Self-employed retirement plans Springfield, MA. The flexibility of being your own boss in Springfield, MA offers many benefits of having a self-directed career. Even so, this flexibility often comes with certain challenges, particularly regarding planning for retirement, because you don't have access to retirement programs through an employer. Only 13% of self-employed individuals have a workplace retirement plan, yet countless should consider understanding their retirement options. In addition to achieving a financially stable retirement, partnering with a financial advisor in Springfield, MA to set up your self-employed retirement plan offers significant tax advantages that help your business to grow and succeed.
Few Springfield, MA investment consulting and retirement planning firms are as attuned to the requirements of self-employed individuals better than Correct Capital. Our founder's father was a small business owner himself (learn more about our story here), and Correct Capital take pride in helping businesses with their retirement planning needs. We understand that your goals for your business and retirement extend well past simple financial figures, and we work tirelessly to offer personalized solutions that reflect your objectives. Keep reading to learn more about your self-employed retirement plan options in Springfield, MA, or reach out to Correct Capital at 877-930-401k or contact us online to consult with a self-employed financial advisor in Springfield, MA today.
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Why Springfield, MA Self-Employed Individuals Should Have a Retirement Plan
Retirement plans for self-employed individuals are essential for preparing you for the future, they also provide tangible benefits today. Offering flexibility in contributions to substantial tax savings, partnering with a financial advisor in Springfield, MA helps you customize your retirement plan to align with your individual circumstances.
Flexibility That Fits Your Income
For those with fluctuating income annually, a plan like a SEP IRA or Solo 401(k) gives you the flexibility to tailor how much you save:
- Customizable Contributions: Save extra during high-income years and scale back when your earnings dip, ensuring your plan works with your cash flow.
- Roth Options: Choosing a Roth Solo 401(k) lets you pay taxes on contributions now, enabling you to withdraw tax-free later—an advantageous choice if you expect your tax rate to be higher in the future.
Save Money on Taxes
Self-employed retirement plans offer valuable tax benefits:
- Tax-Deductible Contributions: Contributions to a SIMPLE IRA shrink your tax liability, 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: Based on your location, you might access state-specific deductions as a self-employed individual. These regional incentives can make these plans even more beneficial.
- Retirement Savings Contributions Credit (Saver’s Credit): Eligible individuals 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
Creating a stable future requires more than how much you save—it’s also determined by your investment strategy:
- Diversified Portfolios: Distributing your investments across different asset classes like stocks and bonds serves to mitigate financial risk while helping to grow your retirement fund.
- Emergency Back-Up: Supplementing your retirement savings with a business emergency fund prevents you from dipping into savings during financial hardships and facing tax penalties.
Plan for the Future of Your Springfield, MA Business
Preparing for retirement also helps you prepare for what’s next with your Springfield, MA business:
- Selling Your Business: When selling your business, plans like SEP IRAs or Solo 401(k)s remain your personal assets and won’t be included in the sale. These accounts ensure the reliable income you’ll need later on. Keep in mind that while the sale of a business usually creates a capital gain, retirement plan contributions are capped at annual limits (e.g., as much as $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: Using retirement contributions wisely helps lower the taxes you’ll owe when you transfer your business.
- Succession Planning: If you’re passing the business on, your retirement accounts offer the funds you need during the change. You might want to seek advice from a financial advisor with expertise in succession and retirement planning to reduce taxes on the sale.
With the proper savings strategy, you manage your financial future, cut down your tax obligations, and build a solid base for both your retirement and your business goals.
Why Start a Self-Employed Retirement Plan in Springfield, MA Now?
Time remains one of the most crucial resources in retirement planning. Getting a head start not only helps you grow a bigger financial cushion but also minimizes the pressure of saving aggressively in the future. This is why it is beneficial to start now:
The Cost of Waiting
Delaying your retirement savings can have a substantial 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, subsequently, generate even more returns. The more time your money has to grow, the larger the impact of this compounding process.
Example: Two individuals, Alex and Taylor are both self-employed individuals. They each aim 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 invests $180,000 and achieves a total of $691,184.39*.
- Taylor contributes $195,500 but accumulates just $474,367.78*.
How Early Contributions Grow
Even modest contributions made consistently often create significant growth. Take a look at this scenario showing the impact of consistent growth:
- Starting at age 25: If you invest $200 per month in a retirement plan with an average annual return of 7%, you’ll end up with $497,303.29* by age 65.
- Starting at age 35: Contributing the same $200 per month yields only $235,412.97* by age 65—a shortfall of over $260,000, all because of a 10-year delay.
Starting sooner, the less you need to save each year to meet your retirement goals.
*The figures provided in this example are estimates generated with NerdWallet’s Compound Interest Calculator, based on a 7% annual return. Annual deposits were multiplied by the number of years to estimate total contributions. This information is meant to provide general guidance and cannot predict actual future outcomes. Actual results may vary depending on elements like market conditions, fees, and personal factors. Always consult a financial advisor for custom recommendations.
Take Control of Your Financial Future
If you’re self-employed in Springfield, MA, it is often the case that you put more emphasis on reinvesting in your business instead of saving for retirement. That said, starting a plan now enables you to:
- Take advantage of tax-deferred growth or penalty-free withdrawals in the future.
- Take advantage of flexible contributions that adapt to your earnings.
- Build a financial cushion that ensures stability, no matter how your business changes.
Starting early, the less you’ll be required to worry about catching up later in life. Taking steps toward your retirement goals today means taking control of your financial future and creating for yourself the opportunity to concentrate on your dreams—both for your retirement years and your Springfield, MA business.
