Self-employed retirement plans Sioux Falls, SD. The flexibility of running your own company in Sioux Falls, SD is one of the best aspects of working for yourself. Even so, this flexibility can come with a lack of security, notably in terms of planning for retirement, because you don't have the option of a workplace retirement plan. Only 13% of self-employed individuals have a workplace retirement plan, but many would be better off exploring their options. In addition to achieving a more secure retirement, partnering with a financial advisor in Sioux Falls, SD to create your self-employed retirement plan delivers significant tax advantages that help you to move your business forward.
Few Sioux Falls, SD investment consulting and retirement planning firms truly grasp the challenges faced by self-employed individuals quite like Correct Capital. Our founder's father was a small business owner himself (read more of our story here), and our firm are deeply experienced in assisting business owners in their retirement planning needs. We know that your professional and personal aspirations extend well past simple financial figures, and we strive to offer personalized solutions that reflect your objectives. Read on to discover about your self-employed retirement plan options in Sioux Falls, SD, or give us a call at Correct Capital at 877-930-401k or contact us online to talk to a entrepreneurial financial advisor in Sioux Falls, SD today.
Why Sioux Falls, SD Self-Employed Individuals Should Have a Retirement Plan
Retirement plans for self-employed individuals help prepare you for the future, they also offer immediate benefits today. Offering flexibility in contributions to considerable tax savings, partnering with a financial advisor in Sioux Falls, SD allows you to design your retirement plan to align with your unique financial situation.
Flexibility That Fits Your Income
If your income changes over time, a plan like a SEP IRA or Solo 401(k) offers the flexibility to tailor how much you save:
- Customizable Contributions: Set aside more during high-income years and reduce savings when income is lower, ensuring your plan fits your cash flow.
- Roth Options: Choosing a Roth Solo 401(k) lets you settle taxes at the time of contribution, so you can withdraw tax-free later—a wise move if you expect your tax rate to be higher in the future.
Save Money on Taxes
Plans designed for the self-employed deliver 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: Investments grow tax-free until withdrawal, which gives your money more time to accumulate.
- State-Specific Incentives: In some states, you could qualify for state-specific credits as a business owner. These state-level incentives help make these plans even more beneficial.
- Retirement Savings Contributions Credit (Saver’s Credit): Those who meet the requirements can take advantage of a credit of up to 50% of the first $2,000 contributed a retirement plan, helping to lower your tax bill even more.
Protect Your Savings With Smart Investments
Creating a stable future goes beyond just how much you save—it’s also linked to the way you invest:
- Diversified Portfolios: Distributing your investments across a mix of stocks, bonds, and alternatives is a smart way to minimize exposure to risk while helping to grow your nest egg.
- Emergency Back-Up: Supplementing your retirement savings with a dedicated business safety net helps you avoid tapping into your nest egg during challenging periods and incurring penalties.
Plan for the Future of Your Sioux Falls, SD Business
A thoughtful retirement strategy can assist you prepare for what’s next with your Sioux Falls, SD business:
- Selling Your Business: For those considering a sale, accounts such as SEP IRAs or Solo 401(k)s remain your personal assets and don’t transfer with the business. These plans can provide the reliable income you’ll need later on. Keep in mind that while selling your business results in a capital gain, deposits into these plans are subject to yearly maximums (e.g., a maximum of $7,000 for IRAs or as much as $70,000 for Solo 401(k)s, with catch-up contributions, depending on plan details).
- Minimizing Taxes: Strategically planning your contributions minimizes the taxes you’ll owe when you pass on your business.
- Succession Planning: For those winding down or handing over their business, your nest egg ensure financial security during the change. You may also partner with a financial advisor who specializes in succession planning and retirement accounts 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 solid base for both your retirement and your business goals.
Why Start a Self-Employed Retirement Plan in Sioux Falls, SD Now?
Time is one of the most crucial factors for building your retirement fund. Starting early not only lets you accumulate a bigger financial cushion but also reduces the pressure of saving aggressively in the future. The following are reasons why it is beneficial to start now:
The Cost of Waiting
Waiting to start your retirement fund can have a significant impact on the savings you’ll have when you retire. The primary reason is compound interest—the powerful process where your investments earn returns, and those returns, in turn, accumulate even more returns. The more time 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 begins contributing $5,000 annually at age 30.
- Taylor waits until age 40 but contributes $7,500 annually to bridge the gap.
By age 65, with an assumption of 7% annual return:
- Alex contributes $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
Even modest contributions contributed over time can lead to significant growth. Consider this example showing the power of consistent growth:
- Starting at age 25: By investing $200 per month in a retirement plan with an average annual return of 7%, you’ll accumulate $497,303.29* by age 65.
- Starting at age 35: Investing the same $200 per month yields only $235,412.97* by age 65—a difference of over $260,000, all because of a 10-year delay.
The earlier you begin, the lower your annual savings needs each year to meet 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. Annual deposits were multiplied by the number of years to estimate total contributions. The scenarios provided are intended as illustrative examples and do not guarantee future performance. Actual results may vary based on variables including market conditions, fees, and individual circumstances. We recommend consulting a financial advisor for custom recommendations.
Take Control of Your Financial Future
As a self-employed person in Sioux Falls, SD, it can be tempting to focus more on reinvesting in your business rather than saving for retirement. However, starting a plan now enables you to:
- Benefit from tax-free future growth or penalty-free withdrawals in the future.
- Take advantage of contribution flexibility that align with your cash flow.
- Create a long-term safety measure that offers peace of mind, no matter how your business changes.
Starting early, the less you’ll be required to worry about making up for lost time later in life. Building your retirement savings today means taking control of your financial future and giving yourself the ability to focus on your dreams—both for your retirement years and your Sioux Falls, SD business.
