Self-employed retirement plans Spokane, WA. The independence of being your own boss in Spokane, WA offers many benefits of having a self-directed career. That said, this independence 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, although many should consider exploring their options. In addition to achieving a more comfortable retirement, partnering with a financial advisor in Spokane, WA to create your self-employed retirement plan delivers significant tax advantages that allow both you and your business to thrive.
Few Spokane, WA financial advisory and retirement planning firms are as attuned to the requirements of entrepreneurs as well as Correct Capital. Our company’s founder grew up with a father who was a small business owner himself (read more of our story here), and Correct Capital take pride in supporting entrepreneurs with their retirement planning needs. We understand that your professional and personal aspirations go far beyond simple financial figures, and we are dedicated to provide customized solutions aligned with your vision. Read on to discover 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 consult with a self-employed 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 offer tangible benefits today. Offering flexibility in contributions to considerable tax savings, partnering with a financial advisor in Spokane, WA allows you to create your retirement plan to align with your specific needs.
Flexibility That Fits Your Income
If your income changes from year to year, a plan like a SEP IRA or Solo 401(k) gives you the freedom to tailor how much you save:
- Customizable Contributions: Save extra during high-income years and cut back when your earnings dip, so your plan aligns with your cash flow.
- Roth Options: Choosing a Roth Solo 401(k) lets you handle taxes upfront, so you can 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
Self-employed retirement plans provide significant tax benefits:
- Tax-Deductible Contributions: Contributions to a SIMPLE IRA lower your taxable income, 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 may be eligible for extra deductions as a business owner. These regional incentives help make these plans even more valuable.
- 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 goes beyond just how much you save—it’s also about how you invest:
- Diversified Portfolios: Distributing your investments across varied stocks, bonds, and other assets can help reduce risk while still growing your nest egg.
- Emergency Back-Up: Supplementing your retirement savings with a dedicated business safety net ensures you don’t dipping into savings during financial hardships and incurring penalties.
Plan for the Future of Your Spokane, WA Business
Retirement planning can assist you prepare for what’s next with your Spokane, WA business:
- Selling Your Business: For those considering a sale, retirement accounts like SEP IRAs and Solo 401(k)s remain yours and won’t be included in the sale. These accounts ensure the financial stability you’ll need in the future. It’s important to note that while selling your business results in a capital gain, contributions to retirement accounts are capped at annual limits (e.g., a maximum of $7,000 for IRAs or a maximum of $70,000 for Solo 401(k)s, with catch-up contributions, depending on plan details).
- Minimizing Taxes: Using retirement contributions wisely minimizes the taxes you might face when you sell your business.
- Succession Planning: For those winding down or handing over their business, your nest egg provide the funds you need during the change. You might want to work with a financial advisor who specializes in succession planning and retirement accounts to help with taxes associated with the transaction.
With the proper savings strategy, you can take control of your financial future, reduce your tax burden, and create a strong framework for both your retirement and your business goals.
Why Start a Self-Employed Retirement Plan in Spokane, WA Now?
There’s no denying that time is one of the most crucial assets for building your retirement fund. Getting a head start not only helps you grow a more substantial retirement fund but also reduces the financial burden of saving aggressively in the future. Here’s why it is beneficial to start now:
The Cost of Waiting
Waiting to start your retirement fund could lead to a substantial impact on the total you’ll have when you reach retirement age. The biggest reason is compound interest—the powerful process where your investments grow, and those returns, then, earn even more returns. The longer your money has to grow, the greater the benefit of this compounding process.
Example: Two individuals, 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 waits until age 40 but saves $7,500 annually to make up for lost time.
By age 65, using a projected 7% annual return:
- Alex contributes $180,000 and ends up with $691,184.39*.
- Taylor invests $195,500 but only ends up with $474,367.78*.
How Early Contributions Grow
Regular, modest investments contributed over time may result in impressive growth. Consider this example showing the effect of compound interest:
- 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: Investing the same $200 per month leaves you with only $235,412.97* by age 65—a difference of over $260,000, simply due to a 10-year delay.
Saving early, the less effort required each year to meet your retirement goals.
*The figures provided in this example are estimates calculated using 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 factors such as market conditions, fees, and individual circumstances. Always consult a financial advisor for custom recommendations.
Take Control of Your Financial Future
As a self-employed person in Spokane, WA, it can be tempting to put more emphasis on reinvesting in your business rather than saving for retirement. However, starting a plan now allows you to:
- Benefit from tax-free future growth or withdrawals without taxes later on.
- Enjoy adjustable savings that change with your income.
- Build a safety net that provides security, no matter how your business develops.
Starting early, the less you’ll be required to worry about playing catch-up later in life. Building your retirement savings today means gaining control over your financial future and giving yourself the ability to focus on your dreams—both for your future retirement and your Spokane, WA business.
Types of Self-Employed Retirement Plans
A variety of retirement savings options open for entrepreneurs in Spokane, WA, each offering its own pros and cons. A financial advisor can help you learn about the advantages and disadvantages of each choice and determine the one ideal for your unique situation. In most cases, your self-employed retirement plan options in Spokane, WA include:
Traditional or Roth IRA
Plan Overview: Individual Retirement Accounts (IRAs), as explained here, represent long-term savings plans that provide key tax perks. In a traditional IRA, you can usually deduct your contributions from taxable income, and earnings grow without immediate taxation, but money taken out during retirement are taxed as income. In contrast, Roth IRAs require contributions are made with after-tax income, but retirement withdrawals that qualify, including earnings, are not taxed. In both cases, withdrawals are penalty-free as long as you are at least 59½.
