Self-employed retirement plans Vancouver, WA. The flexibility of owning your own business in Vancouver, WA is one of the greatest advantages of having a self-directed career. Even so, this freedom often comes with certain challenges, especially regarding planning for retirement, since you don't have access to retirement programs through an employer. 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 more comfortable retirement, working with a financial advisor in Vancouver, WA to create your self-employed retirement plan can provide significant tax advantages that allow both you and your business to thrive.
Few Vancouver, WA investment consulting and retirement planning firms are as attuned to the requirements of entrepreneurs as well as 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 Correct Capital have a rich history of helping businesses with their retirement planning needs. We recognize that your business and retirement aspirations aren’t limited to basic numbers, and we strive to provide personalized solutions that reflect your objectives. Continue exploring to find out about your self-employed retirement plan options in Vancouver, WA, or call Correct Capital at 877-930-401k or contact us online to consult with a small business financial advisor in Vancouver, WA today.
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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 offer real benefits today. With customizable contribution options to significant tax savings, consulting a financial advisor in Vancouver, WA allows you to design your retirement plan to align with your individual circumstances.
Flexibility That Fits Your Income
For those with fluctuating income from year to year, a plan like a SEP IRA or Solo 401(k) offers the option to tailor how much you save:
- Customizable Contributions: Set aside more during high-income years and scale back when income is lower, so your plan works with your current income.
- Roth Options: A Roth Solo 401(k) lets you handle taxes upfront, so you can withdraw tax-free later—a smart decision if you expect your tax rate will increase in the future.
Save Money on Taxes
Self-employed retirement plans deliver valuable tax benefits:
- Tax-Deductible Contributions: Contributions to a SEP IRA lower your taxable income, allowing you to keep more of your income.
- Tax-Deferred Growth: Investments grow tax-free until withdrawal, giving your money more time to grow.
- State-Specific Incentives: In some states, you could qualify for extra credits as a self-employed individual. These state-level incentives help make these plans even more valuable.
- 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 contributed a retirement plan, helping to lower your tax bill even more.
Protect Your Savings With Smart Investments
Creating a stable future isn’t only about how much you save—it’s also determined by your investment strategy:
- Diversified Portfolios: Distributing your investments across different asset classes like stocks and bonds serves to mitigate financial risk while continuing to build your nest egg.
- Emergency Back-Up: Pairing your retirement plan with a dedicated business safety net prevents you from using your retirement funds during challenging periods and incurring penalties.
Plan for the Future of Your Vancouver, WA Business
Preparing for retirement also helps you plan ahead for what’s next with your Vancouver, WA business:
- Selling Your Business: If you’re planning to sell, retirement accounts like SEP IRAs and Solo 401(k)s remain yours and don’t transfer with the business. These accounts ensure the financial stability you’ll need during retirement. Keep in mind that while selling your business results in a capital gain, deposits into these plans are restricted by contribution limits (e.g., as much as $7,000 for IRAs or up to $70,000 for Solo 401(k)s, including catch-up contributions, according to plan rules).
- Minimizing Taxes: Making the most of retirement savings can reduce the taxes you’ll owe when you sell your business.
- Succession Planning: Whether you’re transferring ownership, your nest egg provide a stable foundation during the change. You can also work with a financial advisor experienced in both succession and retirement strategies to reduce taxes during the sale.
With the best-fit retirement strategy, you gain control over your financial future, lower your tax bill, and create a solid base for both your retirement and your business goals.
Why Start a Self-Employed Retirement Plan in Vancouver, WA Now?
There’s no denying that time is one of the most important resources for building your retirement fund. Beginning sooner rather than later not only allows you to build a larger nest egg but also lowers the financial burden of saving aggressively in the future. Here’s why it is beneficial to start now:
The Cost of Waiting
Delaying your retirement savings could lead to a major impact on the savings you’ll have when you reach retirement age. The biggest reason is compound interest—the concept where your investments generate earnings, and those returns, in turn, generate even more returns. The greater time span your money has to grow, the greater the benefit of compounding.
Example: Taylor and Alex are both entrepreneurs. 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 puts away $7,500 annually to make up for lost time.
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 accumulates just $474,367.78*.
How Early Contributions Grow
Even modest contributions invested steadily may result in impressive growth. Here’s a simple scenario showing the effect of consistent growth:
- Starting at age 25: By investing $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 yields only $235,412.97* by age 65—a gap of over $260,000, simply due to a 10-year delay.
Starting sooner, the less you need to save each year to meet your retirement goals.
*These calculations represent estimates derived from NerdWallet’s Compound Interest Calculator, with the assumption of a 7% annual return. These calculations involved multiplying yearly deposits by the years contributed. This information is for illustrative purposes only and are not a promise of future results. Outcomes may change 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
For self-employed individuals in Vancouver, WA, it might seem easier to focus more on reinvesting in your business instead of saving for retirement. That said, starting a plan now gives you the chance to:
- Leverage tax-free future growth or penalty-free withdrawals later on.
