Self-employed retirement plans Seattle, WA. The freedom of owning your own business in Seattle, WA offers many benefits of having a self-directed career. Even so, this independence can come with potential drawbacks, 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 understanding their retirement options. In addition to having a more secure retirement, working with a financial advisor in Seattle, WA to establish your self-employed retirement plan delivers significant tax advantages that allow you to move your business forward.
Few Seattle, WA financial advisory and retirement planning firms are as attuned to the requirements of entrepreneurs better than Correct Capital. Our founder's father was a small business owner himself (check out our story here), and Correct Capital have a rich history of assisting business owners in their retirement planning needs. We understand that your business and retirement aspirations go far beyond simple financial figures, and we work tirelessly to create personalized solutions that reflect your objectives. Read on to discover about your self-employed retirement plan options in Seattle, WA, or give us a call at Correct Capital at 877-930-401k or contact us online to consult with a entrepreneurial financial advisor in Seattle, WA today.
Why Seattle, WA Self-Employed Individuals Should Have a Retirement Plan
Retirement plans for self-employed individuals help prepare you for the future, they also offer real benefits today. With customizable contribution options to considerable tax savings, partnering with a financial advisor in Seattle, WA enables you to customize your retirement plan to fit your individual circumstances.
Flexibility That Fits Your Income
If your income changes annually, a plan like a SEP IRA or Solo 401(k) provides the flexibility to adjust how much you save:
- Customizable Contributions: Set aside more during profitable years and reduce savings when your earnings dip, so your plan aligns with your financial situation.
- Roth Options: Choosing a Roth Solo 401(k) lets you settle taxes at the time of contribution, so you can withdraw your savings tax-free down the road—a wise move if you believe 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) shrink your tax liability, helping you keep more of your earnings.
- Tax-Deferred Growth: Investments grow tax-free until withdrawal, giving your money more time to accumulate.
- State-Specific Incentives: Depending on where you live, you might access state-specific credits as a sole proprietor. These local incentives can make these plans even more advantageous.
- Retirement Savings Contributions Credit (Saver’s Credit): Eligible individuals can take advantage of a 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
Building a secure retirement isn’t only about how much you save—it’s also about how you invest:
- Diversified Portfolios: Distributing your investments across varied stocks, bonds, and alternatives can help minimize exposure to risk while continuing to build your nest egg.
- Emergency Back-Up: Combining your retirement strategy and 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 Seattle, WA Business
Retirement planning also helps you think through what’s next with your Seattle, WA 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 plans can provide the reliable income you’ll need during retirement. It’s important to note 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 a maximum of $70,000 for Solo 401(k)s, with catch-up contributions, according to plan rules).
- Minimizing Taxes: Strategically planning your contributions can reduce the taxes you are required to pay when you transfer your business.
- Succession Planning: Whether you’re transferring ownership, your retirement accounts offer financial security as you make this shift. You can also seek advice from a financial advisor with expertise in succession and retirement planning to help with taxes associated with the transaction.
With the proper savings strategy, you can take control of your financial future, lower your tax bill, and establish a secure foundation for both your retirement and your business goals.
Why Start a Self-Employed Retirement Plan in Seattle, WA Now?
There’s no denying that time is one of the most crucial factors for building your retirement fund. Starting early not only allows you to build a more substantial retirement fund but also minimizes the stress of saving aggressively in the future. Here’s why it is beneficial to start now:
The Cost of Waiting
Delaying your retirement savings could lead to a substantial impact on the total you’ll have when you reach retirement age. The primary reason is compound interest—the financial principle where your investments earn returns, and those returns, in turn, earn even more returns. The greater time span your money has to grow, the more significant the benefit of this compounding process.
Example: Taylor and Alex are both entrepreneurs. Both of them want 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, with an assumption of 7% annual return:
- Alex invests $180,000 and accumulates $691,184.39*.
- Taylor invests $195,500 but accumulates just $474,367.78*.
How Early Contributions Grow
Even modest contributions invested steadily often create impressive growth. Consider this example 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 end up with $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, just from a 10-year delay.
Saving early, the less you need to save each year to meet your retirement goals.
*The figures provided in this example represent estimates calculated using NerdWallet’s Compound Interest Calculator, assuming a 7% annual return. Annual deposits were multiplied by the number of years to estimate total contributions. These examples are intended as illustrative examples and are not a promise of future results. Actual results may vary based on factors such as market conditions, fees, and your unique situation. Be sure to speak with a financial advisor for custom recommendations.
Take Control of Your Financial Future
As a self-employed person in Seattle, WA, it is often the case that you put more emphasis on reinvesting in your business rather than saving for retirement. However, starting a plan now enables you to:
- Leverage growth that is tax-deferred or withdrawals without taxes later on.
- Enjoy flexible contributions that adapt to your income.
- Build a long-term safety measure that offers peace of mind, no matter how your business develops.
The sooner you start, the less you’ll need to worry about catching up later in life. Taking steps toward your retirement goals today means managing your financial future and creating for yourself the freedom to concentrate on your objectives—both for your golden years and your Seattle, WA business.
Types of Self-Employed Retirement Plans
A variety of retirement savings options available for those working for themselves in Seattle, WA, each providing its own pros and cons. A financial advisor is available to help you learn about the pros and cons of each choice and identify the one most suitable for your circumstances. Generally speaking, your self-employed retirement plan options in Seattle, WA are:
Traditional or Roth IRA
Plan Overview: IRAs, or Individual Retirement Accounts, are financial tools for retirement that provide key tax perks. In a conventional IRA, you can usually deduct your contributions from taxable income, and returns grow free of current taxes, but withdrawals in retirement are taxed as income. In contrast, Roth IRA contributions are made with after-tax income, but qualified withdrawals in retirement, including earnings, are tax-free. In both cases, withdrawals don’t incur penalties as long as you are at least 59½.