Eligibility: Unlike 401(k)s, which are employer-sponsored, IRAs, including traditional and Roth options 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'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 enables those who are self-employed to set aside a portion of their self-employment income. Contributions are strictly employer contributions an employer, so, as a self-employed individual, you (the employee) are limited to contributions from the employer role more than 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. You may choose to contribute a set monetary value or a percentage of wages to employee accounts. SEP IRAs works well for entrepreneurs facing periods of inconsistent earnings. In contrast to some alternatives, SEP IRAs don’t have the high fees associated with starting or maintaining other plans.
SEPs function like conventional IRAs, where contributions are made with pre-tax money and retirement distributions are taxable.
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
If you’re self-employed, the contribution you can make 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 self-employed retirement plan meant for companies that have no employees or if the only employee is your spouse. These plans operate much like traditional employer-managed 401(k) plans, and allow you to contribute as both an employee or an employer with pre-tax money. This offers more savings compared to SEPs or IRAs; however, the increased savings potential may be offset by more constrained investment avenues. With this type of plan, you can make either traditional or Roth deferrals, which have 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: If you are self-employed with a solo 401(k) plan, you have the ability to make two types of contributions:
- 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 if you're over 50, or $34,750 for those who turn 60-63 in 2025.
- Profit-sharing contributions (as an employer) are limited to 25% of your adjusted self-employment income, which is defined as net profit minus half of your self-employment tax and the employee contributions you made.
The total contribution cannot exceed $70,000, or $77,500 for those aged 50 and older (for 2025), $81,250 if you attain age 60-63 in 2025.
Individual Defined Benefit Plan
Plan Overview: A defined benefit plan offers a structured retirement solution that delivers a pre-established payout to entrepreneurs upon retirement. In contrast to the plans discussed earlier, this plan is not influenced by market performance, but lets individuals clearly understand the precise amount they'll receive in retirement. This strategy is best suited 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 upon retirement.
Eligibility: Entrepreneurs operating a solo business or with a small staff of under five are eligible to open an individual defined benefit plan, but it's typically recommended for those over 50 who earn at least $250,000 a year. Typically, good candidates for defined benefit plans include:
- Business owners or partners who desire to contribute more than $70,000 (or $77,500 for those aged 50+)
- Businesses currently investing 3-4% but are open to increasing contributions
- Companies with proven 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 must be determined by an actuary based on your financial situation, age, and savings targets. Limits on contributions change annually.
The Importance of a Financial Advisor in Spokane, WA for Your Self-Employed Retirement Plan
A financial advisor in Spokane, WA specialized in self-employed retirement plans serves as an important asset for self-employed individuals. They offer the knowledge to assist navigate the complexities of retirement planning and develop a tailored strategy that aligns with your goals. A financial advisor in Spokane, WA will evaluate your financial situation, determine how much risk you’re comfortable with, and guide you in choosing wisely about saving and investing for retirement. Part of what we do for you features:
- Guide you in choosing a plan that best fits your needs and goals
- Further adapt the plan to your specific situation even further
- Adopt a written plan that complies with IRS regulations
- Set up an asset trust plan
- Make sure you understand the plan's terms
- Review and modify your plan when necessary
- Offer continued financial education and guidance as you continue on the road to retirement
- Boost your retirement earnings by maximizing your social security benefits
Self-Employed Retirement Plans in Spokane, WA: Correct Capital's Process
Entrepreneurs in Spokane, WA who aren’t equipped with the time or understanding to manage their self-employed retirement plan themselves often feel overwhelmed by their choices. At Correct Capital, our Spokane, WA financial advisors manage the majority of your retirement planning for you, working to make meeting your financial objectives as straightforward as possible for you. We are here to assist you in setting up your self-employed retirement plan in four simple steps:
- Schedule a Call: It only takes 20 minutes, a member of our advisor team can determine if we're suited to your needs for you and your business. This short conversation helps us understand what you're looking for with no obligation or significant effort on your part.
- Gather Information: Once we mutually decide to continue, we'll gather information, including your employee count, your existing financial picture, and your long-term savings targets. This allows us to put together a custom plan 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 in detail to help you fully grasp it and explain its fit to your circumstances.
- Implementation and Monitoring: Once we've agreed on your plan, we'll put everything in place so you can initiate your savings journey. Over the course of our partnership, we'll meet with you and track your progress to keep it tailored to your evolving circumstances.
Our Spokane, WA financial advisors and retirement plan consultants are fiduciary advisors, which means they are committed by law and ethics to prioritize your needs above all else.
Other financial advisory services we offer in Spokane, WA include:
- Family Wealth Planning
- Financial Planning for Business Owners
- Comprehensive Financial Planning
- Retirement Income Planning
- Investment Planning
- Retirement Financial Planning
- Independent Financial Advisor
- Roth Conversion
- Investment Management
- 401(k) Audit
Call Correct Capital for Your Self-Employed Retirement Plan in Spokane, WA
Your business isn't "just a business" to you, and your Spokane, WA financial advisors should provide more than basic financial recommendations. At Correct Capital, we focus on building a relationship with our clients and their businesses to provide personalized self-employed retirement plans. All our clients in Spokane, WA benefit from our I.O.U. promise: all guidance we provide 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.
