Self-employed retirement plans Tempe, AZ. The flexibility of running your own company in Tempe, AZ offers many benefits of having a self-directed career. Even so, this freedom sometimes brings with a lack of security, particularly when it comes to retirement savings, because you don't have the benefit of a workplace retirement plan. Only 13% of self-employed individuals have a workplace retirement plan, but many would be better off exploring their options. In addition to having a more comfortable retirement, seeking advice from a financial advisor in Tempe, AZ to create your self-employed retirement plan offers significant tax advantages that help you to move your business forward.
Few Tempe, AZ financial advisory and retirement planning firms are as attuned to the requirements of small business owners quite like Correct Capital. The father of our founder was a small business owner himself (check out our story here), and our firm take pride in helping businesses with their retirement planning needs. We recognize that your business and retirement aspirations go far beyond basic numbers, and we are dedicated to offer personalized solutions to meet your unique goals. Read on to discover about your self-employed retirement plan options in Tempe, AZ, or give us a call at Correct Capital at 877-930-401k or contact us online to speak with 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 help prepare you for the future, they also deliver tangible benefits today. With customizable contribution options to significant tax savings, consulting a financial advisor in Tempe, AZ enables you to design your retirement plan to align with your specific needs.
Flexibility That Fits Your Income
When your earnings vary annually, a plan like a SEP IRA or Solo 401(k) gives you the option to tailor how much you save:
- Customizable Contributions: Set aside more during successful years and scale back when your earnings dip, so that your plan works 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 wise move if you believe your tax rate will increase in the future.
Save Money on Taxes
Plans designed for the self-employed deliver powerful tax benefits:
- Tax-Deductible Contributions: Contributions to a Solo 401(k) reduce what you owe in taxes, so you can keep more of your earnings.
- Tax-Deferred Growth: You won't pay taxes on investment growth until you withdraw it, which gives your money more time to grow.
- State-Specific Incentives: Depending on where you live, you might access additional tax breaks as a business owner. These regional incentives help make these plans even more advantageous.
- Retirement Savings Contributions Credit (Saver’s Credit): Those who meet the requirements can claim a tax credit of up to 50% of the first $2,000 contributed 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 determined by your investment strategy:
- Diversified Portfolios: Distributing your investments across different stocks, bonds, and alternatives is a smart way to mitigate financial risk while still growing your savings.
- Emergency Back-Up: Combining your retirement strategy and a dedicated business safety net prevents you from tapping into your nest egg during financial hardships and risking extra costs.
Plan for the Future of Your Tempe, AZ Business
Preparing for retirement enables you to plan ahead for what’s next with your Tempe, AZ business:
- Selling Your Business: For those considering a sale, retirement accounts like SEP IRAs and Solo 401(k)s remain yours and won’t be included in the sale. These accounts ensure the steady income you’ll need during retirement. Keep in mind that while selling your business results in a capital gain, retirement plan contributions are subject to yearly maximums (e.g., as much as $7,000 for IRAs or a maximum of $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’ll owe when you transfer your business.
- Succession Planning: Whether you’re transferring ownership, your retirement accounts offer a stable foundation through the transition. You can also partner with a financial advisor who specializes in succession planning and retirement accounts to reduce taxes during the sale.
With the proper savings strategy, you gain control over your financial future, reduce your tax burden, and create a strong framework for both your retirement and your business goals.
Why Start a Self-Employed Retirement Plan in Tempe, AZ Now?
Time is one of the most important assets when it comes to saving for retirement. Beginning sooner rather than later not only helps you grow a larger nest egg but also minimizes the stress of saving aggressively in the future. The following are reasons why it is beneficial to start now:
The Cost of Waiting
Putting off saving for retirement may cause a significant impact on the total you’ll have when you reach retirement age. The primary 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 more significant the effect of compounding.
Example: Two individuals, Alex and Taylor are both self-employed professionals. Both of them want 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 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 ends up with $691,184.39*.
- Taylor contributes $195,500 but accumulates just $474,367.78*.
How Early Contributions Grow
Regular, modest investments made consistently may result in impressive growth. Take a look at this scenario showing the impact of compounding:
- Starting at age 25: Putting aside $200 per month in a retirement plan with an average annual return of 7%, you’ll accumulate $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 difference of over $260,000, just from a 10-year delay.
Starting sooner, the less effort required each year to achieve your retirement goals.
*The figures provided in this example are based on estimates generated with NerdWallet’s Compound Interest Calculator, with the assumption of a 7% annual return. Annual deposits were multiplied by the number of years to estimate total contributions. This information is meant to provide general guidance and are not a promise of future results. Actual results may vary due to variables including market conditions, fees, and your unique situation. Be sure to speak with a financial advisor for personalized advice.
Take Control of Your Financial Future
For self-employed individuals in Tempe, AZ, it might seem easier to put more emphasis on reinvesting in your business over saving for retirement. Even so, beginning a plan now allows you to:
- Take advantage of growth that is tax-deferred or withdrawals without taxes in the future.
- Benefit from flexible contributions that change with your cash flow.
- Establish a safety net that ensures stability, no matter how your business evolves.
Getting started now, the less you’ll need to worry about playing catch-up later in life. Taking steps toward your retirement goals today means managing your financial future and creating for yourself the ability to turn your attention to your goals—both for your golden years and your Tempe, AZ business.
Types of Self-Employed Retirement Plans
There are several retirement savings options open for entrepreneurs in Tempe, AZ, each providing its own benefits and trade-offs. A financial advisor can help you evaluate the pros and cons of each choice and identify the one ideal for your circumstances. Typically, your self-employed retirement plan options in Tempe, AZ are:
Traditional or Roth IRA
Plan Overview: IRAs, or Individual Retirement Accounts, are long-term savings plans that provide distinct tax benefits. In a traditional IRA, the money you contribute is often tax-deductible, and returns grow free of current taxes, but withdrawals in retirement are taxed as income. In contrast, with Roth IRAs, you contribute are made with after-tax income, but eligible distributions during retirement, including earnings, are not taxed. In both types of accounts, withdrawals don’t incur penalties as long as you are at least 59½.
