Self-employed retirement plans Tempe, AZ. The freedom of running your own company in Tempe, AZ offers many benefits of working for yourself. Even so, this freedom can come with certain challenges, particularly when it comes to planning for retirement, because 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 understanding their retirement options. In addition to achieving a more secure retirement, seeking advice from a financial advisor in Tempe, AZ to create your self-employed retirement plan can provide significant tax advantages that allow your business to grow and succeed.
Few Tempe, AZ wealth management and retirement planning firms truly grasp the challenges faced by self-employed individuals better than 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 take pride in helping businesses with their retirement planning needs. We understand that your business and retirement aspirations extend well past basic numbers, and we strive to provide personalized solutions that reflect your objectives. Keep reading to learn more about your self-employed retirement plan options in Tempe, AZ, or call Correct Capital at 877-930-401k or contact us online to talk to a self-employed financial advisor in Tempe, AZ today.
Why Tempe, AZ Self-Employed Individuals Should Have a Retirement Plan
Retirement plans for self-employed individuals are essential for preparing you for the future, they also offer real benefits today. Offering flexibility in contributions to substantial tax savings, working with a financial advisor in Tempe, AZ enables you to customize your retirement plan to align with your unique financial situation.
Flexibility That Fits Your Income
For those with fluctuating income annually, a plan like a SEP IRA or Solo 401(k) offers the option to modify how much you save:
- Customizable Contributions: Set aside more during profitable years and scale back when revenues are down, so that your plan aligns with your cash flow.
- Roth Options: A Roth Solo 401(k) lets you handle taxes upfront, so you can withdraw your savings tax-free down the road—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, allowing you to keep more of your hard-earned money.
- Tax-Deferred Growth: Investments grow tax-free until withdrawal, providing your money more time to accumulate.
- State-Specific Incentives: In some states, you might access extra tax breaks as a sole proprietor. These state-level incentives can make these plans even more valuable.
- Retirement Savings Contributions Credit (Saver’s Credit): Qualified participants can take advantage of 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 goes beyond just how much you save—it’s also determined by your investment strategy:
- Diversified Portfolios: Distributing your investments across a mix of asset classes like stocks and bonds serves to mitigate financial risk while helping to grow your nest egg.
- Emergency Back-Up: Pairing your retirement plan with a business emergency fund prevents you from using your retirement funds during challenging periods and risking extra costs.
Plan for the Future of Your Tempe, AZ Business
Preparing for retirement enables you to think through what’s next with your Tempe, AZ business:
- Selling Your Business: When selling your business, retirement accounts like SEP IRAs and Solo 401(k)s remain your personal assets and won’t be included in the sale. These accounts can provide the financial stability you’ll need later on. It’s important to note 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 pass on your business.
- Succession Planning: Whether you’re transferring ownership, your retirement savings offer financial security during the change. You may also partner with a financial advisor with expertise in succession and retirement planning to help with taxes on the sale.
With the proper savings strategy, you manage your financial future, cut down your tax obligations, and create a secure foundation for both your retirement and your business goals.
Why Start a Self-Employed Retirement Plan in Tempe, AZ Now?
Time remains one of the most crucial factors in retirement planning. Starting early not only helps you grow a bigger financial cushion but also minimizes the pressure of saving aggressively in the future. The following are reasons why it makes sense to begin today:
The Cost of Waiting
Putting off saving for retirement could lead to a substantial impact on the savings you’ll have when you retire. The main reason is compound interest—the concept where your investments generate earnings, and those returns, then, accumulate even more returns. The more time your money has to grow, the greater the impact of this growth.
Example: Taylor and Alex are both self-employed individuals. Their shared goal is to save $500,000 for retirement by age 65:
- Alex begins contributing $5,000 annually at age 30.
- Taylor postpones starting contributions to age 40 but puts away $7,500 annually to bridge the gap.
By age 65, using a projected 7% annual return:
- Alex puts in $180,000 and achieves a total of $691,184.39*.
- Taylor invests $195,500 but only ends up with $474,367.78*.
How Early Contributions Grow
Regular, modest investments made consistently often create significant growth. Here’s a simple scenario showing the impact of compounding:
- Starting at age 25: Putting aside $200 per month in a retirement plan with an expected yearly growth rate of 7%, you’ll grow to approximately $497,303.29* by age 65.
- Starting at age 35: Contributing the same $200 per month would result in 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 less effort required each year to achieve your retirement goals.
*The numbers shown in this scenario are estimates generated with NerdWallet’s Compound Interest Calculator, based on 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 meant to provide general guidance and cannot predict actual future outcomes. Your individual results may differ depending on factors such as market conditions, fees, and your unique situation. We recommend consulting a financial advisor for guidance tailored to your needs.
Take Control of Your Financial Future
As a self-employed person in Tempe, AZ, it might seem easier to put more emphasis on reinvesting in your business rather than saving for retirement. That said, beginning a plan now allows you to:
- Benefit from tax-free future growth or penalty-free withdrawals in the future.
- Enjoy adjustable savings that adapt to your earnings.
- Establish a safety net that provides security, no matter how your business changes.
Starting early, the less you’ll have to worry about playing catch-up later in life. Saving for retirement now means managing your financial future and allowing yourself the ability to turn your attention to your objectives—both for your retirement years and your Tempe, AZ business.
