Self-employed retirement plans Sunnyvale, CA. The independence of owning your own business in Sunnyvale, CA offers many benefits of having a self-directed career. Even so, this independence sometimes brings with potential drawbacks, especially in terms of 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, but many should consider understanding their retirement options. In addition to enjoying a more comfortable retirement, partnering with a financial advisor in Sunnyvale, CA to set up your self-employed retirement plan delivers significant tax advantages that help both you and your business to thrive.
Few Sunnyvale, CA investment consulting and retirement planning firms understand the needs of self-employed individuals better than Correct Capital. The father of our founder was a small business owner himself (check out our story here), and we take pride in helping businesses with their retirement planning needs. We recognize that your business and retirement aspirations extend well past just monetary concerns, and we work tirelessly to offer personalized solutions that reflect your objectives. Continue exploring to find out about your self-employed retirement plan options in Sunnyvale, CA, or reach out to Correct Capital at 877-930-401k or contact us online to consult with a self-employed financial advisor in Sunnyvale, CA today.
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Why Sunnyvale, CA 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 real benefits today. With customizable contribution options to substantial tax savings, partnering with a financial advisor in Sunnyvale, CA enables you to design your retirement plan to fit your specific needs.
Flexibility That Fits Your Income
If your income changes annually, a plan like a SEP IRA or Solo 401(k) gives you the freedom to modify how much you save:
- Customizable Contributions: Contribute more during high-income years and reduce savings when income is lower, so your plan works with your cash flow.
- Roth Options: Opting for 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 is likely to rise in the future.
Save Money on Taxes
Retirement plans for self-employed individuals offer valuable tax benefits:
- Tax-Deductible Contributions: Contributions to a SIMPLE IRA shrink your tax liability, helping you keep more of your earnings.
- Tax-Deferred Growth: Investments grow tax-free until withdrawal, providing your money more time to compound.
- State-Specific Incentives: Based on your location, you might access state-specific credits as a business owner. These state-level incentives make these plans even more beneficial.
- Retirement Savings Contributions Credit (Saver’s Credit): Eligible individuals can claim a tax credit of up to 50% of the first $2,000 they contribute 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 a mix of stocks, bonds, and other assets serves to minimize exposure to risk while continuing to build your nest egg.
- Emergency Back-Up: Supplementing your retirement savings with a financial buffer for your business prevents you from tapping into your nest egg during tough times and risking extra costs.
Plan for the Future of Your Sunnyvale, CA Business
Retirement planning also helps you prepare for what’s next with your Sunnyvale, CA business:
- Selling Your Business: If you’re planning to sell, retirement accounts like SEP IRAs and Solo 401(k)s remain your personal assets and are not part of the sale. These accounts can provide the steady income you’ll need later on. Keep in mind that while selling a business often leads to a capital gain, retirement plan contributions are restricted by contribution limits (e.g., a maximum of $7,000 for IRAs or as much as $70,000 for Solo 401(k)s, factoring in catch-up contributions, according to plan rules).
- Minimizing Taxes: Strategically planning your contributions can reduce the taxes you might face when you pass on your business.
- Succession Planning: If you’re passing the business on, your nest egg offer financial security during the change. You may also work with a financial advisor experienced in both succession and retirement strategies to help with taxes on the sale.
With the right retirement plan, you manage 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 Sunnyvale, CA Now?
Time remains one of the most valuable factors when it comes to saving for retirement. Getting a head start not only allows you to build a more substantial retirement fund but also reduces the stress of playing catch-up as you get older. This is why it pays to take action now:
The Cost of Waiting
Delaying your retirement savings could lead to a major impact on the savings you’ll have when you retire. The biggest reason is compound interest—the powerful process where your investments earn returns, and those returns, subsequently, generate even more returns. The greater time span your money has to grow, the more significant the benefit of compounding.
Example: Taylor and Alex are both self-employed professionals. They each aim to save $500,000 for retirement by age 65:
- Alex starts saving $5,000 annually at age 30.
- Taylor postpones starting contributions to age 40 but saves $7,500 annually to make up for lost time.
By age 65, with an assumption of 7% annual return:
- Alex contributes $180,000 and achieves a total of $691,184.39*.
- Taylor contributes $195,500 but accumulates just $474,367.78*.
How Early Contributions Grow
Small, consistent savings invested steadily can lead to substantial growth. Take a look at this scenario showing the effect of compound interest:
- Starting at age 25: Putting aside $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: Investing the same $200 per month would result in only $235,412.97* by age 65—a difference of over $260,000, all because of a 10-year delay.
Saving early, the less you need to save each year to reach your retirement goals.
*The numbers shown in this scenario represent 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. The scenarios provided are for illustrative purposes only and are not a promise of future results. Your individual results may differ based on factors such as market conditions, fees, and your unique situation. Always consult a financial advisor for custom recommendations.
Take Control of Your Financial Future
As a self-employed person in Sunnyvale, CA, it can be tempting to focus more on reinvesting in your business rather than saving for retirement. However, initiating a plan now enables you to:
- Benefit from tax-free future growth or withdrawals without taxes down the road.
- Take advantage of adjustable savings that align with your cash flow.
- Establish a financial cushion that provides security, no matter how your business evolves.
The sooner you start, the less you’ll have to worry about catching up later in life. Building your retirement savings today means gaining control over your financial future and creating for yourself the freedom to turn your attention to your goals—both for your future retirement and your Sunnyvale, CA business.
