Self-employed retirement plans Scottsdale, AZ. The flexibility of being your own boss in Scottsdale, AZ is one of the greatest advantages of working for yourself. Even so, this flexibility can come with certain challenges, notably when it comes to retirement savings, as you don't have the benefit of employer-sponsored retirement plans. Only 13% of self-employed individuals have a workplace retirement plan, yet countless should consider exploring their options. In addition to enjoying a more secure retirement, working with a financial advisor in Scottsdale, AZ to set up your self-employed retirement plan can provide significant tax advantages that enable you to move your business forward.
Few Scottsdale, AZ wealth management 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 Correct Capital take pride in helping businesses with their retirement planning needs. We know that your professional and personal aspirations go far beyond just monetary concerns, and we are dedicated to offer personalized solutions that reflect your objectives. Keep reading to learn more about your self-employed retirement plan options in Scottsdale, AZ, or reach out to Correct Capital at 877-930-401k or contact us online to speak with a self-employed financial advisor in Scottsdale, AZ today.
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Why Scottsdale, AZ Self-Employed Individuals Should Have a Retirement Plan
Retirement plans for self-employed individuals are essential for preparing you for the future, they also offer immediate benefits today. From flexible contributions to substantial tax savings, consulting a financial advisor in Scottsdale, AZ enables you to customize your retirement plan to fit your unique financial situation.
Flexibility That Fits Your Income
For those with fluctuating income over time, a plan like a SEP IRA or Solo 401(k) gives you the freedom to modify how much you save:
- Customizable Contributions: Save extra during successful years and scale back when your earnings dip, ensuring your plan works with your current income.
- Roth Options: A Roth Solo 401(k) lets you settle taxes at the time of contribution, so you can withdraw tax-free later—a smart decision if you expect your tax rate to be higher in the future.
Save Money on Taxes
Retirement plans for self-employed individuals provide powerful tax benefits:
- Tax-Deductible Contributions: Contributions to a Solo 401(k) shrink your tax liability, 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: In some states, you could qualify for extra deductions as a business owner. These local incentives make these plans even more advantageous.
- 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, 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: Allocating your investments across varied asset classes like stocks and bonds serves to mitigate financial risk while still growing your savings.
- Emergency Back-Up: Combining your retirement strategy and a dedicated business safety net ensures you don’t using your retirement funds during financial hardships and incurring penalties.
Plan for the Future of Your Scottsdale, AZ Business
Retirement planning also helps you prepare for what’s next with your Scottsdale, AZ business:
- Selling Your Business: When selling your business, plans like SEP IRAs or Solo 401(k)s stay in your name and are not part of the sale. These savings can provide the reliable income you’ll need later on. Keep in mind that while selling a business often leads to a capital gain, retirement plan contributions 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: Using retirement contributions wisely minimizes the taxes you might face when you pass on your business.
- Succession Planning: Whether you’re transferring ownership, your nest egg provide a stable foundation during the change. You can also work with a financial advisor experienced in both succession and retirement strategies to help with taxes during the sale.
With the right retirement plan, you gain control over your financial future, cut down your tax obligations, and build a secure foundation 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 valuable factors for building your retirement fund. Beginning sooner rather than later not only helps you grow a bigger financial cushion but also minimizes the stress of catching up later in life. Here’s why it is beneficial to start now:
The Cost of Waiting
Waiting to start your retirement fund may cause a major impact on the amount you’ll have when you retire. The main reason is compound interest—the financial principle where your investments earn returns, and those returns, then, earn even more returns. The greater time span your money has to grow, the more significant the impact of this growth.
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 waits until age 40 but puts away $7,500 annually to make up for lost time.
By age 65, using a projected 7% annual return:
- Alex invests $180,000 and ends up with $691,184.39*.
- Taylor invests $195,500 but accumulates just $474,367.78*.
How Early Contributions Grow
Small, consistent savings contributed over time may result in substantial growth. Consider this example showing the power of compounding:
- Starting at age 25: Putting aside $200 per month in a retirement plan with an projected return of 7%, you’ll end up with $497,303.29* by age 65.
- Starting at age 35: Contributing the same $200 per month would result in only $235,412.97* by age 65—a shortfall of over $260,000, just from a 10-year delay.
Saving early, the less effort required each year to meet your retirement goals.
*The figures provided in this example are based on estimates derived from NerdWallet’s Compound Interest Calculator, with the assumption of 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 intended as illustrative examples and are not a promise of future results. Your individual results may differ depending on elements like market conditions, fees, and your unique situation. Always consult a financial advisor for guidance tailored to your needs.
Take Control of Your Financial Future
If you’re self-employed in Scottsdale, AZ, it is often the case that you prioritize reinvesting in your business rather than saving for retirement. That said, initiating a plan now enables you to:
- Benefit from tax-free future growth or tax-free withdrawals down the road.
- Benefit from adjustable savings that adapt to your earnings.
- Establish a safety net that provides security, no matter how your business evolves.
Getting started now, the less you’ll have to worry about catching up later in life. Taking steps toward your retirement goals today means gaining control over your financial future and creating for yourself the freedom to turn your attention to your dreams—both for your future retirement and your Scottsdale, AZ business.
Types of Self-Employed Retirement Plans
A variety of retirement savings options designed for entrepreneurs in Scottsdale, AZ, each with its own advantages and considerations. A financial advisor will guide you to understand the advantages and disadvantages of each plan and choose the one most suitable for your unique situation. In most cases, your self-employed retirement plan options in Scottsdale, AZ consist of:
Traditional or Roth IRA
Plan Overview: IRAs, or Individual Retirement Accounts, are long-term savings plans that offer key tax perks. In a conventional IRA, contributions are typically tax-deductible, and earnings grow without immediate taxation, 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 accounts, withdrawals come without penalties provided you are at least 59½.