Types of Self-Employed Retirement Plans
There are several retirement savings options designed for entrepreneurs in Tempe, AZ, each offering its own benefits and trade-offs. A financial advisor will guide you to understand the benefits and drawbacks of each option and determine the one most suitable for your circumstances. Typically, your self-employed retirement plan options in Tempe, AZ consist of:
Traditional or Roth IRA
Plan Overview: IRAs, or Individual Retirement Accounts, are financial tools for retirement that offer specific tax advantages. In a conventional IRA, the money you contribute is often tax-deductible, and returns grow free of current taxes, but money taken out during retirement are subject to income tax. In contrast, with Roth IRAs, you contribute using income already taxed, but qualified withdrawals in retirement, including earnings, are exempt from taxes. In both types of accounts, withdrawals are penalty-free as long as you are at least 59½.
Eligibility: Unlike 401(k)s, which are employer-sponsored, traditional and Roth IRAs are available to anyone with taxable earnings.
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 serves as a retirement savings option that allows self-employed individuals to save a percentage of their net business profits. Contributions are strictly employer contributions an employer, so, as a self-employed individual, you (the employee) cannot make additional contributions beyond the 25% you (the employer) have designated. If you have employees, you must contribute the same amount for them as you do for yourself. You have the flexibility to contribute a set monetary value or a percentage of wages to employee accounts. SEP IRAs is a good option for entrepreneurs facing periods of inconsistent earnings. In contrast to some alternatives, SEP IRAs lack the high fees associated with starting or maintaining other plans.
SEPs operate like traditional IRAs, where contributions are made with pre-tax money and withdrawals are taxed as income.
Eligibility: Employers of any type, including self-employed individuals can set up a SEP.
Contribution Limits: Contribution limits for employees in a SEP IRA are the lesser of:
- 25% of compensation, or
- $70,000 for 2025
If you’re self-employed, the contribution you can make 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 savings option for the self-employed meant for businesses without employees or where the only employee is a spouse. These plans are similar to traditional employer-managed 401(k) plans, and enable contributions as both an employer and an employee with pre-tax money. This offers more savings than SEPs or IRAs; however, the extra savings options may be offset by more constrained investment avenues. Using a solo 401(k), you can make either traditional or Roth deferrals, which share the same tax benefits as their IRA contribution counterparts.
Eligibility: Only business owners and their spouses may establish and contribute to a solo 401(k).
Contribution Limits: As a self-employed individual with a solo 401(k) plan, you have the ability to make two types of contributions:
- Deferrals as an employee of up to 100% of your self-employed earnings, capped at the annual contribution limit. For 2025, the limits will be $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) cannot exceed 25% of your adjusted 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 (for 2025), $81,250 for individuals turning 60-63 in 2025.
Individual Defined Benefit Plan
Plan Overview: The defined benefit plan represents a type of retirement plan that guarantees a set amount to business owners upon retirement. In contrast to the plans discussed earlier, investment returns don’t affect the payout, but allows self-employed individuals to know what they'll receive in retirement. This plan is best suited for high-earning entrepreneurs who want to save a large amount for retirement and can commit to making substantial contributions. Contributions offer tax-deferred growth, and withdrawals are taxable as income in retirement.
Eligibility: Any self-employed individual operating a solo business or with a small staff of under five can open an individual defined benefit plan, but it's most commonly recommended for those over 50 who earn at least $250,000 a year. Typically, good candidates for defined benefit plans are:
- Entrepreneurs who aim to deposit more than $70,000 (or $77,500 for individuals 50 and older)
- Companies already contributing 3-4% with plans to contribute more
- Companies with proven 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 must be determined by an actuary determined by your earnings, age, and retirement objectives. Contribution limits change annually.
The Importance of a Financial Advisor in Tempe, AZ for Your Self-Employed Retirement Plan
A financial advisor in Tempe, AZ focused on self-employed retirement strategies is an important asset for self-employed individuals. They offer the knowledge to assist guide you through the challenges of retirement planning and craft a customized plan that reflects your aspirations. A financial advisor in Tempe, AZ will review your finances, understand your risk tolerance, and help you in making informed decisions about saving and investing for retirement. Part of what we do for you involves:
- Help you choose a plan that best fits your needs and goals
- Customize the plan to fit you personally even further
- Create a written plan that complies with IRS regulations
- Arrange a trust plan for assets
- Help you understand the plan's terms
- Monitor and adjust your plan to keep it aligned with your goals
- Provide ongoing education and advice to help you navigate your retirement journey
- Boost your retirement earnings by making the most of your social security
Self-Employed Retirement Plans in Tempe, AZ: Correct Capital's Process
Tempe, AZ business owners who aren’t equipped with the time or understanding to handle their self-employed retirement plan on their own often feel overwhelmed when faced with their options. At Correct Capital, our Tempe, AZ financial advisors manage the majority of your retirement strategy for you, working to make meeting your retirement goals as easy as possible for you. We are here to assist you in setting up 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 determine if we're a good fit for you and your business. This initial call lets us learn about your needs with zero commitment or extensive time commitment on your part.
- Gather Information: Once we mutually decide to continue, we'll gather information, including whether you have employees, your existing financial picture, and your future objectives. This helps us create a tailored approach suited specifically for your needs.
- Review Your Plan: When we finalize a plan using the information you provide, we'll meet with you and review 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 implement the necessary steps so you can start saving. As time goes on, we'll check in and monitor your plan to ensure it stays suited to your needs.
Our Tempe, AZ financial advisors and retirement plan consultants are fiduciary advisors, who are obligated to they are legally and ethically bound to do what's in your best interest.
Other financial advisory services we offer in Tempe, AZ 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 Tempe, AZ
You don't see your business as "just a business", and your Tempe, AZ financial advisors must deliver more than simply sound financial advice. At Correct Capital, we make it a priority to understand our clients and their businesses to provide tailored self-employed retirement plans. We offer all our Tempe, AZ clients our I.O.U. promise: everything we recommend will be independent, objective, and unbiased. To get started on your self-employment retirement plan, contact Correct Capital now at 877-930-401k or contact us online.
