Self-employed retirement plans Tucson, AZ. The independence of being your own boss in Tucson, AZ offers many benefits of having a self-directed career. However, this freedom can come with certain challenges, particularly when it comes to planning for retirement, as you don't have the benefit of a workplace retirement plan. Only 13% of self-employed individuals have a workplace retirement plan, although many would be better off looking into other possibilities. In addition to achieving a financially stable retirement, working with a financial advisor in Tucson, AZ to establish your self-employed retirement plan delivers significant tax advantages that help you to move your business forward.
Few Tucson, AZ wealth management and retirement planning firms truly grasp the challenges faced by entrepreneurs better than Correct Capital. Our founder's father was a small business owner himself (read more of our story here), and Correct Capital take pride in helping businesses with their retirement planning needs. We know that your goals for your business and retirement go far beyond basic numbers, and we are dedicated to create customized solutions to meet your unique goals. Read on to discover about your self-employed retirement plan options in Tucson, AZ, or give us a call at Correct Capital at 877-930-401k or contact us online to talk to a small business financial advisor in Tucson, AZ today.
Why Tucson, AZ Self-Employed Individuals Should Have a Retirement Plan
Retirement plans for self-employed individuals help prepare you for the future, they also provide real benefits today. With customizable contribution options to substantial tax savings, partnering with a financial advisor in Tucson, AZ allows you to create your retirement plan to fit 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 option to adjust how much you save:
- Customizable Contributions: Set aside more during profitable years and reduce savings when your earnings dip, ensuring your plan aligns with your financial situation.
- Roth Options: A Roth Solo 401(k) lets you pay taxes on contributions now, so you can withdraw tax-free later—a wise move if you anticipate your tax rate is likely to rise in the future.
Save Money on Taxes
Self-employed retirement plans offer significant tax benefits:
- Tax-Deductible Contributions: Contributions to a SEP IRA shrink your tax liability, so you can keep more of your hard-earned money.
- Tax-Deferred Growth: You won't pay taxes on investment growth until you withdraw it, which gives your money more time to compound.
- State-Specific Incentives: Depending on where you live, you could qualify for extra deductions as a business owner. These local incentives make these plans even more beneficial.
- Retirement Savings Contributions Credit (Saver’s Credit): Eligible individuals can apply for a 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
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 different stocks, bonds, and alternatives serves to minimize exposure to risk while continuing to build your savings.
- Emergency Back-Up: Pairing your retirement plan with a dedicated business safety net prevents you from using your retirement funds during challenging periods and facing tax penalties.
Plan for the Future of Your Tucson, AZ Business
Retirement planning enables you to think through what’s next with your Tucson, AZ business:
- Selling Your Business: When selling your business, accounts such as SEP IRAs or Solo 401(k)s remain your personal assets and won’t be included in the sale. These plans ensure the steady income you’ll need later on. Keep in mind that while the sale of a business usually creates a capital gain, contributions to retirement accounts are capped at annual limits (e.g., a maximum of $7,000 for IRAs or up to $70,000 for Solo 401(k)s, factoring in catch-up contributions, based on plan compensation).
- Minimizing Taxes: Making the most of retirement savings helps lower the taxes you’ll owe when you sell your business.
- Succession Planning: For those winding down or handing over their business, your retirement savings ensure financial security during the change. You may also partner with a financial advisor who specializes in succession planning and retirement accounts to minimize tax burdens on the sale.
With the right retirement plan, you manage your financial future, reduce your tax burden, and build a secure foundation for both your retirement and your business goals.
Why Start a Self-Employed Retirement Plan in Tucson, AZ Now?
Time is one of the most valuable factors when it comes to saving for retirement. Getting a head start not only lets you accumulate a bigger financial cushion but also lowers the financial burden of catching up later in life. 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 amount you’ll have when you reach retirement age. The primary reason is compound interest—the financial principle where your investments generate earnings, and those returns, subsequently, accumulate even more returns. The longer your money has to grow, the greater the impact of this growth.
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 waits until age 40 but saves $7,500 annually to make up for lost time.
By age 65, assuming 7% annual return:
- Alex puts in $180,000 and ends up with $691,184.39*.
- Taylor invests $195,500 but achieves a total of only $474,367.78*.
How Early Contributions Grow
Even modest contributions made consistently may result in impressive growth. Consider this example showing the effect of compounding:
- Starting at age 25: If you invest $200 per month in a retirement plan with an projected return of 7%, you’ll grow to approximately $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 shortfall of over $260,000, simply due to a 10-year delay.
The earlier you begin, the less effort required each year to meet your retirement goals.
*These calculations represent estimates calculated using NerdWallet’s Compound Interest Calculator, with the assumption of a 7% annual return. These calculations involved multiplying yearly deposits by the years contributed. The scenarios provided are intended as illustrative examples and do not guarantee future performance. Your individual results may differ depending on variables including market conditions, fees, and individual circumstances. Be sure to speak with a financial advisor for guidance tailored to your needs.
Take Control of Your Financial Future
For self-employed individuals in Tucson, AZ, it might seem easier to prioritize reinvesting in your business over saving for retirement. However, initiating a plan now enables you to:
- Leverage tax-deferred growth or penalty-free withdrawals later on.
- Enjoy contribution flexibility that align with your cash flow.
- Establish a safety net that offers peace of mind, no matter how your business develops.
The sooner you start, the less you’ll have to worry about playing catch-up later in life. Saving for retirement now means managing your financial future and giving yourself the ability to focus on your objectives—both for your golden years and your Tucson, AZ business.
