Self-employed retirement plans Tempe, AZ. The freedom of running your own company in Tempe, AZ is one of the best aspects of being self-employed. That said, this flexibility often comes with potential drawbacks, particularly regarding planning for retirement, as you don't have the benefit of retirement programs through an employer. Only 13% of self-employed individuals have a workplace retirement plan, but many could benefit from exploring their options. In addition to enjoying a financially stable retirement, seeking advice from a financial advisor in Tempe, AZ to set up your self-employed retirement plan offers significant tax advantages that enable your business to grow and succeed.
Few Tempe, AZ financial advisory and retirement planning firms understand the needs of small business owners better than Correct Capital. Our company’s founder grew up with a father who was a small business owner himself (learn more about our story here), and our firm are deeply experienced in supporting entrepreneurs with their retirement planning needs. We understand that your goals for your business and retirement aren’t limited to just monetary concerns, and we are dedicated to create tailored solutions that reflect your objectives. Read on to discover about your self-employed retirement plan options in Tempe, AZ, or call Correct Capital at 877-930-401k or contact us online to speak with a small business financial advisor in Tempe, AZ today.
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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 offer tangible benefits today. From flexible contributions to substantial tax savings, working with a financial advisor in Tempe, AZ helps you create your retirement plan to suit your unique financial situation.
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 adjust how much you save:
- Customizable Contributions: Contribute more during high-income years and reduce savings when revenues are down, so that your plan works with your current income.
- Roth Options: A Roth Solo 401(k) lets you settle taxes at the time of contribution, allowing you to withdraw tax-free later—a smart decision if you believe your tax rate to be higher in the future.
Save Money on Taxes
Retirement plans for self-employed individuals offer valuable tax benefits:
- Tax-Deductible Contributions: Contributions to a SEP IRA reduce what you owe in taxes, allowing you to 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 may be eligible for additional deductions as a business owner. These state-level incentives make these plans even more beneficial.
- Retirement Savings Contributions Credit (Saver’s Credit): Qualified participants can claim a tax 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
Planning for a safe retirement isn’t only about how much you save—it’s also about how you invest:
- Diversified Portfolios: Distributing your investments across different stocks, bonds, and alternatives serves to reduce risk while continuing to build your savings.
- Emergency Back-Up: Pairing your retirement plan with a financial buffer for your business ensures you don’t tapping into your nest egg during challenging periods and incurring penalties.
Plan for the Future of Your Tempe, AZ Business
Retirement planning also helps you think through what’s next with your Tempe, AZ 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 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., a maximum of $7,000 for IRAs or as much as $70,000 for Solo 401(k)s, including catch-up contributions, according to plan rules).
- Minimizing Taxes: Using retirement contributions wisely can reduce the taxes you’ll owe 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 can also work with a financial advisor who specializes in succession planning and retirement accounts to reduce taxes associated with the transaction.
With the proper savings strategy, you manage your financial future, lower your tax bill, and create a secure foundation for both your retirement and your business goals.
Why Start a Self-Employed Retirement Plan in Tempe, AZ Now?
There’s no denying that time is one of the most important factors when it comes to saving for retirement. Beginning sooner rather than later not only lets you accumulate a more substantial retirement fund but also lowers the pressure of playing catch-up as you get older. The following are reasons why it pays to take action now:
The Cost of Waiting
Waiting to start your retirement fund can have a major impact on the total you’ll have when you stop working. The main reason is compound interest—the concept where your investments earn returns, and those returns, subsequently, earn even more returns. The more time your money has to grow, the greater the benefit of this compounding process.
Example: Alex and Taylor are both self-employed professionals. Their shared goal is to save $500,000 for retirement by age 65:
- Alex starts saving $5,000 annually at age 30.
- Taylor delays savings until 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 ends up with $691,184.39*.
- Taylor contributes $195,500 but accumulates just $474,367.78*.
How Early Contributions Grow
Regular, modest investments contributed over time often create impressive growth. Take a look at this scenario showing the effect of compounding:
- 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: Contributing the same $200 per month leaves you with only $235,412.97* by age 65—a difference of over $260,000, all because of a 10-year delay.
Starting sooner, the less you need to save each year to achieve your retirement goals.
*The numbers shown in this scenario are estimates derived from 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. These examples are for illustrative purposes only and do not guarantee future performance. Actual results may vary due to variables including market conditions, fees, and individual circumstances. Be sure to speak with a financial advisor for custom recommendations.
Take Control of Your Financial Future
If you’re self-employed in Tempe, AZ, it is often the case that you focus more on reinvesting in your business rather than saving for retirement. That said, beginning a plan now gives you the chance to:
- Take advantage of tax-deferred growth or penalty-free withdrawals later on.
- Benefit from contribution flexibility that adapt to your income.
- Create a financial cushion that offers peace of mind, no matter how your business evolves.
Getting started now, the less you’ll be required to worry about playing catch-up later in life. Saving for retirement now means gaining control over your financial future and giving yourself the ability to focus on your objectives—both for your golden years and your Tempe, AZ business.
Types of Self-Employed Retirement Plans
Multiple retirement savings options open for those working for themselves in Tempe, AZ, each offering its own benefits and trade-offs. A financial advisor can help you learn about the advantages and disadvantages of each option and determine the one ideal for your circumstances. Typically, your self-employed retirement plan options in Tempe, AZ are:
Traditional or Roth IRA
Plan Overview: Individual Retirement Accounts (IRAs), as explained here, represent financial tools for retirement that provide key tax perks. In a standard IRA, the money you contribute is often tax-deductible, and earnings grow without immediate taxation, but money taken out during retirement are taxed as income. In contrast, Roth IRAs require contributions using income already taxed, but eligible distributions during retirement, including earnings, are tax-free. In both types of accounts, withdrawals come without penalties if you are at least 59½.
