Self-employed retirement plans Seattle, WA. The freedom of owning your own business in Seattle, WA is one of the greatest advantages of working for yourself. Even so, this independence can come with potential drawbacks, notably in terms of building your retirement fund, as you don't have the benefit of retirement programs through an employer. Only 13% of self-employed individuals have a workplace retirement plan, but many should consider understanding their retirement options. In addition to enjoying a more secure retirement, partnering with a financial advisor in Seattle, WA to create your self-employed retirement plan can provide significant tax advantages that help both you and your business to thrive.
Few Seattle, WA investment consulting and retirement planning firms truly grasp the challenges faced by small business owners better than Correct Capital. Our founder's father was a small business owner himself (learn more about our story here), and Correct Capital have a rich history of assisting business owners in their retirement planning needs. We know that your professional and personal aspirations extend well past just monetary concerns, and we work tirelessly to provide customized solutions to meet your unique goals. Continue exploring to find out about your self-employed retirement plan options in Seattle, WA, or reach out to Correct Capital at 877-930-401k or contact us online to speak with a small business financial advisor in Seattle, WA today.
Schedule a Meeting With an Advisor Today
Correct Capital Wealth Management's office is physically located in St. Louis, MO, but we serve clients throughout the United States in both personal financial planning and corporate retirement plans.
Schedule a 15-Minute Introductory Call
Why Seattle, WA Self-Employed Individuals Should Have a Retirement Plan
Retirement plans for self-employed individuals not only prepare you for the future, they also offer real benefits today. With customizable contribution options to substantial tax savings, consulting a financial advisor in Seattle, WA enables you to customize your retirement plan to fit your unique financial situation.
Flexibility That Fits Your Income
For those with fluctuating income annually, a plan like a SEP IRA or Solo 401(k) offers the option to tailor how much you save:
- Customizable Contributions: Contribute more during high-income years and scale back when income is lower, so that your plan fits your financial situation.
- Roth Options: Opting for a Roth Solo 401(k) lets you handle taxes upfront, enabling you to withdraw without tax penalties in the future—a smart decision if you believe your tax rate to be higher in the future.
Save Money on Taxes
Plans designed for the self-employed offer significant tax benefits:
- Tax-Deductible Contributions: Contributions to a Solo 401(k) lower your taxable income, so you can keep more of your earnings.
- Tax-Deferred Growth: Your savings grow untaxed until withdrawn, giving your money more time to grow.
- State-Specific Incentives: Depending on where you live, you might access state-specific deductions as a business owner. These state-level incentives can make these plans even more advantageous.
- Retirement Savings Contributions Credit (Saver’s Credit): Eligible individuals can claim a tax credit of up to 50% of the first $2,000 contributed 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 determined by your investment strategy:
- Diversified Portfolios: Spreading your investments across a mix of stocks, bonds, and alternatives is a smart way to mitigate financial risk while still growing your nest egg.
- Emergency Back-Up: Supplementing your retirement savings with a business emergency fund helps you avoid using your retirement funds during financial hardships and incurring penalties.
Plan for the Future of Your Seattle, WA Business
A thoughtful retirement strategy enables you to plan ahead for what’s next with your Seattle, WA business:
- Selling Your Business: When selling your business, retirement accounts like SEP IRAs and Solo 401(k)s remain yours and won’t be included in the sale. These plans ensure the financial stability you’ll need during retirement. It’s important to note that while selling a business often leads to a capital gain, contributions to retirement accounts are capped at annual limits (e.g., a maximum of $7,000 for IRAs or up to $70,000 for Solo 401(k)s, factoring in catch-up contributions, according to plan rules).
- Minimizing Taxes: Making the most of retirement savings minimizes the taxes you are required to pay when you sell your business.
- Succession Planning: If you’re passing the business on, your retirement accounts ensure financial security through the transition. You may also work with a financial advisor with expertise in succession and retirement planning to help with taxes on the sale.
