Self-employed retirement plans St. Paul, MN. The flexibility of running your own company in St. Paul, MN is one of the greatest advantages of being self-employed. Even so, this independence sometimes brings with certain challenges, particularly in terms of building your retirement fund, as you don't have the benefit of employer-sponsored retirement plans. Only 13% of self-employed individuals have a workplace retirement plan, yet countless should consider exploring their options. In addition to enjoying a financially stable retirement, seeking advice from a financial advisor in St. Paul, MN to set up your self-employed retirement plan can provide significant tax advantages that enable your business to grow and succeed.
Few St. Paul, MN investment consulting and retirement planning firms truly grasp the challenges faced by small business owners as well as Correct Capital. Our founder's father was a small business owner himself (read more of our story here), and Correct Capital have a rich history of supporting entrepreneurs with their retirement planning needs. We recognize that your business and retirement aspirations aren’t limited to simple financial figures, and we are dedicated to create tailored solutions to meet your unique goals. Keep reading to learn more about your self-employed retirement plan options in St. Paul, MN, or reach out to Correct Capital at 877-930-401k or contact us online to speak with a self-employed financial advisor in St. Paul, MN today.
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Why St. Paul, MN Self-Employed Individuals Should Have a Retirement Plan
Retirement plans for self-employed individuals not only prepare you for the future, they also deliver real benefits today. From flexible contributions to substantial tax savings, consulting a financial advisor in St. Paul, MN helps you customize your retirement plan to suit your specific needs.
Flexibility That Fits Your Income
For those with fluctuating income from year to year, a plan like a SEP IRA or Solo 401(k) offers the freedom to modify how much you save:
- Customizable Contributions: Contribute more during high-income years and scale back when your earnings dip, so your plan aligns with your financial situation.
- 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—an advantageous choice if you expect your tax rate is likely to rise in the future.
Save Money on Taxes
Retirement plans for self-employed individuals deliver powerful tax benefits:
- Tax-Deductible Contributions: Contributions to a SEP IRA shrink your tax liability, so you can keep more of your earnings.
- Tax-Deferred Growth: You won't pay taxes on investment growth until you withdraw it, giving your money more time to grow.
- State-Specific Incentives: Based on your location, you may be eligible for extra deductions as a self-employed individual. These state-level incentives make these plans even more beneficial.
- Retirement Savings Contributions Credit (Saver’s Credit): Those who meet the requirements can apply for a credit of up to 50% of the first $2,000 put into a retirement plan, cutting down your tax bill even more.
Protect Your Savings With Smart Investments
Building a secure retirement requires more than how much you save—it’s also linked to the way you invest:
- Diversified Portfolios: Distributing your investments across varied asset classes like stocks and bonds can help reduce risk while helping to grow your savings.
- Emergency Back-Up: Pairing your retirement plan with a business emergency fund helps you avoid tapping into your nest egg during tough times and incurring penalties.
Plan for the Future of Your St. Paul, MN Business
Retirement planning also helps you think through what’s next with your St. Paul, MN business:
- Selling Your Business: When selling your business, accounts such as SEP IRAs or Solo 401(k)s remain your personal assets and don’t transfer with the business. These savings ensure the steady income you’ll need in the future. Keep in mind that while selling your business results in a capital gain, contributions to retirement accounts are restricted by contribution 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, according to plan rules).
- Minimizing Taxes: Making the most of retirement savings helps lower the taxes you are required to pay when you sell your business.
- Succession Planning: Whether you’re transferring ownership, your nest egg provide the funds you need as you make this shift. You may also work with a financial advisor with expertise in succession and retirement planning to minimize tax burdens during the sale.
With the proper savings strategy, you gain control over your financial future, lower your tax bill, and create a strong framework for both your retirement and your business goals.
Why Start a Self-Employed Retirement Plan in St. Paul, MN Now?