Eligibility: Unlike plans linked to your job, IRAs, including traditional and Roth options are open to those with taxable earnings.
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: A Simplified Employee Pension (SEP) IRA offers a way to save for retirement that allows entrepreneurs to save a percentage of their net business profits. Contributions can only be made by an employer, so, as a sole proprietor, you (the employee) cannot make additional contributions more than the 25% you (the employer) already contributed. If you have employees, you must contribute the same amount for them as you do for yourself. You have the flexibility to contribute a flat-dollar amount or a percentage of wages to employee accounts. SEP IRAs may be ideal for companies with 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 traditional IRAs, where contributions are made with pre-tax money and retirement distributions are taxable.
Eligibility: Both employers and self-employed individuals can open 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 amount eligible to be contributed is based on a special calculation.
Solo 401(k)
Plan Overview: A Solo 401(k) plan, sometimes referred to as an Individual 401(k) or one-participant 401(k) plan, is a savings option for the self-employed intended for companies that have no employees or if the only employee is your spouse. Solo 401(k)s are similar to employer-sponsored 401(k) plans, and allow you to contribute as both the employer and the employee with pre-tax money. This allows for more savings versus SEPs or IRAs; however, the increased savings potential can be balanced by more limited investment options. 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: Only business owners and their spouses can set up 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:
- Deferrals as an employee of up to 100% of your earned income from self-employment, subject to the annual contribution limit. For 2025, the limits will be $23,500, or $31,000 for those aged 50 and above, or $34,750 if you attain age 60-63 in 2025.
- Employer profit-sharing contributions (as an employer) are limited to 25% of your net earnings from self-employment, which is your net profit minus half of your self-employment tax and the deferrals you made.
Total contributions are capped at $70,000, or $77,500 if you're over age 50 (in 2025), $81,250 for individuals turning 60-63 in 2025.
Individual Defined Benefit Plan
Plan Overview: A defined benefit plan represents a type of retirement plan that delivers a fixed, predetermined benefit to entrepreneurs upon retirement. As opposed to defined contribution plans, investment returns don’t affect the payout, but allows self-employed individuals to know exactly how much they'll receive in retirement. This plan is ideal for wealthier entrepreneurs who are focused on saving a substantial amount for retirement and are prepared to contribute sizeable contributions. Contributions offer tax-deferred growth, and withdrawals incur taxes as income upon retirement.
Eligibility: Any self-employed individual operating a solo business or with less than five employees are eligible to open an individual defined benefit plan, but it's most commonly advised for those over 50 who make $250,000 or more annually. Typically, good candidates for defined benefit plans are:
- Partners or owners who want to invest more than $70,000 (or $77,500 for individuals 50 and older)
- Companies already contributing 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 increase their retirement contributions rapidly
Contribution Limits: The maximum allowable contribution requires calculation from an actuary based on your income, age, and retirement goals. Contribution limits are adjusted each year.
The Importance of a Financial Advisor in Scottsdale, AZ for Your Self-Employed Retirement Plan
Working with a financial advisor in Scottsdale, AZ focused on self-employed retirement strategies can be an essential partner for entrepreneurs. They bring the skills needed to navigate the complexities of retirement planning and design a personalized approach that reflects your aspirations. Your advisor in Scottsdale, AZ will evaluate your financial situation, determine how much risk you’re comfortable with, and assist you in choosing wisely about saving and investing for retirement. A key part of what we do for you includes:
- Help you choose a plan that best fits your needs and goals
- Customize the plan to fit you personally even further
- Formalize a plan in writing in accordance with IRS guidelines
- Arrange a trust plan for assets
- Help you understand the plan's terms
- Track and fine-tune your plan as needed
- Offer continued financial education and guidance to help you navigate your retirement journey
- Maximize what you receive in retirement by optimizing your social security benefits
Self-Employed Retirement Plans in Scottsdale, AZ: Correct Capital's Process
Scottsdale, AZ business owners who don’t have the time or expertise to manage their self-employed retirement plan themselves often feel overwhelmed as they look at their available plans. With Correct Capital, our Scottsdale, AZ financial advisors manage the lion's share of your savings plan setup for you, working to make meeting your future savings targets as straightforward 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: It only takes 20 minutes, a member of our advisor team will assess if our services align for you and your business. This short conversation lets us learn about your needs with no pressure or major time investment on your part.
- Gather Information: Once we mutually decide to continue, we'll ask for information, including how many employees you have (if any), your current financial situation, and your future objectives. This allows us to put together a tailored approach that aligns with your goals.
- 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 help you fully grasp it and explain its fit to your circumstances.
- Implementation and Monitoring: When we finalize on your plan, we'll put everything in place so you can initiate your savings journey. As time goes on, we'll check in and track your progress to make sure it remains aligned with your goals.
Our Scottsdale, AZ financial advisors and retirement plan consultants serve as fiduciary advisors, who are obligated to they are committed by law and ethics to do what's in your best interest.
Other financial advisory services we offer in Scottsdale, AZ 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 Scottsdale, AZ
Your business isn't "just a business" to you, and your Scottsdale, AZ financial advisors need to offer more than basic financial recommendations. At Correct Capital, we take the time to get to know our clients and their businesses to deliver customized self-employed retirement plans. We offer all our Scottsdale, AZ 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, contact Correct Capital now at 877-930-401k or contact us online.