Types of Self-Employed Retirement Plans
There are several retirement savings options designed for entrepreneurs in Sunnyvale, CA, each with its own pros and cons. A financial advisor is available to help you understand the benefits and drawbacks of each option and choose the one best suited for your unique situation. Typically, your self-employed retirement plan options in Sunnyvale, CA consist of:
Traditional or Roth IRA
Plan Overview: IRAs, or Individual Retirement Accounts, are retirement savings vehicles that offer distinct tax benefits. In a traditional IRA, the money you contribute is often tax-deductible, and earnings grow without immediate taxation, but retirement distributions are taxed as income. In contrast, Roth IRA contributions from post-tax earnings, but retirement withdrawals that qualify, including earnings, are not taxed. In both types of accounts, withdrawals are penalty-free provided you are at least 59½.
Eligibility: Unlike plans linked to your job, 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're 50 or older.
Simplified Employee Pension Plan (SEP IRA)
Plan Overview: SEP IRAs offers a way to save for retirement that allows entrepreneurs to contribute a percentage of their net earnings. 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 above the 25% you (the employer) already contributed. 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 businesses that experience periods of inconsistent earnings. In contrast to some alternatives, SEP IRAs don’t have costly startup or administrative fees.
SEPs operate like standard IRAs, where contributions are made with pre-tax money and withdrawals are taxed as income.
Eligibility: Any employer, including the self-employed can open a SEP.
Contribution Limits: Contribution limits for employees in a SEP IRA must not exceed:
- 25% of compensation, or
- $70,000 for 2025
As a self-employed person, the allowable contribution 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 intended for businesses without employees or when the sole employee is your spouse. Solo 401(k)s function similarly to traditional employer-managed 401(k) plans, and let you make contributions as both the employer and the employee with pre-tax money. This offers more savings than SEPs or IRAs; however, the additional opportunities often come with more limited investment options. In a solo 401(k) plan, 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 are eligible to open and contribute to a solo 401(k).
Contribution Limits: If you are self-employed with a solo 401(k) plan, you have the ability to make two types of contributions:
- Elective deferrals (as an employee) of up to 100% of your earned income from self-employment, capped at 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.
- Contributions as an employer (as an employer) cannot exceed 25% of your adjusted self-employment income, which is your net profit minus half of your self-employment tax and the employee contributions you made.
Total contributions are capped at $70,000, or $77,500 for those aged 50 and older (in 2025), $81,250 for those aged 60-63 in 2025.
Individual Defined Benefit Plan
Plan Overview: The defined benefit plan is a retirement option that guarantees 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 allows self-employed individuals to know exactly how much they'll receive in retirement. This plan is best suited for high-earning self-employed individuals who want to save a significant sum for retirement and are prepared to contribute sizeable contributions. Contributions are tax deferred, and withdrawals incur taxes as income during retirement.
Eligibility: Self-employed professionals managing a one-person company or employing fewer than five people 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 tend to be:
- Business owners or partners who aim to deposit more than $70,000 (or $77,500 for individuals 50 and older)
- Businesses currently investing 3-4% but are open to increasing contributions
- Organizations showing consistent profit patterns
- Business leaders over age 40 who aim to quickly build retirement savings or accelerate the retirement savings
Contribution Limits: The cap on contributions is calculated by an actuary determined by your financial situation, age, and savings targets. Contribution limits are adjusted each year.
The Importance of a Financial Advisor in Sunnyvale, CA for Your Self-Employed Retirement Plan
Working with a financial advisor in Sunnyvale, CA specialized in self-employed retirement plans serves as an invaluable resource for those working for themselves. They have the expertise to help guide you through the challenges of retirement planning and craft a tailored strategy that aligns with your goals. An expert in your area will review your finances, identify your risk preferences, and help you in selecting the best options about saving and investing for retirement. Included in what we do for you involves:
- Assist in selecting a plan that aligns with your objectives and circumstances
- Customize the plan to your specific situation even further
- Adopt a written plan that complies with IRS regulations
- Arrange a trust plan for assets
- Help you understand the plan's terms
- Track and fine-tune your plan when necessary
- Deliver continuous support and financial insights to help you navigate your retirement journey
- Increase your retirement income by maximizing your social security benefits
Self-Employed Retirement Plans in Sunnyvale, CA: Correct Capital's Process
Self-employed individuals in Sunnyvale, CA who don’t have the time or expertise to manage their retirement savings strategy on their own may end up overwhelmed as they look at their available plans. With Correct Capital, our Sunnyvale, CA financial advisors handle the bulk of your retirement strategy for you, and strive to ensure meeting your financial objectives as hassle-free 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 initial call lets us get a sense of your goals with no pressure or extensive time commitment on your part.
- Gather Information: If we both decide to move forward, we'll ask for information, including whether you have employees, your existing financial picture, and your long-term savings targets. This helps us create a tailored approach designed just for you.
- Review Your Plan: After we put together a plan based on the information you provide, we'll schedule a meeting and go over your plan step by step to make sure it's clear and explain its fit to your circumstances.
- Implementation and Monitoring: When we finalize on your plan, we'll put everything in place so you can initiate your savings journey. Throughout our relationship, we'll have regular meetings and track your progress to ensure it stays suited to your needs.
Our Sunnyvale, CA financial advisors and retirement plan consultants are fiduciary advisors, meaning they are legally and ethically bound to prioritize your needs above all else.
Other financial advisory services we offer in Sunnyvale, 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 Sunnyvale, CA
Your business isn't "just a business" to you, and your Sunnyvale, CA financial advisors should provide more than simply sound financial advice. At Correct Capital, we focus on building a relationship with our clients and their businesses to provide customized self-employed retirement plans. All our clients in Sunnyvale, CA 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, contact Correct Capital now at 877-930-401k or contact us online.
