the knowledge to assist navigate the complexities of retirement planning and craft a personalized approach that matches your objectives. A financial advisor in Scottsdale, AZ will evaluate your financial situation, identify your risk preferences, and assist you in making informed decisions about saving and investing for retirement. Part of what we do for you includes:
- Assist in selecting a plan that best fits your needs and goals
- Customize the plan to fit you personally even further
- Adopt a written plan that complies with IRS regulations
- Arrange a trust plan for assets
- Ensure you comprehend the plan's terms
- Track and fine-tune your plan when necessary
- Provide ongoing education and advice throughout your retirement planning process
- Maximize what you receive in retirement by making the most of your social security
Self-Employed Retirement Plans in Scottsdale, AZ: Correct Capital's Process
Entrepreneurs in Scottsdale, AZ who aren’t equipped with the time or understanding to manage their own retirement planning themselves may end up overwhelmed by their options. At Correct Capital, our Scottsdale, AZ financial advisors manage the lion's share of your savings plan setup for you, working to make meeting your financial objectives 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: In just 20 minutes, a member of our advisor team can help understand if our services align for you and your business. This brief introduction lets us understand what you're looking for with no obligation or major time investment on your part.
- Gather Information: If we both decide to move forward, we'll request information, including your employee count, your existing financial picture, and your retirement goals. This helps us create a tailored approach suited specifically for your needs.
- Review Your Plan: After we put together a plan from the information you provide, we'll meet with you and review your plan in detail to help you fully grasp it and show how it aligns with your goals.
- Implementation and Monitoring: When we finalize on your plan, we'll set everything up so you can start saving. As time goes on, we'll meet with you and track your progress to keep it tailored to your evolving circumstances.
Our Scottsdale, AZ financial advisors and retirement plan consultants are fiduciary advisors, meaning they are committed by law and ethics to act in your best interest.
Other financial advisory services we offer in Scottsdale, AZ include:
- Investment Planning
- Retirement Financial Planning
- Independent Financial Advisor
- Investment Management
- 401(k) Audit
- High-Net-Worth Wealth Management
- Retirement Planner
- Financial Planning
- Retirement Plan Consultants
Call Correct Capital for Your Self-Employed Retirement Plan in Scottsdale, AZ
You don't see your business as "just a business", and your Scottsdale, AZ financial advisors should provide more than basic financial recommendations. 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. To every client in Scottsdale, AZ, 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.