With the proper savings strategy, you can take control of your financial future, lower your tax bill, and create a strong framework 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 important assets in retirement planning. Starting early not only lets you accumulate a more substantial retirement fund but also reduces the financial burden of playing catch-up as you get older. The following are reasons why it pays to take action now:
The Cost of Waiting
Waiting to start your retirement fund could lead to a major impact on the total you’ll have when you retire. The primary reason is compound interest—the financial principle where your investments grow, and those returns, subsequently, generate even more returns. The greater time span your money has to grow, the larger the benefit of compounding.
Example: Alex and Taylor are both self-employed individuals. Their shared goal is to save $500,000 for retirement by age 65:
- Alex starts saving $5,000 annually at age 30.
- Taylor postpones starting contributions to age 40 but contributes $7,500 annually to catch up.
By age 65, using a projected 7% annual return:
- Alex invests $180,000 and accumulates $691,184.39*.
- Taylor contributes $195,500 but accumulates just $474,367.78*.
How Early Contributions Grow
Small, consistent savings made consistently can lead to substantial growth. Consider this example showing the effect of consistent growth:
- 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: Saving the same $200 per month yields only $235,412.97* by age 65—a difference of over $260,000, just from a 10-year delay.
The earlier you begin, the lower your annual savings needs each year to meet your retirement goals.
*The figures provided in this example represent estimates generated with 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 cannot predict actual future outcomes. Your individual results may differ depending on elements like market conditions, fees, and individual circumstances. Be sure to speak with a financial advisor for guidance tailored to your needs.
Take Control of Your Financial Future
As a self-employed person in Seattle, WA, it might seem easier to prioritize reinvesting in your business instead of saving for retirement. Even so, beginning a plan now gives you the chance to:
- Take advantage of tax-deferred growth or tax-free withdrawals in the future.
- Enjoy contribution flexibility that adapt to your cash flow.
- Establish a safety net that ensures stability, no matter how your business develops.
Starting early, the less you’ll have to worry about playing catch-up later in life. Taking steps toward your retirement goals today means managing your financial future and giving yourself the ability to turn your attention to your goals—both for your golden years and your Seattle, WA business.
Types of Self-Employed Retirement Plans
There are several retirement savings options designed for entrepreneurs in Seattle, WA, each with its own pros and cons. A financial advisor will guide you to understand the benefits and drawbacks of each option and identify the one most suitable for your circumstances. In most cases, your self-employed retirement plan options in Seattle, WA are:
Traditional or Roth IRA
Plan Overview: Individual Retirement Accounts (IRAs), as explained here, represent retirement savings vehicles that provide distinct tax benefits. In a traditional IRA, you can usually deduct your contributions from taxable income, and returns grow free of current taxes, but money taken out during retirement are taxed as income. In contrast, Roth IRA contributions using income already taxed, but retirement withdrawals that qualify, including earnings, are exempt from taxes. In both accounts, withdrawals are penalty-free if you are at least 59½.
Eligibility: While many retirement plans, such as 401(k)s, are tied to employment, IRAs, including traditional and Roth options are open to those with an earned income.
Contribution Limits: For 2025, annual contribution limits for IRAs are set 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 is a retirement plan that permits entrepreneurs to set aside a portion of their self-employment income. Contributions must come from an employer, so, as a sole proprietor, you (the employee) cannot make additional contributions beyond 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. It's your choice whether to contribute a flat-dollar amount or a percentage of wages to employee accounts. This type of plan may be ideal for companies with cycles of high revenue and low revenue. Unlike other plans, SEP IRAs lack costly startup or administrative fees.
SEPs operate like traditional IRAs, where contributions are made with pre-tax money and retirement distributions are taxable.