Time remains one of the most valuable resources for building your retirement fund. Starting early not only lets you accumulate a bigger financial cushion but also minimizes the financial burden of catching up later in life. The following are reasons why it makes sense to begin today:
The Cost of Waiting
Waiting to start your retirement fund may cause a major impact on the amount you’ll have when you stop working. The primary reason is compound interest—the financial principle where your investments earn returns, and those returns, then, earn even more returns. The longer your money has to grow, the more significant the effect of this compounding process.
Example: Taylor and Alex are both entrepreneurs. They each aim 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 catch up.
By age 65, with an assumption of 7% annual return:
- Alex puts in $180,000 and ends up with $691,184.39*.
- Taylor puts in $195,500 but only ends up with $474,367.78*.
How Early Contributions Grow
Small, consistent savings made consistently often create significant 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 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 gap of over $260,000, just from a 10-year delay.
Starting sooner, the less you need to save each year to reach your retirement goals.
*The numbers shown in this scenario are based on estimates calculated using NerdWallet’s Compound Interest Calculator, assuming a 7% annual return. The contributions were calculated by multiplying the annual deposit amount by the total number of years contributions were made. The scenarios provided are intended as illustrative examples and cannot predict actual future outcomes. Your individual results may differ depending on elements like market conditions, fees, and your unique situation. Be sure to speak with a financial advisor for custom recommendations.
Take Control of Your Financial Future
If you’re self-employed in St. Paul, MN, it might seem easier to focus more on reinvesting in your business instead of saving for retirement. However, initiating a plan now gives you the chance to:
- Benefit from tax-deferred growth or tax-free withdrawals later on.
- Take advantage of flexible contributions that adapt to your income.
- Establish a safety net that provides security, no matter how your business changes.
Starting early, the less you’ll need to worry about catching up later in life. Building your retirement savings today means managing your financial future and allowing yourself the opportunity to turn your attention to your dreams—both for your retirement years and your St. Paul, MN business.
Types of Self-Employed Retirement Plans
Multiple retirement savings options open for entrepreneurs in St. Paul, MN, each providing its own pros and cons. A financial advisor is available to help you understand the advantages and disadvantages of each choice and determine the one ideal for your circumstances. Typically, your self-employed retirement plan options in St. Paul, MN consist of:
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 standard IRA, contributions are typically tax-deductible, and investment earnings grow tax-deferred, but retirement distributions are subject to income tax. In contrast, with Roth IRAs, you contribute from post-tax earnings, but retirement withdrawals that qualify, including earnings, are not taxed. In both types of accounts, withdrawals don’t incur penalties if you are at least 59½.
Eligibility: While many retirement plans, such as 401(k)s, are tied to employment, IRAs, including traditional and Roth options are available to anyone with a source of income.
Contribution Limits: For 2025, annual contribution limits for IRAs are set at $7,000, or $8,000 if you qualify for catch-up contributions.
Simplified Employee Pension Plan (SEP IRA)
Plan Overview: The Simplified Employee Pension IRA offers a way to save for retirement that permits entrepreneurs to set aside a portion of their self-employment income. Contributions are strictly employer contributions an employer, so, as a sole proprietor, you (the employee) are limited to contributions from the employer role above 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. It's your choice whether to contribute a flat-dollar amount or a percentage of wages to employee accounts. SEP IRAs is a good option for businesses that experience periods of inconsistent earnings. Unlike other plans, SEP IRAs don’t have costly startup or administrative fees.
SEPs function like traditional IRAs, where you contribute pre-tax dollars and money withdrawn is subject to income tax.
Eligibility: Employers of any type, including self-employed individuals can establish a SEP.
Contribution Limits: Contribution limits for employees in a SEP IRA must not exceed:
- 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: A Solo 401(k) plan, sometimes referred to as an Individual 401(k) or one-participant 401(k) plan, is a retirement savings plan designed for companies that have no employees or when the sole employee is your spouse. These plans function similarly to employer-sponsored 401(k) plans, and let you make contributions as both an employer and an employee with pre-tax money. This provides more savings compared to SEPs or IRAs; however, the additional opportunities may be offset by more constrained investment avenues. In a solo 401(k) plan, 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 are eligible to open and contribute to a solo 401(k).