Types of Self-Employed Retirement Plans
A variety of retirement savings options available for entrepreneurs in Sioux Falls, SD, each with its own advantages and considerations. A financial advisor is available to help you learn about the advantages and disadvantages of each choice and identify the one ideal for your unique situation. Typically, your self-employed retirement plan options in Sioux Falls, SD consist of:
Traditional or Roth IRA
Plan Overview: IRAs, or Individual Retirement Accounts, are retirement savings vehicles that provide key tax perks. In a standard IRA, you can usually deduct your contributions from taxable income, and investment earnings grow tax-deferred, but retirement distributions are subject to income tax. In contrast, Roth IRA contributions are made with after-tax income, but retirement withdrawals that qualify, including earnings, are tax-free. In both types of accounts, withdrawals come without 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 accessible for individuals with taxable earnings.
Contribution Limits: For 2025, annual contribution limits for IRAs remain $7,000, or $8,000 for those aged 50+.
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 must come from an employer, so, as a sole proprietor, you (the employee) are limited to contributions from the employer role beyond the 25% you (the employer) have designated. If you have employees, you are obligated to contribute the same amount for them as you do for yourself. You may choose to contribute a fixed dollar figure or a percentage of wages to employee accounts. A SEP IRA works well for businesses that experience fluctuating revenue streams. Unlike other plans, SEP IRAs are free of costly startup or administrative fees.
SEPs work like standard IRAs, where the contributions are tax-deferred and retirement distributions are taxable.
Eligibility: Any employer, including the self-employed 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 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 savings option for the self-employed meant for businesses with no employees or where the only employee is a spouse. This type of plan function similarly to employer-sponsored 401(k) plans, and let you make contributions as both the employer and the employee with pre-tax money. This allows for more savings compared to SEPs or IRAs; however, the extra savings options may be offset by more restricted investment choices. 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 have the ability to make two types of contributions:
- Employee contributions 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 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 adjusted self-employment income, which is defined as 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+ (as of 2025), $81,250 if you attain age 60-63 in 2025.
Individual Defined Benefit Plan
Plan Overview: The defined benefit plan offers a structured retirement solution that provides a set amount to entrepreneurs upon retirement. Unlike defined contribution plans mentioned above, 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 plan is best suited for wealthier entrepreneurs who want to save a significant sum for retirement and can commit to making larger deposits. Contributions offer tax-deferred growth, and withdrawals are taxable as income during retirement.
Eligibility: Entrepreneurs running an owner-only business or with a small staff of under five can open an individual defined benefit plan, but it's typically recommended for individuals aged 50+ who earn at least $250,000 a year. Generally, good candidates for defined benefit plans include:
- Partners or owners who aim to deposit more than $70,000 (or $77,500 for those aged 50+)
- Organizations that already put in 3-4% with plans to contribute more
- Companies that have demonstrated consistent profit patterns
- Partners or owners over age 40 who wish to accelerate savings or increase their retirement contributions rapidly
Contribution Limits: The cap on contributions requires calculation from an actuary using your financial situation, age, and savings targets. Contribution limits are adjusted each year.
The Importance of a Financial Advisor in Sioux Falls, SD for Your Self-Employed Retirement Plan
Partnering with an advisor in Sioux Falls, SD experienced with retirement plans for the self-employed serves as an important asset for entrepreneurs. They have the expertise to help guide you through the challenges of retirement planning and design a customized plan that matches your objectives. A financial advisor in Sioux Falls, SD will assess where you stand financially, identify your risk preferences, and assist you in selecting the best options about saving and investing for retirement. Included in what we do for you involves:
- Help you choose a plan that best fits your needs and goals
- Tailor the plan to fit you personally even further
- Formalize a plan in writing in accordance with IRS guidelines
- Arrange a trust plan for assets
- Make sure you understand the plan's terms
- Review and modify your plan to keep it aligned with your goals
- Provide ongoing education and advice throughout your retirement planning process
- Maximize what you receive in retirement by optimizing your social security benefits
Self-Employed Retirement Plans in Sioux Falls, SD: Correct Capital's Process
Sioux Falls, SD business owners who lack the time, interest, or knowledge to handle their self-employed retirement plan themselves may end up overwhelmed as they look at their available plans. With Correct Capital, our Sioux Falls, SD financial advisors handle the majority of your savings plan setup for you, and strive to ensure meeting your retirement goals 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: A quick 20-minute call is all it takes, a member of our advisor team can help understand if our services align for you and your business. This brief introduction helps us get a sense of your goals with no obligation or extensive time commitment on your part.
- Gather Information: Should we agree to proceed, we'll gather information, including how many employees you have (if any), your current financial situation, and your retirement goals. This helps us create a tailored approach designed just for you.
- Review Your Plan: Once we've developed a plan from the information you provide, we'll sit down with you and discuss your plan step by step to make sure it's clear and show how it aligns with your goals.
- Implementation and Monitoring: Once we've agreed on your plan, we'll put everything in place so you can initiate your savings journey. Throughout our relationship, we'll check in and track your progress to make sure it remains aligned with your goals.
Our Sioux Falls, SD financial advisors and retirement plan consultants act as fiduciary advisors, who are obligated to they are committed by law and ethics to act in your best interest.
Other financial advisory services we offer in Sioux Falls, SD include:
- 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 Sioux Falls, SD
You don't see your business as "just a business", and your Sioux Falls, SD financial advisors must deliver more than just good financial guidance. 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. All our clients in Sioux Falls, SD benefit from our I.O.U. promise: all guidance we provide will be independent, objective, and unbiased. To get started on your self-employment retirement plan, call Correct Capital today at 877-930-401k or contact us online.
