Self-employed retirement plans Vancouver, WA. The independence of running your own company in Vancouver, WA is one of the greatest advantages of being self-employed. Even so, this freedom often comes with a lack of security, particularly in terms of building your retirement fund, because you don't have access to a workplace retirement plan. Only 13% of self-employed individuals have a workplace retirement plan, although many should consider exploring their options. In addition to achieving a more secure retirement, partnering with a financial advisor in Vancouver, WA to set up your self-employed retirement plan offers significant tax advantages that help your business to grow and succeed.
Few Vancouver, WA investment consulting and retirement planning firms understand the needs of small business owners as well as Correct Capital. Our founder's father was a small business owner himself (read more of our story here), and we are deeply experienced in assisting business owners in their retirement planning needs. We recognize that your professional and personal aspirations extend well past basic numbers, and we work tirelessly to offer tailored solutions aligned with your vision. Continue exploring to find out about your self-employed retirement plan options in Vancouver, WA, or reach out to Correct Capital at 877-930-401k or contact us online to talk to a entrepreneurial financial advisor in Vancouver, WA today.
Why Vancouver, 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 provide tangible benefits today. From flexible contributions to substantial tax savings, working with a financial advisor in Vancouver, WA 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 freedom to tailor how much you save:
- Customizable Contributions: Save extra during profitable years and scale back when revenues are down, so that your plan fits your current income.
- Roth Options: A Roth Solo 401(k) lets you pay taxes on contributions now, enabling you to withdraw your savings tax-free down the road—an advantageous choice if you believe your tax rate is likely to rise in the future.
Save Money on Taxes
Plans designed for the self-employed deliver valuable tax benefits:
- Tax-Deductible Contributions: Contributions to a Solo 401(k) shrink your tax liability, 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: In some states, you might access extra deductions as a self-employed individual. These state-level incentives make these plans even more advantageous.
- Retirement Savings Contributions Credit (Saver’s Credit): Those who meet the requirements can take advantage of 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
Creating a stable future requires more than how much you save—it’s also about how you invest:
- Diversified Portfolios: Distributing your investments across different stocks, bonds, and alternatives is a smart way to minimize exposure to risk while still growing your retirement fund.
- Emergency Back-Up: Supplementing your retirement savings with a financial buffer for your business helps you avoid using your retirement funds during financial hardships and facing tax penalties.
Plan for the Future of Your Vancouver, WA Business
A thoughtful retirement strategy also helps you prepare for what’s next with your Vancouver, 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 accounts can provide the steady income you’ll need later on. Keep in mind that while the sale of a business usually creates a capital gain, retirement plan contributions are restricted by contribution limits (e.g., up to $7,000 for IRAs or a maximum of $70,000 for Solo 401(k)s, factoring in catch-up contributions, based on plan compensation).
- Minimizing Taxes: Using retirement contributions wisely can reduce the taxes you’ll owe when you sell your business.
- Succession Planning: Whether you’re transferring ownership, your retirement savings offer financial security as you make this shift. You may also partner with a financial advisor experienced in both succession and retirement strategies to minimize tax burdens during the sale.
With the right retirement plan, you can take control of 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 Vancouver, WA Now?
Time is one of the most crucial factors when it comes to saving for retirement. Getting a head start not only helps you grow a more substantial retirement fund but also reduces the financial burden of playing catch-up as you get older. This is why it is beneficial to start now:
The Cost of Waiting
Delaying your retirement savings can have a significant impact on the savings you’ll have when you retire. The biggest reason is compound interest—the concept where your investments grow, and those returns, then, accumulate even more returns. The greater time span your money has to grow, the more significant the effect of this compounding process.
Example: Alex and Taylor are both entrepreneurs. They each aim to save $500,000 for retirement by age 65:
- Alex begins contributing $5,000 annually at age 30.
- Taylor delays savings until age 40 but puts away $7,500 annually to bridge the gap.
By age 65, with an assumption of 7% annual return:
- Alex invests $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
Regular, modest investments invested steadily often create impressive growth. Here’s a simple scenario showing the impact of compound interest:
- Starting at age 25: If you invest $200 per month in a retirement plan with an expected yearly growth rate 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 gap of over $260,000, just from a 10-year delay.
The earlier you begin, the less effort required each year to achieve your retirement goals.
*These calculations are estimates derived from NerdWallet’s Compound Interest Calculator, assuming 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 for illustrative purposes only and do not guarantee future performance. Actual results may vary depending on variables including market conditions, fees, and individual circumstances. We recommend consulting a financial advisor for custom recommendations.
Take Control of Your Financial Future
If you’re self-employed in Vancouver, WA, it can be tempting to focus more on reinvesting in your business over saving for retirement. However, initiating a plan now allows you to:
- Benefit from tax-free future growth or penalty-free withdrawals down the road.
- Benefit from adjustable savings that align with your income.
- Establish a safety net that provides security, no matter how your business changes.
Getting started now, the less you’ll have to worry about catching up later in life. Taking steps toward your retirement goals today means gaining control over your financial future and allowing yourself the ability to concentrate on your goals—both for your retirement years and your Vancouver, WA business.
Types of Self-Employed Retirement Plans
There are several retirement savings options available for self-employed individuals in Vancouver, WA, each with its own pros and cons. A financial advisor can help you learn about the benefits and drawbacks of each option and determine the one most suitable for your needs. In most cases, your self-employed retirement plan options in Vancouver, WA consist of:
Traditional or Roth IRA
Plan Overview: Individual Retirement Accounts (IRAs), as explained here, represent retirement savings vehicles that provide specific tax advantages. In a conventional IRA, you can usually deduct your contributions from taxable income, and returns grow free of current taxes, but retirement distributions are taxable. In contrast, Roth IRAs require contributions are made with after-tax income, but qualified withdrawals in retirement, including earnings, are tax-free. In both accounts, withdrawals are penalty-free provided you are at least 59½.