Eligibility: Both employers and self-employed individuals 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 designed for businesses with no employees or when the sole employee is your spouse. Solo 401(k)s function similarly to traditional employer-managed 401(k) plans, and enable contributions as both an employee or an employer with pre-tax money. This allows for more savings than SEPs or IRAs; however, the additional opportunities can be balanced by more limited investment options. Using a solo 401(k), 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 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 are allowed to make two types of contributions:
- Elective deferrals (as an employee) of up to 100% of your earned income from self-employment, 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 for individuals aged 60-63 in 2025.
- Employer profit-sharing contributions (as an employer) cannot exceed 25% of your net earnings from self-employment, which is calculated as net profits less half of your self-employment tax and the deferrals you made.
Your combined contributions must not surpass $70,000, or $77,500 for individuals aged 50+ (in 2025), $81,250 for those aged 60-63 in 2025.
Individual Defined Benefit Plan
Plan Overview: The defined benefit plan offers a structured retirement solution that delivers a fixed, predetermined benefit to entrepreneurs upon retirement. In contrast to the plans discussed earlier, a defined benefit plan doesn't fluctuate based on investment returns, but enables participants to determine exactly how much they'll get in retirement. This option is recommended for higher-income self-employed individuals who are focused on saving a substantial amount for retirement and are willing to make larger deposits. Contributions are tax deferred, and withdrawals incur taxes as income during retirement.
Eligibility: Any self-employed individual operating a solo business or with less than five employees may establish an individual defined benefit plan, but it's most commonly suggested for people above age 50 who earn at least $250,000 a year. Generally, 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% but are open to increasing contributions
- Organizations showing consistent profit patterns
- Partners or owners over age 40 who desire to "catch up" or accelerate the retirement savings
Contribution Limits: The contribution limit must be determined by an actuary determined by your financial situation, age, and savings targets. Allowable 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 is an important asset for those working for themselves. They have the expertise to help understand the intricacies of saving for retirement and craft a tailored strategy that matches your objectives. A financial advisor in Seattle, WA will assess where you stand financially, determine how much risk you’re comfortable with, and help you in selecting the best options about saving and investing for retirement. Included in what we do for you features:
- Assist in selecting a plan that suits your unique requirements
- Tailor the plan to your needs even further
- Adopt a written plan in accordance with IRS guidelines
- Set up an asset trust plan
- Make sure you understand the plan's terms
- Review and modify your plan as needed
- 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 Seattle, WA: Correct Capital's Process
Entrepreneurs in Seattle, WA who lack the time, interest, or knowledge to handle their self-employed retirement plan themselves can become overwhelmed by their options. With Correct Capital, our Seattle, WA financial advisors take on the majority 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 four simple steps:
- Schedule a Call: It only takes 20 minutes, a member of our advisor team will assess if we're a good fit for you and your business. This short conversation lets us get a sense of your goals with no pressure or extensive time commitment on your part.
- Gather Information: Should we agree to proceed, we'll request information, including whether you have employees, your present financial standing, and your retirement goals. This helps us create a custom plan designed just for you.
- Review Your Plan: After we put together a plan based on the information you provide, we'll meet with you and go over your plan in detail to ensure you understand it and explain its fit to your circumstances.
- Implementation and Monitoring: After we agree on your plan, we'll put everything in place so you can begin contributing. As time goes on, we'll check in and review your strategy to make sure it remains aligned with your goals.
Our Seattle, WA financial advisors and retirement plan consultants are fiduciary advisors, which means they are legally and ethically bound to act in your best interest.
Other financial advisory services we offer in Seattle, WA 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 Seattle, WA
Your business isn't "just a business" to you, and your Seattle, WA financial advisors must deliver more than just good financial guidance. At Correct Capital, we make it a priority to understand our clients and their businesses to deliver customized self-employed retirement plans. All our clients in Seattle, WA benefit from our I.O.U. promise: all of the advice you get from us will be independent, objective, and unbiased. To begin on your self-employment retirement plan, contact Correct Capital now at 877-930-401k or contact us online.