Eligibility: Unlike plans linked to your job, IRAs, including traditional and Roth options 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: SEP IRAs serves as a retirement savings option that permits those who are self-employed to contribute a percentage of their net earnings. Contributions are strictly employer contributions an employer, so, as a sole proprietor, you (the employee) cannot make additional contributions above 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. A SEP IRA works well for companies with fluctuating revenue streams. Compared to other retirement options, SEP IRAs lack costly startup or administrative fees.
SEPs operate like traditional IRAs, where contributions are made with pre-tax money and money withdrawn is subject to income tax.
Eligibility: Any employer, including the self-employed 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
For self-employed individuals, the amount eligible to be contributed is based on a special calculation.
Solo 401(k)
Plan Overview: Solo 401(k)s, also called an Individual 401(k) or one-participant 401(k) plan, is a retirement savings plan intended for businesses with no employees or if the only employee is your spouse. This type of plan are similar to 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 versus 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 share the same tax benefits as their IRA contribution counterparts.
Eligibility: This plan is exclusively for business owners and their spouses may establish and contribute to a solo 401(k).
Contribution Limits: For self-employed individuals with a solo 401(k) plan, you can make two types of contributions:
- Elective deferrals (as an employee) of up to 100% of your self-employment income, capped at the annual contribution limit. For 2025, the limits will be $23,500, or $31,000 if you're over 50, or $34,750 for those who turn 60-63 in 2025.
- Profit-sharing contributions (as an employer) are limited to 25% of your net earnings from self-employment, which is calculated as net profits less half of your self-employment tax and the deferrals you made.
Your combined contributions must not surpass $70,000, or $77,500 for those aged 50 and older (in 2025), $81,250 if you attain age 60-63 in 2025.
Individual Defined Benefit Plan
Plan Overview: The defined benefit plan offers a structured retirement solution that provides a fixed, predetermined benefit to self-employed individuals upon retirement. Unlike defined contribution plans mentioned above, investment returns don’t affect the payout, but lets individuals clearly understand the precise amount they'll receive in retirement. This option is recommended for higher-income professionals who are focused on saving a substantial amount for retirement and can commit to making substantial contributions. Contributions grow tax-free until withdrawal, and withdrawals incur taxes as income in retirement.
Eligibility: Any self-employed individual operating a solo business or employing fewer than five people are eligible to open an individual defined benefit plan, but it's most commonly advised for individuals aged 50+ who generate a minimum of $250,000 yearly. Generally, good candidates for defined benefit plans include:
- Entrepreneurs who desire to contribute more than $70,000 (or $77,500 for those aged 50+)
- Companies already contributing 3-4% and are willing to do more
- Organizations with proven consistent profit patterns
- Business leaders over age 40 who aim to quickly build retirement savings or increase their retirement contributions rapidly
Contribution Limits: The maximum allowable contribution must be determined by an actuary using your income, age, and retirement goals. Contribution limits are updated yearly.
The Importance of a Financial Advisor in Tempe, AZ for Your Self-Employed Retirement Plan
A financial advisor in Tempe, AZ experienced with retirement plans for the self-employed is an important asset for self-employed individuals. They offer the knowledge to assist understand the intricacies of saving for retirement and craft a tailored strategy that matches your objectives. Your advisor in Tempe, AZ 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:
- Help you choose a plan that suits your unique requirements
- Tailor the plan to your specific situation even further
- Formalize a plan in writing in accordance with IRS guidelines
- Organize a trust plan to manage your assets
- Ensure you comprehend the plan's terms
- Track and fine-tune your plan to keep it aligned with your goals
- Offer continued financial education and guidance to help you navigate your retirement journey
- Maximize what you receive in retirement by making the most of your social security
Self-Employed Retirement Plans in Tempe, AZ: Correct Capital's Process
Tempe, AZ business owners who don’t have the time or expertise to handle their own retirement planning on their own can become overwhelmed by their choices. With Correct Capital, our Tempe, AZ financial advisors take on the lion's share of your savings plan setup for you, and strive to ensure meeting your financial objectives as straightforward as possible for you. We can help you get set up your self-employed retirement plan in just four steps:
- Schedule a Call: In just 20 minutes, a member of our advisor team can help understand 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 major time investment 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 current financial situation, and your long-term savings targets. This enables us to craft a personalized strategy suited specifically for your needs.
- Review Your Plan: When we finalize a plan using the information you provide, we'll schedule a meeting and review your plan step by step to help you fully grasp it and show how it aligns with your goals.
- Implementation and Monitoring: Once we've agreed on your plan, we'll put everything in place so you can start saving. As time goes on, we'll check in and monitor your plan to keep it tailored to your evolving circumstances.
Our Tempe, AZ financial advisors and retirement plan consultants are 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 Tempe, AZ include:
- Family Wealth Planning
- Financial Planning for Business Owners
- Comprehensive Financial Planning
- Retirement Income Planning
- Investment Planning
- Retirement Financial Planning
- Independent Financial Advisor
- Roth Conversion
- Investment Management
- 401(k) Audit
Call Correct Capital for Your Self-Employed Retirement Plan in Tempe, AZ
To you, your business is more than "just a business", and your Tempe, AZ financial advisors need to offer more than simply sound financial advice. Correct Capital takes pride in, we take the time to get to know our clients and their businesses to create 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 take the first step on your self-employment retirement plan, contact Correct Capital now at 877-930-401k or contact us online.