Eligibility: While many retirement plans, such as 401(k)s, are tied to employment, traditional and Roth IRAs are open to those with an earned income.
Contribution Limits: For 2025, annual contribution limits for IRAs are capped at $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 is a retirement plan that allows self-employed individuals to contribute a percentage of their net earnings. Contributions must come from an employer, so, as a self-employed individual, you (the employee) would not be able to contribute above the 25% you (the employer) allocate. 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. A SEP IRA works well for entrepreneurs facing cycles of high revenue and low revenue. In contrast to some alternatives, SEP IRAs are free of the high fees associated with starting or maintaining other plans.
SEPs function like standard IRAs, where you contribute pre-tax dollars and money withdrawn is subject to income tax.
Eligibility: Both employers and self-employed individuals can establish a SEP.
Contribution Limits: Contribution limits for employees in a SEP IRA are the lesser of:
- 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: A Solo 401(k) plan, also called an Individual 401(k) or one-participant 401(k) plan, is a retirement savings plan designed for businesses with no employees or if the only employee is your spouse. These plans function similarly to standard 401(k) plans, and let you make contributions as both the employer and the employee with pre-tax money. This allows for more savings versus SEPs or IRAs; however, the additional opportunities 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: Solo 401(k)s are available solely to business owners and their spouses may establish and contribute to a solo 401(k).
Contribution Limits: For self-employed individuals with a solo 401(k) plan, you are allowed to make two types of contributions:
- Elective deferrals (as an employee) of up to 100% of your self-employed earnings, up to the annual contribution limit. In 2025, those limits are $23,500, or $31,000 for those aged 50 and above, or $34,750 if you attain age 60-63 in 2025.
- Contributions as an employer (as an employer) cannot exceed 25% of your net self-employment income, which is your net profit minus half of your self-employment tax and the elective deferrals you made.
The total contribution cannot exceed $70,000, or $77,500 for individuals aged 50+ (in 2025), $81,250 for individuals turning 60-63 in 2025.
Individual Defined Benefit Plan
Plan Overview: Defined benefit plans offers a structured retirement solution that provides a pre-established payout to entrepreneurs upon retirement. Unlike defined contribution plans mentioned above, investment returns don’t affect the payout, but enables participants to determine exactly how much they'll receive in retirement. This plan is best suited for higher-income self-employed individuals who aim to accumulate a substantial amount for retirement and are willing to make substantial contributions. Contributions are tax deferred, and withdrawals are taxable as income in retirement.
Eligibility: Self-employed professionals operating a solo business or employing fewer than five people are eligible to open an individual defined benefit plan, but it's most commonly advised for those over 50 who earn at least $250,000 a year. Typically, good candidates for defined benefit plans tend to be:
- Entrepreneurs who aim to deposit more than $70,000 (or $77,500 for individuals 50 and older)
- Businesses currently investing 3-4% with plans to contribute more
- Businesses showing consistent profit patterns
- Entrepreneurs over age 40 who wish to accelerate savings or accelerate the retirement savings
Contribution Limits: The cap on contributions is calculated by an actuary based on your earnings, age, and retirement objectives. Limits on contributions are updated yearly.
The Importance of a Financial Advisor in Seattle, WA for Your Self-Employed Retirement Plan
Working with a financial advisor in Seattle, WA specialized in self-employed retirement plans can be an important asset for those working for themselves. They offer the knowledge to assist guide you through the challenges of retirement planning and design a customized plan that aligns with your goals. Your advisor in Seattle, WA will assess where you stand financially, identify your risk preferences, and help you in making informed decisions about saving and investing for retirement. Part of what we do for you involves:
- Guide you in choosing a plan that best fits your needs and goals
- Further adapt the plan to fit you personally even further
- Adopt a written plan as required by IRS rules
- Set up an asset trust plan
- Help you understand the plan's terms
- Monitor and adjust your plan when necessary
- Deliver continuous support and financial insights to help you navigate your retirement journey
- Boost your retirement earnings by making the most of your social security
Self-Employed Retirement Plans in Seattle, WA: Correct Capital's Process
Self-employed individuals in Seattle, WA who aren’t equipped with the time or understanding to oversee their self-employed retirement plan on their own can become overwhelmed when faced with their choices. Through our team at Correct Capital, our Seattle, WA financial advisors take on the majority of your retirement planning for you, to help 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 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 helps us get a sense of your goals with no pressure or major time investment on your part.
- Gather Information: If we both decide to move forward, we'll gather information, including how many employees you have (if any), your present financial standing, and your long-term savings targets. This allows us to put together a personalized strategy that aligns with your goals.
- Review Your Plan: Once we've developed a plan using the information you provide, we'll sit down with you and go over your plan thoroughly to help you fully grasp it and explain its fit to your circumstances.
- Implementation and Monitoring: When we finalize on your plan, we'll set everything up so you can initiate your savings journey. As time goes on, we'll meet with you and track your progress to ensure it stays suited to your needs.
Our Seattle, WA financial advisors and retirement plan consultants act as fiduciary advisors, meaning they are required by law and ethical standards to do what's in your best interest.
Other financial advisory services we offer in Seattle, WA include:
- Independent Financial Advisor
- 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 Seattle, WA
You don't see your business as "just a business", and your Seattle, WA financial advisors must deliver more than basic financial recommendations. Correct Capital takes pride in, we focus on building a relationship with our clients and their businesses to create tailored self-employed retirement plans. To every client in Seattle, WA, we provide our I.O.U. promise: all guidance we provide 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.
