Self-employed retirement plans Springfield, MA. The freedom of being your own boss in Springfield, MA is one of the best aspects of being self-employed. Even so, this freedom sometimes brings with certain challenges, particularly regarding building your retirement fund, because you don't have access to a workplace retirement plan. Only 13% of self-employed individuals have a workplace retirement plan, yet countless should consider exploring their options. In addition to enjoying a more comfortable retirement, working with a financial advisor in Springfield, MA to set up your self-employed retirement plan delivers significant tax advantages that enable your business to grow and succeed.
Few Springfield, MA financial advisory and retirement planning firms understand the needs of small business owners better than Correct Capital. The father of our founder was a small business owner himself (learn more about our story here), and our firm are deeply experienced in helping businesses with their retirement planning needs. We recognize that your business and retirement aspirations extend well past basic numbers, and we strive to create personalized solutions aligned with your vision. 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 speak with a entrepreneurial financial advisor in Springfield, MA today.
Why Springfield, MA 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. From flexible contributions to significant tax savings, working with a financial advisor in Springfield, MA enables you to customize your retirement plan to align with your individual circumstances.
Flexibility That Fits Your Income
If your income changes annually, a plan like a SEP IRA or Solo 401(k) provides the flexibility to tailor how much you save:
- Customizable Contributions: Save extra during successful years and reduce savings when income is lower, so that your plan fits your current income.
- Roth Options: Opting for a Roth Solo 401(k) lets you pay taxes on contributions now, so you can withdraw tax-free later—a smart decision if you anticipate your tax rate is likely to rise in the future.
Save Money on Taxes
Plans designed for the self-employed deliver significant tax benefits:
- Tax-Deductible Contributions: Contributions to a SIMPLE IRA shrink your tax liability, allowing you to keep more of your earnings.
- Tax-Deferred Growth: Investments grow tax-free until withdrawal, providing your money more time to accumulate.
- State-Specific Incentives: Depending on where you live, you may be eligible for additional tax breaks as a business owner. These state-level incentives make these plans even more beneficial.
- Retirement Savings Contributions Credit (Saver’s Credit): Eligible individuals can take advantage of 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 goes beyond just how much you save—it’s also about how you invest:
- Diversified Portfolios: Spreading your investments across varied stocks, bonds, and alternatives is a smart way to reduce risk while still growing your savings.
- Emergency Back-Up: Pairing your retirement plan with a financial buffer for your business ensures you don’t using your retirement funds during financial hardships and risking extra costs.
Plan for the Future of Your Springfield, MA Business
Preparing for retirement can assist you think through what’s next with your Springfield, MA 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 accounts offer the steady income you’ll need in the future. Keep in mind that while selling a business often leads to a capital gain, deposits into these plans are subject to yearly maximums (e.g., up to $7,000 for IRAs or up to $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 pass on your business.
- Succession Planning: Whether you’re transferring ownership, your nest egg ensure a stable foundation through the transition. You might want to seek advice from a financial advisor experienced in both succession and retirement strategies to help with taxes associated with the transaction.
With the right retirement plan, you gain control over your financial future, reduce your tax burden, and establish a secure foundation for both your retirement and your business goals.
Why Start a Self-Employed Retirement Plan in Springfield, MA Now?
There’s no denying that time is one of the most valuable assets for building your retirement fund. Starting early not only helps you grow a larger nest egg but also reduces the financial burden of catching up later in life. The following are reasons why it pays to take action now:
The Cost of Waiting
Waiting to start your retirement fund can have a substantial impact on the amount you’ll have when you stop working. The primary reason is compound interest—the financial principle where your investments grow, and those returns, then, generate even more returns. The longer your money has to grow, the larger the effect 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 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 invests $180,000 and ends up with $691,184.39*.
- Taylor invests $195,500 but achieves a total of only $474,367.78*.
How Early Contributions Grow
Even modest contributions invested steadily often create impressive growth. Here’s a simple scenario showing the effect of compound interest:
- Starting at age 25: If you invest $200 per month in a retirement plan with an average annual return of 7%, you’ll grow to approximately $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 gap of over $260,000, all because of a 10-year delay.
Saving early, the less you need to save each year to meet your retirement goals.
*The figures provided in this example are estimates calculated using 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 for illustrative purposes only and do not guarantee future performance. Outcomes may change based on factors such as market conditions, fees, and personal factors. We recommend consulting a financial advisor for custom recommendations.
Take Control of Your Financial Future
If you’re self-employed in Springfield, MA, it can be tempting to prioritize reinvesting in your business over saving for retirement. That said, starting a plan now allows you to:
- Leverage tax-deferred growth or tax-free withdrawals down the road.
- Enjoy flexible contributions that adapt to your cash flow.
- Build a long-term safety measure that provides security, no matter how your business develops.
Getting started now, the less you’ll have to worry about catching up later in life. Saving for retirement now means gaining control over your financial future and allowing yourself the freedom to turn your attention to your dreams—both for your retirement years and your Springfield, MA business.