Types of Self-Employed Retirement Plans
There are several retirement savings options open for self-employed individuals in Springfield, MA, each offering its own benefits and trade-offs. A financial advisor is available to help you learn about the advantages and disadvantages of each plan and choose the one best suited for your unique situation. Typically, your self-employed retirement plan options in Springfield, MA are:
Traditional or Roth IRA
Plan Overview: Individual Retirement Accounts (IRAs), as explained here, represent financial tools for retirement that provide specific tax advantages. In a standard IRA, you can usually deduct your contributions from taxable income, and returns grow free of current taxes, but retirement distributions are taxable. In contrast, Roth IRA contributions using income already taxed, but retirement withdrawals that qualify, including earnings, are not taxed. In both types of accounts, withdrawals come without penalties as long as you are at least 59½.
Eligibility: Unlike plans linked to your job, both traditional and Roth IRAs are open to those with taxable earnings.
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: SEP IRAs serves as a retirement savings option that allows self-employed individuals to contribute a percentage of their net earnings. Contributions must come from an employer, so, as a sole proprietor, you (the employee) would not be able to contribute 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 have the flexibility to contribute a set monetary value or a percentage of wages to employee accounts. SEP IRAs is a good option for businesses that experience cycles of high revenue and low revenue. Compared to other retirement options, SEP IRAs are free of the high fees associated with starting or maintaining other plans.
SEPs work like traditional IRAs, where you contribute pre-tax dollars and money withdrawn is subject to income tax.
Eligibility: Both employers and self-employed individuals 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
As a self-employed person, 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 when the sole employee is your spouse. Solo 401(k)s function similarly to employer-sponsored 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 may be offset by more restricted investment choices. Using a solo 401(k), you can make either traditional or Roth deferrals, which share the same tax benefits as their IRA contribution counterparts.
Eligibility: Solo 401(k)s are available solely to business owners and their spouses are eligible to open 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:
- Employee contributions of up to 100% of your earned income from self-employment, 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.
- Profit-sharing contributions (as an employer) must not surpass 25% of your net earnings from self-employment, which is calculated as net profits less half of your self-employment tax and the employee contributions you made.
The total contribution cannot exceed $70,000, or $77,500 for individuals aged 50+ (in 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 fixed, predetermined benefit to entrepreneurs upon retirement. Unlike defined contribution plans mentioned above, this plan is not influenced by market performance, but enables participants to determine what they'll receive in retirement. This option is recommended for high-earning entrepreneurs who aim to accumulate a substantial amount for retirement and can commit to making substantial contributions. Contributions are tax deferred, and withdrawals are taxable as income in retirement.
Eligibility: Self-employed professionals managing a one-person company or employing fewer than five people are eligible to open an individual defined benefit plan, but it's typically suggested for individuals aged 50+ who generate a minimum of $250,000 yearly. Generally, good candidates for defined benefit plans include:
- Entrepreneurs who desire to contribute more than $70,000 (or $77,500 for those aged 50+)
- Organizations that already put in 3-4% but are open to increasing contributions
- Organizations with proven consistent profit patterns
- Partners or owners over age 40 who desire to "catch up" or boost savings within a short timeframe
Contribution Limits: The maximum allowable contribution requires calculation from an actuary based on your financial situation, age, and savings targets. Limits on contributions are adjusted each year.
The Importance of a Financial Advisor in Springfield, MA for Your Self-Employed Retirement Plan
A financial advisor in Springfield, MA specialized in self-employed retirement plans is an essential partner for those working for themselves. They have the expertise to help guide you through the challenges of retirement planning and develop a customized plan that reflects your aspirations. An expert in your area will evaluate your financial situation, determine how much risk you’re comfortable with, and guide 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 suits your unique requirements
- Further adapt the plan to fit you personally even further
- Formalize a plan in writing that complies with IRS regulations
- Set up an asset trust plan
- Ensure you comprehend the plan's terms
- Monitor and adjust your plan when necessary
- Deliver continuous support and financial insights to help you navigate your retirement journey
- Maximize what you receive in retirement by maximizing your social security benefits
Self-Employed Retirement Plans in Springfield, MA: Correct Capital's Process
Springfield, MA business owners who lack the time, interest, or knowledge to oversee their self-employed retirement plan themselves often feel overwhelmed by their choices. With Correct Capital, our Springfield, MA financial advisors manage the lion's share of your retirement strategy for you, working to make meeting your financial objectives as easy 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 can help understand if we're suited to your needs for you and your business. This short conversation allows us to understand what you're looking for with zero commitment or extensive time commitment on your part.
- Gather Information: If we both decide to move forward, we'll gather information, including your employee count, your present financial standing, and your future objectives. This enables us to craft a custom plan that aligns with your goals.
- Review Your Plan: When we finalize a plan based on the information you provide, we'll sit down with you and review your plan in detail to help you fully grasp it and explain its fit to your circumstances.
- Implementation and Monitoring: After we agree on your plan, we'll implement the necessary steps so you can initiate your savings journey. Throughout our relationship, we'll have regular meetings and track your progress to keep it tailored to your evolving circumstances.
Our Springfield, MA financial advisors and retirement plan consultants serve as fiduciary advisors, who are obligated to they are required by law and ethical standards to act in your best interest.
Other financial advisory services we offer in Springfield, MA 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 Springfield, MA
Your business isn't "just a business" to you, and your Springfield, MA financial advisors should provide more than simply sound financial advice. With Correct Capital, we take the time to get to know our clients and their businesses to provide personalized self-employed retirement plans. All our clients in Springfield, MA 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, reach out to Correct Capital at 877-930-401k or contact us online.
