Self-employed retirement plans Tacoma, WA. The flexibility of being your own boss in Tacoma, WA offers many benefits of working for yourself. That said, this independence can come with certain challenges, especially in terms of retirement savings, because you don't have access to employer-sponsored retirement plans. Only 13% of self-employed individuals have a workplace retirement plan, yet countless should consider understanding their retirement options. In addition to enjoying a more comfortable retirement, working with a financial advisor in Tacoma, WA to establish your self-employed retirement plan can provide significant tax advantages that allow you to move your business forward.
Few Tacoma, WA investment consulting and retirement planning firms are as attuned to the requirements of entrepreneurs better than Correct Capital. The father of our founder was a small business owner himself (read more of our story here), and Correct Capital have a rich history of helping businesses with their retirement planning needs. We know that your business and retirement aspirations extend well past simple financial figures, and we work tirelessly to create tailored solutions aligned with your vision. Read on to discover about your self-employed retirement plan options in Tacoma, WA, or reach out to Correct Capital at 877-930-401k or contact us online to speak with a entrepreneurial financial advisor in Tacoma, WA today.
Why Tacoma, WA Self-Employed Individuals Should Have a Retirement Plan
Retirement plans for self-employed individuals are essential for preparing you for the future, they also deliver real benefits today. From flexible contributions to significant tax savings, consulting a financial advisor in Tacoma, WA helps you design your retirement plan to align with your specific needs.
Flexibility That Fits Your Income
For those with fluctuating income annually, a plan like a SEP IRA or Solo 401(k) offers the flexibility to modify how much you save:
- Customizable Contributions: Contribute more during successful years and cut back when income is lower, so your plan fits your financial situation.
- Roth Options: A Roth Solo 401(k) lets you pay taxes on contributions now, enabling you to 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 offer significant tax benefits:
- Tax-Deductible Contributions: Contributions to a Solo 401(k) reduce what you owe in taxes, helping you keep more of your income.
- 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: In some states, you may be eligible for state-specific tax breaks as a self-employed individual. These state-level incentives help make these plans even more beneficial.
- Retirement Savings Contributions Credit (Saver’s Credit): Qualified participants can apply for a credit of up to 50% of the first $2,000 they contribute a retirement plan, cutting down your tax bill even more.
Protect Your Savings With Smart Investments
Planning for a safe retirement isn’t only about 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 serves to mitigate financial risk while still growing your savings.
- Emergency Back-Up: Combining your retirement strategy and a dedicated business safety net helps you avoid using your retirement funds during tough times and incurring penalties.
Plan for the Future of Your Tacoma, WA Business
Retirement planning also helps you prepare for what’s next with your Tacoma, WA business:
- Selling Your Business: For those considering a sale, plans like SEP IRAs or Solo 401(k)s remain yours and won’t be included in the sale. These savings offer the reliable income you’ll need in the future. Remember that while the sale of a business usually creates a capital gain, deposits into these plans are capped at annual limits (e.g., a maximum of $7,000 for IRAs or a maximum of $70,000 for Solo 401(k)s, factoring in catch-up contributions, according to plan rules).
- Minimizing Taxes: Making the most of retirement savings can reduce the taxes you’ll owe when you transfer your business.
- Succession Planning: If you’re passing the business on, your retirement savings provide the funds you need through the transition. You can also work with a financial advisor experienced in both succession and retirement strategies to help with taxes during the sale.
With the right retirement plan, you manage your financial future, reduce your tax burden, and establish a strong framework for both your retirement and your business goals.
Why Start a Self-Employed Retirement Plan in Tacoma, WA Now?
There’s no denying that time is one of the most important assets in retirement planning. Starting early not only allows you to build a bigger financial cushion but also lowers the financial burden of saving aggressively in the future. The following are reasons why it makes sense to begin today:
The Cost of Waiting
Delaying your retirement savings may cause a major impact on the total you’ll have when you reach retirement age. The biggest reason is compound interest—the powerful process where your investments generate earnings, and those returns, in turn, generate even more returns. The more time your money has to grow, the larger the effect of this compounding process.
Example: Taylor and Alex are both self-employed individuals. 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 contributes $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 contributes $195,500 but only ends up with $474,367.78*.
How Early Contributions Grow
Small, consistent savings made consistently can lead to substantial growth. Here’s a simple scenario showing the power of compound interest:
- Starting at age 25: By investing $200 per month in a retirement plan with an expected yearly growth rate of 7%, you’ll end up with $497,303.29* by age 65.
- Starting at age 35: Investing 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.
*The numbers shown in this scenario are estimates generated with NerdWallet’s Compound Interest Calculator, with the assumption of a 7% annual return. The contributions were calculated by multiplying the annual deposit amount by the total number of years contributions were made. This information is meant to provide general guidance and do not guarantee future performance. Actual results may vary due to elements like market conditions, fees, and individual circumstances. We recommend consulting a financial advisor for personalized advice.
Take Control of Your Financial Future
If you’re self-employed in Tacoma, WA, it is often the case that you prioritize reinvesting in your business over saving for retirement. Even so, starting a plan now enables you to:
- Benefit from tax-free future growth or penalty-free withdrawals down the road.
- Take advantage of flexible contributions that align with your income.
- Build a financial cushion that ensures stability, no matter how your business evolves.
Getting started now, the less you’ll have to worry about making up for lost time later in life. Saving for retirement now means gaining control over your financial future and allowing yourself the ability to concentrate on your goals—both for your golden years and your Tacoma, WA business.