Types of Self-Employed Retirement Plans
Multiple retirement savings options available for those working for themselves in Springfield, MA, each with its own benefits and trade-offs. A financial advisor will guide you to understand the advantages and disadvantages of each option and determine the one best suited for your needs. Typically, your self-employed retirement plan options in Springfield, MA consist of:
Traditional or Roth IRA
Plan Overview: Individual Retirement Accounts (IRAs), as explained here, represent long-term savings plans that provide specific tax advantages. In a traditional IRA, the money you contribute is often tax-deductible, and earnings grow without immediate taxation, but withdrawals in retirement are taxable. In contrast, with Roth IRAs, you contribute from post-tax earnings, but retirement withdrawals that qualify, including earnings, are exempt from taxes. In both types of accounts, withdrawals are penalty-free if 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: A Simplified Employee Pension (SEP) IRA is a retirement plan that allows self-employed individuals to set aside a portion of their self-employment income. Contributions can only be made by 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, 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. A SEP IRA may be ideal for companies with periods of inconsistent earnings. Unlike other plans, SEP IRAs are free of expensive setup or ongoing fees.
SEPs function like standard IRAs, where you contribute pre-tax dollars 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 must not exceed:
- 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: The Solo 401(k), sometimes referred to as an Individual 401(k) or one-participant 401(k) plan, is a self-employed retirement plan designed for businesses with no employees or if the only employee is your spouse. Solo 401(k)s function similarly to traditional employer-managed 401(k) plans, and enable contributions as both an employer and an employee with pre-tax money. This offers more savings compared to SEPs or IRAs; however, the increased savings potential often come with 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: Solo 401(k)s are available solely to business owners and their spouses can set up and contribute to a solo 401(k).
Contribution Limits: For self-employed individuals 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. The contribution limits for 2025 include $23,500, or $31,000 if you are 50 or older, or $34,750 for individuals aged 60-63 in 2025.
- Contributions as an employer (as an employer) must not surpass 25% of your net self-employment income, which is your 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 for individuals turning 60-63 in 2025.
Individual Defined Benefit Plan
Plan Overview: A defined benefit plan represents a type of retirement plan that guarantees a fixed, predetermined benefit to business owners 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 have in retirement. This plan is recommended for higher-income entrepreneurs who want to save a large amount for retirement and are willing to make sizeable contributions. Contributions are tax deferred, and withdrawals incur taxes as income during retirement.
Eligibility: Entrepreneurs running an owner-only business or with a small staff of under five may establish an individual defined benefit plan, but it's most commonly recommended for those over 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+)
- Companies already contributing 3-4% with plans to contribute more
- Businesses that have demonstrated consistent profit patterns
- Business leaders over age 40 who aim to quickly build retirement savings or boost savings within a short timeframe
Contribution Limits: The maximum allowable contribution requires calculation from an actuary using your financial situation, age, and savings targets. Allowable contributions are adjusted each year.
The Importance of a Financial Advisor in Springfield, MA for Your Self-Employed Retirement Plan
Partnering with an 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 craft a personalized approach that reflects your aspirations. Your advisor in Springfield, MA will review your finances, identify your risk preferences, and help you in selecting the best options about saving and investing for retirement. A key part of what we do for you involves:
- Assist in selecting a plan that best fits your needs and goals
- Further adapt the plan to your needs even further
- Create a written plan that complies with IRS regulations
- Organize a trust plan to manage your assets
- Help you understand the plan's terms
- Track and fine-tune your plan to keep it aligned with your goals
- Deliver continuous support and financial insights throughout your retirement planning process
- Increase your retirement income by optimizing 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 manage their self-employed retirement plan on their own often feel overwhelmed as they look at their choices. At Correct Capital, our Springfield, MA financial advisors manage the bulk of your retirement strategy 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 four simple steps:
- Schedule a Call: A quick 20-minute call is all it takes, a member of our advisor team can determine if our services align for you and your business. This short conversation lets us get a sense of your goals with zero commitment or significant effort on your part.
- Gather Information: If we both decide to move forward, we'll request information, including how many employees you have (if any), your current financial situation, and your long-term savings targets. This allows us to put together a personalized strategy suited specifically for your needs.
- Review Your Plan: Once we've developed a plan using 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: 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 have regular meetings and review your strategy to make sure it remains aligned with your goals.
Our Springfield, MA financial advisors and retirement plan consultants act as fiduciary advisors, which means they are legally and ethically bound to prioritize your needs above all else.
Other financial advisory services we offer in Springfield, MA 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 Springfield, MA
You don't see your business as "just a business", and your Springfield, MA financial advisors should provide 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 Springfield, MA benefit from our I.O.U. promise: everything we recommend will be independent, objective, and unbiased. To take the first step on your self-employment retirement plan, call Correct Capital today at 877-930-401k or contact us online.
