Self-employed retirement plans Washington, DC. The flexibility of being your own boss in Washington, DC is one of the best aspects of having a self-directed career. However, this freedom often comes with certain challenges, particularly in terms of planning for retirement, since you don't have the benefit of retirement programs through an employer. Only 13% of self-employed individuals have a workplace retirement plan, although many would be better off exploring their options. In addition to enjoying a financially stable retirement, partnering with a financial advisor in Washington, DC to set up your self-employed retirement plan delivers significant tax advantages that help your business to grow and succeed.
Few Washington, DC investment consulting and retirement planning firms understand the needs of self-employed individuals better than Correct Capital. Our founder's father was a small business owner himself (learn more about our story here), and we take pride in helping businesses with their retirement planning needs. We understand that your business and retirement aspirations go far beyond just monetary concerns, and we work tirelessly to create tailored solutions aligned with your vision. Continue exploring to find out about your self-employed retirement plan options in Washington, DC, 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 Washington, DC today.
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Why Washington, DC Self-Employed Individuals Should Have a Retirement Plan
Retirement plans for self-employed individuals help prepare you for the future, they also deliver real benefits today. Offering flexibility in contributions to significant tax savings, consulting a financial advisor in Washington, DC enables you to customize your retirement plan to fit your specific needs.
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 freedom to tailor how much you save:
- Customizable Contributions: Set aside more during successful years and cut back when revenues are down, so your plan fits your financial situation.
- Roth Options: A Roth Solo 401(k) lets you handle taxes upfront, so you can withdraw tax-free later—an advantageous choice if you anticipate your tax rate to be higher in the future.
Save Money on Taxes
Plans designed for the self-employed provide significant tax benefits:
- Tax-Deductible Contributions: Contributions to a SIMPLE IRA lower your taxable income, allowing you to keep more of your earnings.
- Tax-Deferred Growth: Investments grow tax-free until withdrawal, providing your money more time to accumulate.
- State-Specific Incentives: In some states, you might access state-specific credits as a business owner. These state-level incentives help 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 they contribute a retirement plan, cutting down your tax bill even more.
Protect Your Savings With Smart Investments
Building a secure retirement requires more than how much you save—it’s also linked to the way you invest:
- Diversified Portfolios: Allocating your investments across a mix of stocks, bonds, and alternatives serves to mitigate financial risk while helping to grow your nest egg.
- Emergency Back-Up: Pairing your retirement plan with a financial buffer for your business helps you avoid dipping into savings during financial hardships and incurring penalties.
Plan for the Future of Your Washington, DC Business
Preparing for retirement enables you to think through what’s next with your Washington, DC business:
- Selling Your Business: When selling your business, accounts such as SEP IRAs or Solo 401(k)s stay in your name and are not part of the sale. These savings offer the reliable income you’ll need during retirement. Remember that while selling a business often leads to a capital gain, contributions to retirement accounts 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, with catch-up contributions, depending on plan details).
- Minimizing Taxes: Making the most of retirement savings minimizes the taxes you might face when you sell your business.
- Succession Planning: If you’re passing the business on, your nest egg offer the funds you need during the change. You might want to seek advice from a financial advisor who specializes in succession planning and retirement accounts to help with taxes on the sale.
With the best-fit retirement strategy, you gain control over your financial future, reduce your tax burden, and establish a strong framework for both your retirement and your business goals.
Why Start a Self-Employed Retirement Plan in Washington, DC Now?
Time remains one of the most valuable resources when it comes to saving for retirement. Getting a head start not only allows you to build a more substantial retirement fund but also reduces the stress of catching up later in life. The following are reasons why it is beneficial to start now:
The Cost of Waiting
Delaying your retirement savings may cause a major impact on the total you’ll have when you retire. The biggest reason is compound interest—the powerful process where your investments generate earnings, and those returns, subsequently, generate even more returns. The greater time span your money has to grow, the more significant the impact of this growth.
Example: Taylor and Alex are both entrepreneurs. 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 contributes $7,500 annually to catch up.
By age 65, using a projected 7% annual return:
- Alex contributes $180,000 and accumulates $691,184.39*.
- Taylor contributes $195,500 but only ends up with $474,367.78*.
How Early Contributions Grow
Small, consistent savings contributed over time can lead to substantial growth. Here’s a simple scenario 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 end up with $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, all because of a 10-year delay.
Starting sooner, the less effort required each year to reach your retirement goals.
*These calculations are based on estimates derived from NerdWallet’s Compound Interest Calculator, based on a 7% annual return. The contributions were calculated by multiplying the annual deposit amount by the total number of years contributions were made. This information is intended as illustrative examples and are not a promise of future results. Your individual results may differ due to elements like market conditions, fees, and your unique situation. Always consult a financial advisor for guidance tailored to your needs.
Take Control of Your Financial Future
As a self-employed person in Washington, DC, it can be tempting to focus more on reinvesting in your business rather than saving for retirement. Even so, starting a plan now gives you the chance to:
- Leverage tax-free future growth or withdrawals without taxes down the road.
- Take advantage of flexible contributions that change with your income.
- Establish a financial cushion that ensures stability, no matter how your business develops.
The sooner you start, the less you’ll have 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 freedom to concentrate on your goals—both for your future retirement and your Washington, DC business.