- Benefit from contribution flexibility that align with your cash flow.
- Establish a financial cushion that ensures stability, no matter how your business changes.
Getting started now, 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 focus on your dreams—both for your future retirement and your Vancouver, WA business.
Types of Self-Employed Retirement Plans
A variety of retirement savings options open for self-employed individuals in Vancouver, WA, each providing its own advantages and considerations. A financial advisor is available to help you understand the benefits and drawbacks of each choice and determine the one ideal for your unique situation. Generally speaking, your self-employed retirement plan options in Vancouver, WA include:
Traditional or Roth IRA
Plan Overview: Individual Retirement Accounts (IRAs), as explained here, represent long-term savings plans that provide specific tax advantages. In a standard IRA, contributions are typically tax-deductible, and investment earnings grow tax-deferred, but retirement distributions 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 accounts, withdrawals are penalty-free provided 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 remain $7,000, or $8,000 if you qualify for catch-up contributions.
Simplified Employee Pension Plan (SEP IRA)
Plan Overview: SEP IRAs is a retirement plan that enables 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) would not be able to contribute above the 25% you (the employer) allocate. 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 set monetary value or a percentage of wages to employee accounts. SEP IRAs works well for businesses that experience periods of inconsistent earnings. In contrast to some alternatives, SEP IRAs don’t have costly startup or administrative fees.
SEPs work like standard IRAs, where the contributions are tax-deferred 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 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 savings option for the self-employed intended for businesses with no employees or if the only employee is your spouse. This type of plan function similarly to traditional employer-managed 401(k) plans, and enable contributions as both an employee or an employer 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. 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 are eligible to open and contribute to a solo 401(k).
Contribution Limits: As a self-employed individual with a solo 401(k) plan, you can 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 for those aged 50 and above, or $34,750 if you attain age 60-63 in 2025.
- Employer 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 elective deferrals you made.
The total contribution cannot exceed $70,000, or $77,500 if you're over age 50 (for 2025), $81,250 for those aged 60-63 in 2025.
Individual Defined Benefit Plan
Plan Overview: A defined benefit plan represents a type of retirement plan that guarantees a pre-established payout to business owners upon retirement. As opposed to defined contribution plans, this plan is not influenced by market performance, but enables participants to determine exactly how much they'll have in retirement. This plan is ideal for wealthier entrepreneurs who are focused on saving a significant sum for retirement and are willing to make sizeable contributions. Contributions offer tax-deferred growth, and withdrawals incur taxes 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 suggested for people above age 50 who earn at least $250,000 a year. Typically, good candidates for defined benefit plans include:
- Business owners or partners who desire to contribute more than $70,000 (or $77,500 if over age 50)
- Organizations that already put in 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 boost savings within a short timeframe
Contribution Limits: The contribution limit requires calculation from an actuary using your income, age, and retirement goals. Contribution limits change annually.
The Importance of a Financial Advisor in Vancouver, WA for Your Self-Employed Retirement Plan
Partnering with an advisor in Vancouver, WA specialized in self-employed retirement plans is an important asset for entrepreneurs. They offer the knowledge to assist guide you through the challenges of retirement planning and design a personalized approach that aligns with your goals. An expert in your area will assess where you stand financially, identify your risk preferences, 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 aligns with your objectives and circumstances
- Tailor the plan to fit you personally even further
- Formalize a plan in writing as required by IRS rules
- Arrange a trust plan for assets
- Help you understand the plan's terms
- Review and modify your plan as needed
- Deliver continuous support and financial insights to help you navigate your retirement journey
- Boost your retirement earnings by maximizing your social security benefits
Self-Employed Retirement Plans in Vancouver, WA: Correct Capital's Process
Self-employed individuals in Vancouver, WA who aren’t equipped with the time or understanding to oversee their retirement savings strategy themselves may end up overwhelmed when faced with their available plans. With Correct Capital, our Vancouver, WA financial advisors take on the majority of your savings plan setup 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: In just 20 minutes, a member of our advisor team can determine if our services align for you and your business. This initial call helps us understand what you're looking for with no obligation or extensive time commitment on your part.
- Gather Information: Should we agree to proceed, we'll request information, including how many employees you have (if any), your existing financial picture, and your future objectives. This enables us to craft a custom plan suited specifically for your needs.
- Review Your Plan: When we finalize a plan from the information you provide, we'll sit down with you and review your plan thoroughly to ensure you understand it 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. Throughout our relationship, we'll meet with you 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, who are obligated to they are committed by law and ethics to act in your best interest.
Other financial advisory services we offer in Vancouver, WA 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 Vancouver, WA
You don't see your business as "just a business", and your Vancouver, WA financial advisors must deliver more than simply sound financial advice. 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 Vancouver, WA benefit from 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.
