Self-employed retirement plans Stockton, CA. The independence of running your own company in Stockton, CA is one of the best aspects of working for yourself. Even so, this freedom can come with certain challenges, especially when it comes to planning for retirement, since you don't have the option of employer-sponsored retirement plans. Only 13% of self-employed individuals have a workplace retirement plan, yet countless could benefit from looking into other possibilities. In addition to achieving a more secure retirement, seeking advice from a financial advisor in Stockton, CA to establish your self-employed retirement plan offers significant tax advantages that help both you and your business to thrive.
Few Stockton, CA investment consulting and retirement planning firms understand the needs of small business owners as well as Correct Capital. Our company’s founder grew up with a father who was a small business owner himself (check out our story here), and Correct Capital are deeply experienced in helping businesses with their retirement planning needs. We recognize that your professional and personal aspirations aren’t limited to just monetary concerns, and we work tirelessly to provide tailored solutions aligned with your vision. Continue exploring to find out about your self-employed retirement plan options in Stockton, CA, or give us a call at Correct Capital at 877-930-401k or contact us online to consult with a self-employed financial advisor in Stockton, CA today.
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Why Stockton, CA Self-Employed Individuals Should Have a Retirement Plan
Retirement plans for self-employed individuals help prepare you for the future, they also deliver real benefits today. From flexible contributions to substantial tax savings, consulting a financial advisor in Stockton, CA enables you to customize your retirement plan to suit your individual circumstances.
Flexibility That Fits Your Income
When your earnings vary annually, a plan like a SEP IRA or Solo 401(k) offers the option to tailor how much you save:
- Customizable Contributions: Save extra during profitable years and cut back when income is lower, so your plan aligns with your cash flow.
- Roth Options: Choosing a Roth Solo 401(k) lets you pay taxes on contributions now, allowing you to withdraw your savings tax-free down the road—a smart decision if you anticipate your tax rate will increase 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, helping you keep more of your hard-earned money.
- Tax-Deferred Growth: You won't pay taxes on investment growth until you withdraw it, giving your money more time to accumulate.
- State-Specific Incentives: Depending on where you live, you could qualify for state-specific deductions as a self-employed individual. These state-level incentives can 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 requires more than how much you save—it’s also about how you invest:
- Diversified Portfolios: Distributing your investments across a mix of stocks, bonds, and alternatives serves to mitigate financial 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 facing tax penalties.
Plan for the Future of Your Stockton, CA Business
Retirement planning also helps you plan ahead for what’s next with your Stockton, CA 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 offer the reliable income you’ll need in the future. Remember that while selling your business results in a capital gain, retirement plan contributions are subject to yearly maximums (e.g., a maximum of $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 minimizes the taxes you are required to pay when you sell your business.
- Succession Planning: If you’re passing the business on, your nest egg offer financial security through the transition. You may also partner with a financial advisor experienced in both succession and retirement strategies to reduce taxes during the sale.
With the proper savings strategy, you can take control of your financial future, cut down your tax obligations, and establish a strong framework for both your retirement and your business goals.
Why Start a Self-Employed Retirement Plan in Stockton, CA Now?
Time remains one of the most crucial assets for building your retirement fund. Starting early not only helps you grow a larger nest egg but also reduces the stress of catching up later in life. Here’s why it makes sense to begin today:
The Cost of Waiting
Delaying your retirement savings may cause a substantial impact on the amount you’ll have when you reach retirement age. The biggest reason is compound interest—the concept where your investments earn returns, and those returns, in turn, earn even more returns. The greater time span your money has to grow, the more significant the effect of this growth.
Example: 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 delays savings until age 40 but puts away $7,500 annually to make up for lost time.
By age 65, with an assumption of 7% annual return:
- Alex puts in $180,000 and achieves a total of $691,184.39*.
- Taylor invests $195,500 but achieves a total of only $474,367.78*.
How Early Contributions Grow
Regular, modest investments contributed over time may result in substantial growth. Consider this example showing the impact of consistent growth:
- Starting at age 25: By investing $200 per month in a retirement plan with an expected yearly growth rate of 7%, you’ll accumulate $497,303.29* by age 65.
- Starting at age 35: Saving the same $200 per month would result in only $235,412.97* by age 65—a gap of over $260,000, simply due to a 10-year delay.
Starting sooner, the lower your annual savings needs each year to achieve your retirement goals.
*The numbers shown in this scenario 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. These examples are intended as illustrative examples and are not a promise of future results. Actual results may vary based on variables including market conditions, fees, and individual circumstances. We recommend consulting a financial advisor for personalized advice.
Take Control of Your Financial Future
For self-employed individuals in Stockton, CA, it is often the case that you prioritize reinvesting in your business rather than saving for retirement. That said, beginning a plan now allows you to:
- Take advantage of tax-deferred growth or tax-free withdrawals in the future.
- Benefit from flexible contributions that align with your income.
- Build a financial cushion that provides security, no matter how your business changes.
Getting started now, the less you’ll need to worry about making up for lost time later in life. Building your retirement savings today means managing your financial future and giving yourself the opportunity to turn your attention to your dreams—both for your retirement years and your Stockton, CA business.
