Self-employed retirement plans Stockton, CA. The freedom of owning your own business in Stockton, CA is one of the best aspects of working for yourself. That said, this freedom sometimes brings with certain challenges, especially regarding building your retirement fund, since you don't have access to a workplace retirement plan. Only 13% of self-employed individuals have a workplace retirement plan, although many should consider looking into other possibilities. In addition to having a financially stable retirement, working with a financial advisor in Stockton, CA to establish your self-employed retirement plan can provide significant tax advantages that allow both you and your business to thrive.
Few Stockton, CA investment consulting and retirement planning firms are as attuned to the requirements of self-employed individuals as well as 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 assisting business owners in their retirement planning needs. We understand that your business and retirement aspirations extend well past basic numbers, and we work tirelessly to create personalized solutions that reflect your objectives. 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 speak with a entrepreneurial financial advisor in Stockton, CA today.
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 offer tangible benefits today. From flexible contributions to significant tax savings, working with a financial advisor in Stockton, CA helps you create your retirement plan to align with 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 flexibility to adjust how much you save:
- Customizable Contributions: Set aside more during successful years and reduce savings when revenues are down, so your plan works with your financial situation.
- Roth Options: Choosing a Roth Solo 401(k) lets you pay taxes on contributions now, enabling you to withdraw tax-free later—a smart decision if you expect your tax rate will increase in the future.
Save Money on Taxes
Retirement plans for self-employed individuals offer powerful tax benefits:
- Tax-Deductible Contributions: Contributions to a SEP IRA lower your taxable income, so you can keep more of your hard-earned money.
- Tax-Deferred Growth: Investments grow tax-free until withdrawal, which gives your money more time to grow.
- State-Specific Incentives: Depending on where you live, you could qualify for state-specific credits as a sole proprietor. These local incentives make these plans even more advantageous.
- Retirement Savings Contributions Credit (Saver’s Credit): Those who meet the requirements 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
Building a secure retirement goes beyond just how much you save—it’s also about how you invest:
- Diversified Portfolios: Allocating your investments across different stocks, bonds, and other assets serves to minimize exposure to risk while helping to grow your nest egg.
- Emergency Back-Up: Supplementing your retirement savings with a dedicated business safety net prevents you from dipping into savings during challenging periods and facing tax penalties.
Plan for the Future of Your Stockton, CA Business
Retirement planning can assist you think through what’s next with your Stockton, CA business:
- Selling Your Business: For those considering a sale, accounts such as SEP IRAs or Solo 401(k)s remain your personal assets and won’t be included in the sale. These plans can provide the steady income you’ll need during retirement. Keep in mind that while selling your business results in a capital gain, deposits into these plans are subject to yearly maximums (e.g., up to $7,000 for IRAs or as much as $70,000 for Solo 401(k)s, including catch-up contributions, based on plan compensation).
- Minimizing Taxes: Strategically planning your contributions helps lower the taxes you might face when you pass on your business.
- Succession Planning: Whether you’re transferring ownership, your retirement savings ensure financial security during the change. You can 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 manage your financial future, cut down your tax obligations, and create 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 important assets when it comes to saving for retirement. Starting early not only helps you grow a bigger financial cushion but also reduces the stress of catching up later in life. This is why it is beneficial to start now:
The Cost of Waiting
Putting off saving for retirement may cause a major impact on the savings you’ll have when you reach retirement age. The biggest reason is compound interest—the financial principle where your investments earn returns, and those returns, subsequently, earn even more returns. The longer your money has to grow, the larger the impact of compounding.
Example: Alex and Taylor are both self-employed individuals. Their shared goal is 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 saves $7,500 annually to catch up.
By age 65, with an assumption of 7% annual return:
- Alex invests $180,000 and ends up with $691,184.39*.
- Taylor puts in $195,500 but achieves a total of only $474,367.78*.
How Early Contributions Grow
Even modest contributions contributed over time often create significant growth. Consider this example showing the impact of consistent growth:
- Starting at age 25: If you invest $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: Contributing the same $200 per month leaves you with only $235,412.97* by age 65—a shortfall of over $260,000, all because of a 10-year delay.
The earlier you begin, the lower your annual savings needs each year to meet your retirement goals.
*These calculations are estimates calculated using NerdWallet’s Compound Interest Calculator, assuming a 7% annual return. These calculations involved multiplying yearly deposits by the years contributed. These examples are for illustrative purposes only and do not guarantee future performance. Actual results may vary due to elements like market conditions, fees, and your unique situation. We recommend consulting a financial advisor for custom recommendations.
Take Control of Your Financial Future
If you’re self-employed in Stockton, CA, it is often the case that you put more emphasis on reinvesting in your business instead of saving for retirement. That said, beginning a plan now enables you to:
- Take advantage of growth that is tax-deferred or penalty-free withdrawals later on.
- Enjoy adjustable savings that change with your income.
- Create a safety net that offers peace of mind, no matter how your business evolves.
The sooner you start, the less you’ll be required 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 freedom to concentrate on your goals—both for your retirement years and your Stockton, CA business.
Types of Self-Employed Retirement Plans
There are several retirement savings options designed for entrepreneurs in Stockton, CA, each providing its own benefits and trade-offs. A financial advisor will guide you to understand the advantages and disadvantages of each choice and identify the one ideal for your circumstances. Typically, your self-employed retirement plan options in Stockton, CA are:
Traditional or Roth IRA
Plan Overview: IRAs, or Individual Retirement Accounts, are retirement savings vehicles that offer specific tax advantages. In a traditional IRA, the money you contribute is often tax-deductible, and investment earnings grow tax-deferred, but retirement distributions are subject to income tax. In contrast, Roth IRAs require contributions using income already taxed, but eligible distributions during retirement, including earnings, are not taxed. In both types of accounts, withdrawals are penalty-free if you are at least 59½.