Eligibility: Unlike plans linked to your job, both traditional and Roth IRAs 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 qualify for catch-up contributions.
Simplified Employee Pension Plan (SEP IRA)
Plan Overview: A Simplified Employee Pension (SEP) IRA is a retirement plan that enables entrepreneurs to contribute a percentage of their net earnings. Contributions are strictly employer contributions an employer, so, as a self-employed individual, you (the employee) cannot make additional contributions 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 flat-dollar amount or a percentage of wages to employee accounts. This type of plan works well for entrepreneurs facing periods of inconsistent earnings. Compared to other retirement options, SEP IRAs lack costly startup or administrative fees.
SEPs operate like standard IRAs, where contributions are made with pre-tax money and retirement distributions are taxable.
Eligibility: Employers of any type, including self-employed individuals can establish a SEP.
Contribution Limits: Contribution limits for employees in a SEP IRA are the lesser of:
- 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: Solo 401(k)s, sometimes referred to 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. These plans operate much like standard 401(k) plans, and enable contributions as both the employer and the employee with pre-tax money. This allows for more savings compared to SEPs or IRAs; however, the extra savings options can be balanced by more limited investment options. 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: This plan is exclusively for business owners and their spouses may establish and contribute to a solo 401(k).
Contribution Limits: If you are self-employed with a solo 401(k) plan, you can make two types of contributions:
- Employee contributions of up to 100% of your earned income from self-employment, subject to the annual contribution limit. The contribution limits for 2025 include $23,500, or $31,000 if you're over 50, or $34,750 if you attain age 60-63 in 2025.
- Profit-sharing contributions (as an employer) are limited to 25% of your net earnings from self-employment, which is your net profit minus half of your self-employment tax and the deferrals you made.
The total contribution cannot exceed $70,000, or $77,500 if you're over age 50 (as of 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 delivers a fixed, predetermined benefit to entrepreneurs upon retirement. Unlike defined contribution plans mentioned above, this plan is not influenced by market performance, but allows self-employed individuals to know what they'll have in retirement. This option is ideal for high-earning entrepreneurs who want to save a significant sum for retirement and can commit to making substantial contributions. Contributions offer tax-deferred growth, and withdrawals are taxed as income during retirement.
Eligibility: Any self-employed individual operating a solo business or with a small staff of under five are eligible to open an individual defined benefit plan, but it's generally recommended for people above age 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)
- Companies already contributing 3-4% with plans to contribute more
- Businesses with proven consistent profit patterns
- Business leaders over age 40 who wish to accelerate savings or accelerate the retirement savings
Contribution Limits: The maximum allowable contribution requires calculation from an actuary based on your income, age, and retirement goals. Allowable contributions are updated yearly.
The Importance of a Financial Advisor in Tempe, AZ for Your Self-Employed Retirement Plan
Partnering with an advisor in Tempe, AZ experienced with retirement plans for the self-employed can be an important asset for entrepreneurs. They offer the knowledge to assist understand the intricacies of saving for retirement and develop a personalized approach that reflects your aspirations. A financial advisor in Tempe, AZ will assess where you stand financially, understand your risk tolerance, and help you in choosing wisely about saving and investing for retirement. Part of what we do for you includes:
- Assist in selecting a plan that best fits your needs and goals
- Tailor the plan to your specific situation even further
- Create a written plan as required by IRS rules
- Set up an asset trust plan
- Make sure you understand the plan's terms
- Review and modify your plan when necessary
- Offer continued financial education and guidance throughout your retirement planning process
- Boost your retirement earnings by making the most of your social security
Self-Employed Retirement Plans in Tempe, AZ: Correct Capital's Process
Self-employed individuals in Tempe, AZ who don’t have the time or expertise to manage their self-employed retirement plan themselves often feel overwhelmed when faced with their options. Through our team at Correct Capital, our Tempe, AZ financial advisors handle the lion's share of your savings plan setup for you, to help make meeting your financial objectives as straightforward as possible for you. We can help you get set up 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 helps us learn about your needs with no obligation or extensive time commitment on your part.
- Gather Information: Once we mutually decide to continue, we'll ask for information, including how many employees you have (if any), your current financial situation, and your future objectives. This allows us to put together a tailored approach suited specifically for your needs.
- Review Your Plan: After we put together a plan from the information you provide, we'll sit down with you and go over your plan in detail to ensure you understand 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 have regular meetings and track your progress to make sure it remains aligned with your goals.
Our Tempe, AZ financial advisors and retirement plan consultants are fiduciary advisors, who are obligated to they are committed by law and ethics to prioritize your needs above all else.
Other financial advisory services we offer in Tempe, AZ 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 Tempe, AZ
To you, your business is more than "just a business", and your Tempe, AZ financial advisors need to offer more than basic financial recommendations. Correct Capital takes pride in, we focus on building a relationship with our clients and their businesses to deliver personalized self-employed retirement plans. All our clients in Tempe, AZ benefit from our I.O.U. promise: all guidance we provide will be independent, objective, and unbiased. To take the first step on your self-employment retirement plan, call Correct Capital today at 877-930-401k or contact us online.