Types of Self-Employed Retirement Plans
A variety of retirement savings options designed for entrepreneurs in Stockton, CA, each offering its own benefits and trade-offs. A financial advisor can help you understand the advantages and disadvantages of each choice and identify the one ideal for your needs. In most cases, your self-employed retirement plan options in Stockton, CA are:
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 conventional IRA, contributions are typically tax-deductible, and returns grow free of current taxes, but money taken out during retirement are subject to income tax. In contrast, Roth IRA contributions from post-tax earnings, but qualified withdrawals in retirement, including earnings, are exempt from taxes. In both accounts, withdrawals are penalty-free if you are at least 59½.
Eligibility: Unlike plans linked to your job, traditional and Roth IRAs 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: SEP IRAs is a retirement plan that allows those who are self-employed to set aside a portion of their self-employment income. Contributions can only be made by an employer, so, as a sole proprietor, you (the employee) cannot make additional contributions beyond the 25% you (the employer) allocate. If you have employees, you must contribute the same amount for them as you do for yourself. You may choose to contribute a flat-dollar amount or a percentage of wages to employee accounts. A SEP IRA works well for businesses that experience fluctuating revenue streams. In contrast to some alternatives, SEP IRAs are free of expensive setup or ongoing fees.
SEPs operate 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 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 contribution you can make 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 retirement savings plan intended for companies that have no employees or when the sole employee is your spouse. This type of plan operate much like standard 401(k) plans, and let you make contributions as both the employer and the employee 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. 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: Only business owners and their spouses can set up and contribute to a solo 401(k).
Contribution Limits: As a self-employed individual with a solo 401(k) plan, you are allowed to make two types of contributions:
- Deferrals as an employee of up to 100% of your earned income from self-employment, capped at the annual contribution limit. For 2025, the limits will be $23,500, or $31,000 if you are 50 or older, or $34,750 if you attain age 60-63 in 2025.
- Contributions as an employer (as an employer) are limited to 25% of your net 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 if you're over age 50 (as of 2025), $81,250 if you attain age 60-63 in 2025.
Individual Defined Benefit Plan
Plan Overview: Defined benefit plans is a retirement option that provides a pre-established payout to business owners upon retirement. Unlike defined contribution plans mentioned above, investment returns don’t affect the payout, but allows self-employed individuals to know what they'll have in retirement. This strategy is recommended for high-earning self-employed individuals who aim to accumulate a substantial amount for retirement and are willing to make sizeable contributions. Contributions grow tax-free until withdrawal, and withdrawals are taxed as income in retirement.
Eligibility: Any self-employed individual managing a one-person company or employing fewer than five people are eligible to open an individual defined benefit plan, but it's most commonly advised for people above age 50 who make $250,000 or more annually. Generally, good candidates for defined benefit plans are:
- Entrepreneurs who desire to contribute more than $70,000 (or $77,500 for individuals 50 and older)
- Businesses currently investing 3-4% with plans to contribute more
- Businesses that have demonstrated consistent profit patterns
- Business leaders over age 40 who desire to "catch up" or increase their retirement contributions rapidly
Contribution Limits: The contribution limit is calculated by an actuary based on your income, age, and retirement goals. Allowable contributions change annually.
The Importance of a Financial Advisor in Stockton, CA for Your Self-Employed Retirement Plan
Working with a financial advisor in Stockton, CA experienced with retirement plans for the self-employed is an essential partner for those working for themselves. They offer the knowledge to assist navigate the complexities of retirement planning and develop a customized plan that reflects your aspirations. A financial advisor in Stockton, CA will evaluate your financial situation, understand your risk tolerance, and assist you in making informed decisions about saving and investing for retirement. A key part of what we do for you features:
- Guide you in choosing a plan that aligns with your objectives and circumstances
- Tailor the plan to your specific situation even further
- Create a written plan in accordance with IRS guidelines
- Arrange a trust plan for assets
- Make sure you understand the plan's terms
- Monitor and adjust your plan when necessary
- Deliver continuous support and financial insights to help you navigate your retirement journey
- Boost your retirement earnings by optimizing your social security benefits
Self-Employed Retirement Plans in Stockton, CA: Correct Capital's Process
Stockton, CA business owners who aren’t equipped with the time or understanding to handle their self-employed retirement plan on their own often feel overwhelmed as they look at their choices. At Correct Capital, our Stockton, CA financial advisors handle the bulk of your retirement strategy for you, and strive to ensure meeting your retirement goals as easy as possible for you. We will guide you in creating 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 we're a good fit for you and your business. This brief introduction helps us get a sense of your goals with no pressure or extensive time commitment on your part.
- Gather Information: Once we mutually decide to continue, we'll ask for information, including your employee count, your current financial situation, and your future objectives. This allows us to put together a custom plan designed just for you.
- Review Your Plan: After we put together a plan from the information you provide, we'll meet with you and discuss 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 set everything up so you can start saving. Over the course of our partnership, we'll check in and track your progress to ensure it stays suited to your needs.
Our Stockton, CA financial advisors and retirement plan consultants serve as fiduciary advisors, which means they are committed by law and ethics to do what's in your best interest.
Other financial advisory services we offer in Stockton, CA 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 Stockton, CA
Your business isn't "just a business" to you, and your Stockton, CA financial advisors need to offer more than just good financial guidance. Correct Capital takes pride in, we focus on building a relationship with our clients and their businesses to deliver customized self-employed retirement plans. To every client in Stockton, CA, we provide our I.O.U. promise: all guidance we provide will be independent, objective, and unbiased. To begin on your self-employment retirement plan, call Correct Capital today at 877-930-401k or contact us online.
