Self-employed retirement plans Spokane, WA. The independence of running your own company in Spokane, WA is one of the best aspects of having a self-directed career. However, this flexibility often comes with certain challenges, especially when it comes to building your retirement fund, as you don't have access to a workplace retirement plan. Only 13% of self-employed individuals have a workplace retirement plan, although many would be better off understanding their retirement options. In addition to achieving a more secure retirement, partnering with a financial advisor in Spokane, WA to establish your self-employed retirement plan offers significant tax advantages that enable both you and your business to thrive.
Few Spokane, WA financial advisory and retirement planning firms are as attuned to the requirements of self-employed individuals as well as Correct Capital. The father of our founder was a small business owner himself (read more of our story here), and our firm are deeply experienced in helping businesses with their retirement planning needs. We know that your goals for your business and retirement aren’t limited to just monetary concerns, and we strive to provide customized solutions that reflect your objectives. Continue exploring to find out about your self-employed retirement plan options in Spokane, WA, or reach out to Correct Capital at 877-930-401k or contact us online to speak with a small business financial advisor in Spokane, WA today.
Why Spokane, WA 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. From flexible contributions to considerable tax savings, partnering with a financial advisor in Spokane, WA helps you customize your retirement plan to align with your individual circumstances.
Flexibility That Fits Your Income
When your earnings vary from year to year, 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 profitable years and reduce savings when revenues are down, so your plan works with your current income.
- Roth Options: Choosing a Roth Solo 401(k) lets you settle taxes at the time of contribution, so you can withdraw without tax penalties in the future—a smart decision if you anticipate your tax rate will increase in the future.
Save Money on Taxes
Self-employed retirement plans deliver powerful tax benefits:
- Tax-Deductible Contributions: Contributions to a SIMPLE IRA reduce what you owe in taxes, helping you keep more of your hard-earned money.
- Tax-Deferred Growth: You won't pay taxes on investment growth until you withdraw it, which gives your money more time to compound.
- State-Specific Incentives: Depending on where you live, you could qualify for state-specific deductions as a sole proprietor. These local incentives can make these plans even more advantageous.
- Retirement Savings Contributions Credit (Saver’s Credit): Qualified participants can apply for 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
Planning for a safe retirement goes beyond just how much you save—it’s also about how you invest:
- Diversified Portfolios: Spreading your investments across a mix of asset classes like stocks and bonds is a smart way to reduce risk while helping to grow your retirement fund.
- Emergency Back-Up: Pairing your retirement plan with a business emergency fund helps you avoid dipping into savings during tough times and incurring penalties.
Plan for the Future of Your Spokane, WA Business
A thoughtful retirement strategy can assist you plan ahead for what’s next with your Spokane, WA business:
- Selling Your Business: When selling your business, plans like SEP IRAs or Solo 401(k)s stay in your name and won’t be included in the sale. These accounts ensure the steady income you’ll need during retirement. Keep in mind that while the sale of a business usually creates a capital gain, contributions to retirement accounts are subject to yearly maximums (e.g., as much as $7,000 for IRAs or a maximum of $70,000 for Solo 401(k)s, including catch-up contributions, according to plan rules).
- Minimizing Taxes: Strategically planning your contributions minimizes the taxes you might face when you transfer your business.
- Succession Planning: Whether you’re transferring ownership, your retirement savings ensure a stable foundation as you make this shift. You can 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, 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 Spokane, WA Now?
Time is one of the most crucial assets when it comes to saving for retirement. Getting a head start not only helps you grow a bigger financial cushion but also lowers the financial burden of playing catch-up as you get older. The following are reasons 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 reach retirement age. The main 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 more significant the impact of this compounding process.
Example: Two individuals, Alex and Taylor are both self-employed individuals. Both of them want to save $500,000 for retirement by age 65:
- Alex initiates savings of $5,000 annually at age 30.
- Taylor postpones starting contributions to age 40 but puts away $7,500 annually to catch up.
By age 65, with an assumption of 7% annual return:
- Alex contributes $180,000 and achieves a total of $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 often create impressive growth. Take a look at this scenario showing the power of compounding:
- Starting at age 25: Putting aside $200 per month in a retirement plan with an expected yearly growth rate of 7%, you’ll grow to approximately $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, all because of a 10-year delay.
The earlier you begin, the lower your annual savings needs each year to meet your retirement goals.
*These calculations are based on estimates derived from NerdWallet’s Compound Interest Calculator, with the assumption of a 7% annual return. Annual deposits were multiplied by the number of years to estimate total contributions. This information is intended as illustrative examples and are not a promise of future results. 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 Spokane, WA, it might seem easier to focus more on reinvesting in your business over saving for retirement. Even so, beginning a plan now allows you to:
- Benefit from growth that is tax-deferred or tax-free withdrawals later on.
- Benefit from contribution flexibility that align with your cash flow.
- Create a safety net that provides security, no matter how your business evolves.
The sooner you start, 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 freedom to concentrate on your goals—both for your future retirement and your Spokane, WA business.
Types of Self-Employed Retirement Plans
There are several retirement savings options designed for entrepreneurs in Spokane, WA, each providing its own benefits and trade-offs. A financial advisor is available to help you evaluate the pros and cons of each plan and identify the one best suited for your needs. In most cases, your self-employed retirement plan options in Spokane, WA consist of:
Traditional or Roth IRA
Plan Overview: Individual Retirement Accounts (IRAs), as explained here, represent retirement savings vehicles that offer distinct tax benefits. In a conventional IRA, you can usually deduct your contributions from taxable income, and investment earnings grow tax-deferred, but withdrawals in 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 types of accounts, withdrawals don’t incur penalties as long as 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 set at $7,000, or $8,000 for those aged 50+.