Eligibility: Unlike 401(k)s, which are employer-sponsored, IRAs, including traditional and Roth options are available to anyone 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: The Simplified Employee Pension IRA offers a way to save for retirement that permits those who are self-employed to set aside a portion of their self-employment income. Contributions must come from an employer, so, as a sole proprietor, you (the employee) are limited to contributions from the employer role beyond the 25% you (the employer) already contributed. If you have employees, you must contribute the same amount for them as you do for yourself. You have the flexibility to contribute a flat-dollar amount or a percentage of wages to employee accounts. This type of plan works well for businesses that experience periods of inconsistent earnings. In contrast to some alternatives, SEP IRAs lack expensive setup or ongoing fees.
SEPs function like standard 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 must not exceed:
- 25% of compensation, or
- $70,000 for 2025
For self-employed individuals, the allowable contribution is based on a special calculation.
Solo 401(k)
Plan Overview: The Solo 401(k), also called an Individual 401(k) or one-participant 401(k) plan, is a self-employed retirement plan designed for companies that have no employees or if the only employee is your spouse. These plans operate much like employer-sponsored 401(k) plans, and allow you to contribute 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 constrained investment avenues. Using a solo 401(k), you can make either traditional or Roth deferrals, which offer 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: If you are self-employed with a solo 401(k) plan, you are allowed to make two types of contributions:
- Employee contributions of up to 100% of your self-employed earnings, subject to the annual contribution limit. In 2025, those limits are $23,500, or $31,000 for those aged 50 and above, or $34,750 for those who turn 60-63 in 2025.
- Employer profit-sharing contributions (as an employer) are limited to 25% of your adjusted self-employment income, which is your net profit minus half of your self-employment tax and the elective deferrals you made.
The total contribution cannot exceed $70,000, or $77,500 if you're over age 50 (in 2025), $81,250 for those aged 60-63 in 2025.
Individual Defined Benefit Plan
Plan Overview: A defined benefit plan offers a structured retirement solution that provides a fixed, predetermined benefit to self-employed individuals upon retirement. As opposed to defined contribution plans, investment returns don’t affect the payout, but enables participants to determine what they'll receive in retirement. This option is recommended for high-earning self-employed individuals who aim to accumulate a significant sum for retirement and are willing to make sizeable contributions. Contributions offer tax-deferred growth, and withdrawals are taxable as income during retirement.
Eligibility: Self-employed professionals running an owner-only business or with a small staff of under five can open an individual defined benefit plan, but it's generally suggested for those over 50 who earn at least $250,000 a year. Typically, good candidates for defined benefit plans are:
- Partners or owners who desire to contribute more than $70,000 (or $77,500 if over age 50)
- Organizations that already put in 3-4% but are open to increasing contributions
- Companies with proven consistent profit patterns
- Entrepreneurs over age 40 who wish to accelerate savings or increase their retirement contributions rapidly
Contribution Limits: The contribution limit requires calculation from an actuary based on your income, age, and retirement goals. Limits on contributions change annually.
The Importance of a Financial Advisor in Stockton, CA for Your Self-Employed Retirement Plan
A financial advisor in Stockton, CA experienced with retirement plans for the self-employed is an invaluable resource for self-employed individuals. They bring the skills needed to navigate the complexities of retirement planning and develop a tailored strategy that reflects your aspirations. A financial advisor in Stockton, CA will review your finances, determine how much risk you’re comfortable with, and guide you in making informed decisions about saving and investing for retirement. Included in what we do for you features:
- Guide you in choosing a plan that best fits your needs and goals
- Tailor 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
- Track and fine-tune your plan when necessary
- Deliver continuous support and financial insights as you continue on the road to retirement
- Maximize what you receive in retirement by optimizing your social security benefits
Self-Employed Retirement Plans in Stockton, CA: Correct Capital's Process
Self-employed individuals in Stockton, CA who aren’t equipped with the time or understanding to oversee their self-employed retirement plan on their own often feel overwhelmed when faced with their options. Through our team at Correct Capital, our Stockton, CA financial advisors take on the lion's share of your retirement planning for you, to help make meeting your retirement goals as straightforward as possible for you. We will guide you in creating your self-employed retirement plan in a quick, four-step process:
- Schedule a Call: It only takes 20 minutes, 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 zero commitment or significant effort on your part.
- Gather Information: If we both decide to move forward, we'll gather information, including how many employees you have (if any), your existing financial picture, and your long-term savings targets. This allows us to put together a tailored approach designed just for you.
- Review Your Plan: When we finalize a plan using the information you provide, we'll sit down with you and go over your plan thoroughly to ensure you understand it and understand how it best correlates to your needs.
- Implementation and Monitoring: After we agree on your plan, we'll set everything up so you can initiate your savings journey. Over the course of our partnership, we'll check in and monitor your plan to make sure it remains aligned with your goals.
Our Stockton, CA financial advisors and retirement plan consultants serve as fiduciary advisors, meaning 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:
- Roth Conversion
- Investment Management
- 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
To you, your business is more than "just a business", and your Stockton, CA financial advisors need to offer more than simply sound financial advice. At Correct Capital, we take the time to get to know our clients and their businesses to deliver personalized self-employed retirement plans. We offer all our Stockton, CA clients our I.O.U. promise: all guidance we provide will be independent, objective, and unbiased. To begin on your self-employment retirement plan, reach out to Correct Capital at 877-930-401k or contact us online.