Types of Self-Employed Retirement Plans
Multiple retirement savings options available for self-employed individuals in Tacoma, WA, each offering its own benefits and trade-offs. A financial advisor can help you evaluate the pros and cons of each plan and identify the one most suitable for your needs. Generally speaking, your self-employed retirement plan options in Tacoma, WA are:
Traditional or Roth IRA
Plan Overview: Individual Retirement Accounts (IRAs), as explained here, represent financial tools for retirement that provide specific tax advantages. In a conventional IRA, contributions are typically tax-deductible, and returns grow free of current taxes, but withdrawals in retirement are subject to income tax. In contrast, Roth IRA contributions from post-tax earnings, but qualified withdrawals in retirement, including earnings, are not taxed. In both accounts, withdrawals come without penalties as long as you are at least 59½.
Eligibility: Unlike plans linked to your job, traditional and Roth IRAs are open to those with an earned income.
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: The Simplified Employee Pension IRA is a retirement plan that enables those who are self-employed to set aside a portion of their self-employment income. Contributions are strictly employer contributions an employer, so, as a self-employed individual, you (the employee) would not be able to contribute more than the 25% you (the employer) allocate. If you have employees, it's required to contribute the same amount for them as you do for yourself. It's your choice whether to contribute a fixed dollar figure or a percentage of wages to employee accounts. This type of plan is a good option for entrepreneurs facing cycles of high revenue and low revenue. Unlike other plans, SEP IRAs don’t have expensive setup or ongoing fees.
SEPs operate like standard 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 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: Solo 401(k)s, commonly known as an Individual 401(k) or one-participant 401(k) plan, is a savings option for the self-employed intended for businesses with no employees or if the only employee is your spouse. Solo 401(k)s operate much like 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 increased savings potential often come with 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: Solo 401(k)s are available solely to 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 are allowed to make two types of contributions:
- Employee contributions of up to 100% of your self-employment income, subject 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 if you attain age 60-63 in 2025.
- 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 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 for individuals turning 60-63 in 2025.
Individual Defined Benefit Plan
Plan Overview: A defined benefit plan is a retirement option that guarantees a set amount to self-employed individuals upon retirement. Unlike defined contribution plans mentioned above, this plan is not influenced by market performance, but allows self-employed individuals to know the precise amount they'll receive in retirement. This strategy is recommended for wealthier professionals who are focused on saving a significant sum for retirement and can commit to making sizeable contributions. Contributions offer tax-deferred growth, and withdrawals are taxed as income in retirement.
Eligibility: Entrepreneurs operating a solo business or employing fewer than five people can open an individual defined benefit plan, but it's typically advised for individuals aged 50+ who generate a minimum of $250,000 yearly. In most cases, good candidates for defined benefit plans tend to be:
- Entrepreneurs who want to invest more than $70,000 (or $77,500 if over age 50)
- Organizations that already put in 3-4% with plans to contribute more
- Companies with proven consistent profit patterns
- Entrepreneurs over age 40 who wish to accelerate savings or increase their retirement contributions rapidly
Contribution Limits: The maximum allowable contribution is calculated by an actuary based on your income, age, and retirement goals. Limits on contributions are adjusted each year.
The Importance of a Financial Advisor in Tacoma, WA for Your Self-Employed Retirement Plan
Working with a financial advisor in Tacoma, WA focused on self-employed retirement strategies can be an important asset for those working for themselves. They have the expertise to help understand the intricacies of saving for retirement and craft a customized plan that aligns with your goals. Your advisor in Tacoma, WA will review your finances, understand your risk tolerance, and assist you in selecting the best options about saving and investing for retirement. A key part of what we do for you includes:
- Help you choose a plan that suits your unique requirements
- Tailor the plan to your specific situation even further
- Adopt a written plan in accordance with IRS guidelines
- Organize a trust plan to manage your assets
- Make sure you understand the plan's terms
- Review and modify your plan when necessary
- Provide ongoing education and advice throughout your retirement planning process
- Boost your retirement earnings by maximizing your social security benefits
Self-Employed Retirement Plans in Tacoma, WA: Correct Capital's Process
Tacoma, WA business owners who lack the time, interest, or knowledge to oversee their own retirement planning themselves can become overwhelmed as they look at their options. At Correct Capital, our Tacoma, WA financial advisors take on the lion's share of your retirement planning for you, working to make meeting your retirement goals 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 our services align for you and your business. This initial call helps 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 request information, including your employee count, your present financial standing, and your long-term savings targets. This helps us create a personalized strategy that aligns with your goals.
- Review Your Plan: When we finalize a plan based on the information you provide, we'll meet with you and discuss your plan in detail to ensure you understand it and show how it aligns with your goals.
- Implementation and Monitoring: After we agree on your plan, we'll put everything in place so you can begin contributing. As time goes on, we'll check in and track your progress to keep it tailored to your evolving circumstances.
Our Tacoma, WA financial advisors and retirement plan consultants act as fiduciary advisors, who are obligated to they are required by law and ethical standards to do what's in your best interest.
Other financial advisory services we offer in Tacoma, WA include:
- 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 Tacoma, WA
Your business isn't "just a business" to you, and your Tacoma, WA financial advisors must deliver more than basic financial recommendations. At Correct Capital, we make it a priority to understand our clients and their businesses to deliver customized self-employed retirement plans. To every client in Tacoma, WA, 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, reach out to Correct Capital at 877-930-401k or contact us online.