Simplified Employee Pension Plan (SEP IRA)
Plan Overview: The Simplified Employee Pension IRA offers a way to save for retirement 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) would not be able to contribute above the 25% you (the employer) allocate. If you have employees, it's required 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 is a good option for companies with fluctuating revenue streams. Unlike other plans, SEP IRAs lack expensive setup or ongoing fees.
SEPs operate like standard IRAs, where contributions are made with pre-tax money and retirement distributions are taxable.
Eligibility: Any employer, including the self-employed 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
For self-employed individuals, the amount eligible to be contributed is based on a special calculation.
Solo 401(k)
Plan Overview: The Solo 401(k), commonly known as an Individual 401(k) or one-participant 401(k) plan, is a savings option for the self-employed intended for businesses without employees or where the only employee is a spouse. This type of plan operate much like standard 401(k) plans, and enable contributions as both the employer and the employee with pre-tax money. This allows for more savings versus SEPs or IRAs; however, the extra savings options may be offset by more constrained investment avenues. In a solo 401(k) plan, you can make either traditional or Roth deferrals, which share 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: If you are self-employed 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, subject to the annual contribution limit. In 2025, those limits are $23,500, or $31,000 if you're over 50, or $34,750 if you attain age 60-63 in 2025.
- Contributions as an employer (as an employer) cannot exceed 25% of your adjusted self-employment income, which is your net profit minus half of your self-employment tax and the deferrals you made.
The total contribution cannot exceed $70,000, or $77,500 if you're over age 50 (for 2025), $81,250 if you attain age 60-63 in 2025.
Individual Defined Benefit Plan
Plan Overview: Defined benefit plans offers a structured retirement solution that guarantees a fixed, predetermined benefit to business owners upon retirement. As opposed to defined contribution plans, a defined benefit plan doesn't fluctuate based on investment returns, but allows self-employed individuals to know what they'll have in retirement. This option is recommended for high-earning entrepreneurs who are focused on saving a substantial amount for retirement and can commit to making substantial contributions. Contributions grow tax-free until withdrawal, and withdrawals are taxable as income in retirement.
Eligibility: Self-employed professionals running an owner-only business or with a small staff of under five can open an individual defined benefit plan, but it's typically advised for individuals aged 50+ who make $250,000 or more annually. In most cases, good candidates for defined benefit plans include:
- Business owners or partners who aim to deposit more than $70,000 (or $77,500 for those aged 50+)
- Organizations that already put in 3-4% and are willing to do more
- Organizations that have demonstrated consistent profit patterns
- Entrepreneurs over age 40 who desire to "catch up" or boost savings within a short timeframe
Contribution Limits: The contribution limit must be determined by an actuary based on your income, age, and retirement goals. Limits on contributions change annually.
The Importance of a Financial Advisor in Spokane, WA for Your Self-Employed Retirement Plan
Working with a financial advisor in Spokane, WA specialized in self-employed retirement plans serves as an essential partner for entrepreneurs. 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 Spokane, WA will evaluate your financial situation, understand your risk tolerance, and assist you in selecting the best options about saving and investing for retirement. A key part of what we do for you features:
- Guide you in choosing a plan that best fits your needs and goals
- Customize the plan to fit you personally even further
- Formalize a plan in writing that complies with IRS regulations
- 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
- Offer continued financial education and guidance as you continue on the road to retirement
- Maximize what you receive in retirement by making the most of your social security
Self-Employed Retirement Plans in Spokane, WA: Correct Capital's Process
Entrepreneurs in Spokane, WA who don’t have the time or expertise to handle their self-employed retirement plan independently can become overwhelmed by their available plans. Through our team at Correct Capital, our Spokane, WA financial advisors take on the lion's share of your retirement strategy for you, to help make meeting your future savings targets as hassle-free as possible for you. We are here to assist you in setting up your self-employed retirement plan in just four steps:
- Schedule a Call: It only takes 20 minutes, a member of our advisor team can help understand if we're a good fit for you and your business. This initial call helps us learn about your needs with no pressure or significant effort 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 existing financial picture, and your retirement goals. This allows us to put together a tailored approach designed just for you.
- Review Your Plan: Once we've developed a plan from the information you provide, we'll schedule a meeting and discuss your plan step by step to help you fully grasp it and understand how it best correlates to your needs.
- Implementation and Monitoring: After we agree on your plan, we'll put everything in place so you can start saving. Throughout our relationship, we'll have regular meetings and track your progress to keep it tailored to your evolving circumstances.
Our Spokane, WA financial advisors and retirement plan consultants are fiduciary advisors, meaning they are required by law and ethical standards to prioritize your needs above all else.
Other financial advisory services we offer in Spokane, WA include:
- Investment Planning
- Retirement Financial Planning
- 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 Spokane, WA
To you, your business is more than "just a business", and your Spokane, WA financial advisors need to offer more than basic financial recommendations. Correct Capital takes pride in, we focus on building a relationship with our clients and their businesses to deliver personalized self-employed retirement plans. To every client in Spokane, WA, we provide our I.O.U. promise: everything we recommend will be independent, objective, and unbiased. To begin on your self-employment retirement plan, reach out to Correct Capital at 877-930-401k or contact us online.