Types of Self-Employed Retirement Plans
Multiple retirement savings options designed for self-employed individuals in Tucson, AZ, each with its own pros and cons. A financial advisor is available to help you understand the advantages and disadvantages of each choice and determine the one most suitable for your circumstances. Generally speaking, your self-employed retirement plan options in Tucson, AZ are:
Traditional or Roth IRA
Plan Overview: Individual Retirement Accounts (IRAs), as explained here, represent financial tools for retirement that include distinct tax benefits. In a traditional 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, Roth IRA contributions are made with after-tax income, but qualified withdrawals in retirement, including earnings, are not taxed. In both types of accounts, withdrawals come without penalties as long as you are at least 59½.
Eligibility: Unlike plans linked to your job, IRAs, including traditional and Roth options 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 if you qualify for catch-up contributions.
Simplified Employee Pension Plan (SEP IRA)
Plan Overview: SEP IRAs offers a way to save for retirement that allows self-employed individuals to set aside a portion of their self-employment income. 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) have designated. If you have employees, it's required to contribute the same amount for them as you do for yourself. You may choose to contribute a flat-dollar amount or a percentage of wages to employee accounts. SEP IRAs works well for companies with cycles of high revenue and low revenue. Compared to other retirement options, SEP IRAs lack costly startup or administrative fees.
SEPs work like conventional IRAs, where you contribute pre-tax dollars and withdrawals are taxed as income.
Eligibility: Employers of any type, including self-employed individuals can open 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 contribution you can make is based on a special calculation.
Solo 401(k)
Plan Overview: The Solo 401(k), also called an Individual 401(k) or one-participant 401(k) plan, is a self-employed retirement plan intended for businesses without employees or where the only employee is a spouse. This type of plan function similarly to standard 401(k) plans, and enable contributions as both an employer and an employee with pre-tax money. This provides more savings compared to SEPs or IRAs; however, the increased savings potential may be offset by more restricted investment choices. With this type of plan, 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: If you are self-employed with a solo 401(k) plan, you have the ability to make two types of contributions:
- Employee contributions 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 if you are 50 or older, or $34,750 if you attain age 60-63 in 2025.
- Profit-sharing contributions (as an employer) are limited to 25% of your net self-employment income, which is calculated as net profits less 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 if you attain age 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 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 get in retirement. This plan is ideal for wealthier entrepreneurs who are focused on saving a significant sum for retirement and are prepared to contribute sizeable contributions. Contributions grow tax-free until withdrawal, and withdrawals are taxed as income during retirement.
Eligibility: Any self-employed individual managing a one-person company or with a small staff of under five may establish an individual defined benefit plan, but it's typically suggested for people above age 50 who earn at least $250,000 a year. Typically, good candidates for defined benefit plans include:
- Entrepreneurs who desire to contribute more than $70,000 (or $77,500 if over age 50)
- Businesses currently investing 3-4% with plans to contribute more
- Organizations showing consistent profit patterns
- Partners or owners over age 40 who desire to "catch up" or increase their retirement contributions rapidly
Contribution Limits: The cap on contributions requires calculation from an actuary determined by your income, age, and retirement goals. Allowable contributions change annually.
The Importance of a Financial Advisor in Tucson, AZ for Your Self-Employed Retirement Plan
Working with a financial advisor in Tucson, AZ experienced with retirement plans for the self-employed can be an important asset for entrepreneurs. They bring the skills needed to navigate the complexities of retirement planning and design a customized plan that reflects your aspirations. A financial advisor in Tucson, AZ will evaluate your financial situation, understand your risk tolerance, and help you in making informed decisions about saving and investing for retirement. Included in what we do for you involves:
- Assist in selecting a plan that best fits your needs and goals
- Tailor the plan to fit you personally 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 to keep it aligned with your goals
- Deliver continuous support and financial insights to help you navigate your retirement journey
- Boost your retirement earnings by optimizing your social security benefits
Self-Employed Retirement Plans in Tucson, AZ: Correct Capital's Process
Entrepreneurs in Tucson, AZ who don’t have the time or expertise to oversee their self-employed retirement plan themselves can become overwhelmed when faced with their options. Through our team at Correct Capital, our Tucson, AZ financial advisors handle the lion's share of your retirement planning for you, working to make meeting your retirement goals as straightforward 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 help understand if we're suited to your needs for you and your business. This brief introduction helps us learn about your needs with no pressure or significant effort on your part.
- Gather Information: Once we mutually decide to continue, we'll ask for information, including whether you have employees, your existing financial picture, and your long-term savings targets. This allows us to put together a tailored approach that aligns with your goals.
- Review Your Plan: After we put together a plan from the information you provide, we'll meet with you and review your plan step by step to make sure it's clear and show how it aligns with your goals.
- Implementation and Monitoring: After we agree on your plan, we'll set everything up so you can begin contributing. Throughout our relationship, we'll have regular meetings and review your strategy to keep it tailored to your evolving circumstances.
Our Tucson, AZ financial advisors and retirement plan consultants serve as fiduciary advisors, meaning they are legally and ethically bound to do what's in your best interest.
Other financial advisory services we offer in Tucson, AZ include:
- Investment Planning
- Retirement Financial Planning
- Independent Financial Advisor
- Roth Conversion
- Investment Management
- 401(k) Audit
- High-Net-Worth Wealth Management
- Retirement Planner
- Financial Planning
- Retirement Plan Consultants
Call Correct Capital for Your Self-Employed Retirement Plan in Tucson, AZ
You don't see your business as "just a business", and your Tucson, AZ financial advisors must deliver more than simply sound financial advice. With Correct Capital, we make it a priority to understand our clients and their businesses to deliver customized self-employed retirement plans. All our clients in Tucson, AZ benefit from our I.O.U. promise: all guidance we provide will be independent, objective, and unbiased. To get started on your self-employment retirement plan, call Correct Capital today at 877-930-401k or contact us online.