Contribution Limits: For self-employed individuals with a solo 401(k) plan, you can make two types of contributions:
- Deferrals as an employee 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 for those who turn 60-63 in 2025.
- Employer profit-sharing contributions (as an employer) must not surpass 25% of your net self-employment income, which is calculated as net profits less half of your self-employment tax and the deferrals you made.
Your combined contributions must not surpass $70,000, or $77,500 if you're over age 50 (for 2025), $81,250 for those aged 60-63 in 2025.
Individual Defined Benefit Plan
Plan Overview: Defined benefit plans offers a structured retirement solution that provides a fixed, predetermined benefit to entrepreneurs upon retirement. In contrast to the plans discussed earlier, a defined benefit plan doesn't fluctuate based on investment returns, but lets individuals clearly understand the precise amount they'll have in retirement. This option is recommended for high-earning entrepreneurs who want to save a large amount for retirement and are willing to make substantial contributions. Contributions offer tax-deferred growth, and withdrawals are taxed as income in retirement.
Eligibility: Self-employed professionals operating a solo business or employing fewer than five people can open an individual defined benefit plan, but it's typically suggested for those over 50 who generate a minimum of $250,000 yearly. In most cases, good candidates for defined benefit plans tend to be:
- Entrepreneurs who aim to deposit more than $70,000 (or $77,500 if over age 50)
- Businesses currently investing 3-4% with plans to contribute more
- Organizations that have demonstrated consistent profit patterns
- Entrepreneurs over age 40 who wish to accelerate savings or accelerate the retirement savings
Contribution Limits: The contribution limit requires calculation from an actuary using your financial situation, age, and savings targets. Limits on contributions change annually.
The Importance of a Financial Advisor in St. Paul, MN for Your Self-Employed Retirement Plan
Partnering with an advisor in St. Paul, MN experienced with retirement plans for the self-employed serves as an important asset for those working for themselves. They have the expertise to help understand the intricacies of saving for retirement and design a tailored strategy that reflects your aspirations. Your advisor in St. Paul, MN will review your finances, 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 involves:
- Assist in selecting a plan that aligns with your objectives and circumstances
- Customize the plan to fit you personally even further
- Formalize a plan in writing in accordance with IRS guidelines
- 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
- Provide ongoing education and advice to help you navigate your retirement journey
- Maximize what you receive in retirement by making the most of your social security
Self-Employed Retirement Plans in St. Paul, MN: Correct Capital's Process
St. Paul, MN business owners who lack the time, interest, or knowledge to oversee their own retirement planning independently often feel overwhelmed by their choices. With Correct Capital, our St. Paul, MN financial advisors handle the bulk of your retirement planning for you, to help make meeting your financial objectives as easy as possible for you. We can help you get set up your self-employed retirement plan in just four steps:
- 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 short conversation allows us to learn about your needs with no pressure or significant effort on your part.
- Gather Information: Should we agree to proceed, we'll request information, including your employee count, your existing financial picture, and your long-term savings targets. This allows us to put together a custom plan that aligns with your goals.
- Review Your Plan: When we finalize a plan from the information you provide, we'll schedule a meeting and discuss your plan thoroughly 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 begin contributing. Over the course of our partnership, we'll check in and review your strategy to keep it tailored to your evolving circumstances.
Our St. Paul, MN financial advisors and retirement plan consultants act as fiduciary advisors, meaning they are legally and ethically bound to prioritize your needs above all else.
Other financial advisory services we offer in St. Paul, MN 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 St. Paul, MN
Your business isn't "just a business" to you, and your St. Paul, MN financial advisors must deliver more than just good financial guidance. With Correct Capital, we make it a priority to understand our clients and their businesses to create tailored self-employed retirement plans. To every client in St. Paul, MN, we provide our I.O.U. promise: all guidance we provide 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.