Eligibility: Unlike 401(k)s, which are employer-sponsored, IRAs, including traditional and Roth options are open to those with an earned income.
Contribution Limits: For 2025, annual contribution limits for IRAs are capped at $7,000, or $8,000 for those aged 50+.
Simplified Employee Pension Plan (SEP IRA)
Plan Overview: A Simplified Employee Pension (SEP) IRA serves as a retirement savings option that allows those who are self-employed to save a percentage of their net business profits. Contributions are strictly employer contributions an employer, so, as a independent business owner, you (the employee) are limited to contributions from the employer role more than the 25% you (the employer) have designated. If you have employees, you are obligated to contribute the same amount for them as you do for yourself. You have the flexibility to contribute a fixed dollar figure or a percentage of wages to employee accounts. This type of plan works well for businesses that experience periods of inconsistent earnings. Compared to other retirement options, SEP IRAs don’t have expensive setup or ongoing fees.
SEPs work like conventional IRAs, where the contributions are tax-deferred and withdrawals are taxed as income.
Eligibility: Both employers and self-employed individuals can establish a SEP.
Contribution Limits: Contribution limits for employees in a SEP IRA are capped at the lower of:
- 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: A Solo 401(k) plan, sometimes referred to as an Individual 401(k) or one-participant 401(k) plan, is a self-employed retirement plan intended for businesses without employees or if the only employee is your spouse. This type of plan are similar to employer-sponsored 401(k) plans, and enable contributions as both an employer and an employee with pre-tax money. This allows for more savings than SEPs or IRAs; however, the additional opportunities often come with 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 are eligible to open and contribute to a solo 401(k).
Contribution Limits: If you are self-employed with a solo 401(k) plan, you are allowed to make two types of contributions:
- Elective deferrals (as an employee) of up to 100% of your earned income from self-employment, subject to the annual contribution limit. For 2025, the limits will be $23,500, or $31,000 if you're over 50, or $34,750 for individuals aged 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 deferrals you made.
Your combined contributions must not surpass $70,000, or $77,500 for individuals aged 50+ (in 2025), $81,250 for those aged 60-63 in 2025.
Individual Defined Benefit Plan
Plan Overview: A 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 enables participants to determine the precise amount they'll get in retirement. This option is best suited for higher-income entrepreneurs who want to save a significant sum for retirement and are prepared to contribute larger deposits. Contributions offer tax-deferred growth, and withdrawals are taxed as income upon retirement.
Eligibility: Any self-employed individual running an owner-only business or with less than five employees can open an individual defined benefit plan, but it's most commonly recommended for those over 50 who generate a minimum of $250,000 yearly. Generally, good candidates for defined benefit plans include:
- Partners or owners who aim to deposit more than $70,000 (or $77,500 if over age 50)
- Businesses currently investing 3-4% with plans to contribute more
- Companies with proven consistent profit patterns
- Entrepreneurs over age 40 who aim to quickly build retirement savings or boost savings within a short timeframe
Contribution Limits: The cap on contributions is calculated by an actuary based on your financial situation, age, and savings targets. Contribution limits are adjusted each year.
The Importance of a Financial Advisor in Vancouver, WA for Your Self-Employed Retirement Plan
A financial advisor in Vancouver, WA specialized in self-employed retirement plans can be an important asset for entrepreneurs. They have the expertise to help navigate the complexities of retirement planning and develop a personalized approach that matches your objectives. A financial advisor in Vancouver, WA will evaluate your financial situation, understand your risk tolerance, and assist you in choosing wisely about saving and investing for retirement. Part of what we do for you includes:
- Help you choose a plan that best fits your needs and goals
- Customize the plan to your specific situation even further
- Create a written plan as required by IRS rules
- Organize a trust plan to manage your assets
- Help you understand the plan's terms
- Monitor and adjust your plan to keep it aligned with your goals
- Deliver continuous support and financial insights as you continue on the road to retirement
- Increase your retirement income by optimizing your social security benefits
Self-Employed Retirement Plans in Vancouver, WA: Correct Capital's Process
Self-employed individuals in Vancouver, WA who don’t have the time or expertise to oversee their own retirement planning on their own can become overwhelmed as they look at their available plans. With Correct Capital, our Vancouver, WA financial advisors manage the lion's share of your retirement planning for you, and strive to ensure meeting your financial objectives as straightforward as possible for you. We are here to assist you in setting up your self-employed retirement plan in just four steps:
- Schedule a Call: It only takes 20 minutes, a member of our advisor team will assess if we're a good fit for you and your business. This brief introduction helps us learn about your needs with zero commitment or significant effort on your part.
- Gather Information: Once we mutually decide to continue, we'll gather information, including how many employees you have (if any), your existing financial picture, and your retirement goals. This helps us create a tailored approach suited specifically for your needs.
- Review Your Plan: After we put together a plan from the information you provide, we'll meet with you and go over your plan step by step 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 begin contributing. As time goes on, we'll have regular meetings and track your progress to ensure it stays suited to your needs.
Our Vancouver, WA financial advisors and retirement plan consultants act as fiduciary advisors, which means they are required by law and ethical standards to prioritize your needs above all else.
Other financial advisory services we offer in Vancouver, 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 Vancouver, WA
You don't see your business as "just a business", and your Vancouver, WA financial advisors need to offer 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. To every client in Vancouver, WA, we provide 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, reach out to Correct Capital at 877-930-401k or contact us online.