Types of Self-Employed Retirement Plans
A variety of retirement savings options available for entrepreneurs in Washington, DC, each providing its own pros and cons. A financial advisor can help you evaluate the advantages and disadvantages of each option and determine the one best suited for your needs. Typically, your self-employed retirement plan options in Washington, DC are:
Traditional or Roth IRA
Plan Overview: IRAs, or Individual Retirement Accounts, are financial tools for retirement that offer key tax perks. In a conventional IRA, you can usually deduct your contributions from taxable income, and investment earnings grow tax-deferred, but retirement distributions are taxed as income. In contrast, Roth IRAs require contributions using income already taxed, but retirement withdrawals that qualify, including earnings, are not taxed. In both accounts, withdrawals are penalty-free if you are at least 59½.
Eligibility: Unlike plans linked to your job, IRAs, including traditional and Roth options are open to those with taxable earnings.
Contribution Limits: For 2025, annual contribution limits for IRAs are capped at $7,000, or $8,000 if you're 50 or older.
Simplified Employee Pension Plan (SEP IRA)
Plan Overview: A Simplified Employee Pension (SEP) IRA is a retirement plan that enables those who are self-employed 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) cannot make additional contributions beyond the 25% you (the employer) have designated. If you have employees, you must 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. This type of plan is a good option for companies with periods of inconsistent earnings. In contrast to some alternatives, SEP IRAs don’t have costly startup or administrative fees.
SEPs function like standard IRAs, where the contributions are tax-deferred and retirement distributions are taxable.
Eligibility: Any employer, including the self-employed can open a SEP.
Contribution Limits: Contribution limits for employees in a SEP IRA must not exceed:
- 25% of compensation, or
- $70,000 for 2025
As a self-employed person, the contribution you can make is based on a special calculation.
Solo 401(k)
Plan Overview: The Solo 401(k), sometimes referred to as an Individual 401(k) or one-participant 401(k) plan, is a retirement savings plan intended for businesses without employees or if the only employee is your spouse. Solo 401(k)s are similar to standard 401(k) plans, and allow you to contribute as both the employer and the employee with pre-tax money. This allows for more savings than SEPs or IRAs; however, the increased savings potential may be offset by more restricted investment choices. 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: Solo 401(k)s are available solely to business owners and their spouses may establish and contribute to a solo 401(k).
Contribution Limits: As a self-employed individual with a solo 401(k) plan, you are allowed to make two types of contributions:
- Employee contributions of up to 100% of your self-employment income, subject to the annual contribution limit. The contribution limits for 2025 include $23,500, or $31,000 if you are 50 or older, or $34,750 for individuals aged 60-63 in 2025.
- Profit-sharing contributions (as an employer) must not surpass 25% of your net earnings from self-employment, which is your net profit minus half of your self-employment tax and the employee contributions you made.
Total contributions are capped at $70,000, or $77,500 for individuals aged 50+ (as of 2025), $81,250 if you attain age 60-63 in 2025.
Individual Defined Benefit Plan
Plan Overview: The defined benefit plan represents a type of retirement plan that delivers a set amount to business owners upon retirement. As opposed to defined contribution plans, this plan is not influenced by market performance, but allows self-employed individuals to know what they'll get in retirement. This strategy is best suited for higher-income professionals who aim to accumulate a large amount for retirement and are willing to make sizeable contributions. Contributions grow tax-free until withdrawal, and withdrawals are taxable as income upon retirement.
Eligibility: Entrepreneurs running an owner-only business or with a small staff of under five can open an individual defined benefit plan, but it's most commonly suggested for people above age 50 who make $250,000 or more annually. In most cases, good candidates for defined benefit plans tend to be:
- Partners or owners who want to invest more than $70,000 (or $77,500 if over age 50)
- Businesses currently investing 3-4% and are willing to do more
- Companies with proven consistent profit patterns
- Partners or owners over age 40 who wish to accelerate savings or accelerate the retirement savings
Contribution Limits: The cap on contributions requires calculation from an actuary using your financial situation, age, and savings targets. Contribution limits are updated yearly.
The Importance of a Financial Advisor in Washington, DC for Your Self-Employed Retirement Plan
Working with a financial advisor in Washington, DC specialized in self-employed retirement plans is an essential partner for self-employed individuals. They bring the skills needed to understand the intricacies of saving for retirement and develop a tailored strategy that matches your objectives. A financial advisor in Washington, DC will assess where you stand financially, understand your risk tolerance, and help you in selecting the best options about saving and investing for retirement. A key part of what we do for you includes:
- Guide you in choosing a plan that aligns with your objectives and circumstances
- Customize the plan to your needs even further
- Adopt a written plan in accordance with IRS guidelines
- Arrange a trust plan for assets
- Make sure you understand the plan's terms
- Monitor and adjust your plan when necessary
- Provide ongoing education and advice 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 Washington, DC: Correct Capital's Process
Self-employed individuals in Washington, DC who aren’t equipped with the time or understanding to handle their retirement savings strategy independently often feel overwhelmed by their available plans. With Correct Capital, our Washington, DC financial advisors manage the bulk of your retirement planning for you, and strive to ensure meeting your future savings targets as hassle-free 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 our services align for you and your business. This initial call allows us to understand what you're looking for with no obligation or significant effort on your part.
- Gather Information: If we both decide to move forward, we'll request information, including whether you have employees, your current financial situation, and your future objectives. This enables us to craft 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 go over your plan thoroughly to help you fully grasp it and understand how it best correlates to your needs.
- Implementation and Monitoring: Once we've agreed on your plan, we'll put everything in place so you can initiate your savings journey. As time goes on, we'll meet with you and review your strategy to ensure it stays suited to your needs.
Our Washington, DC financial advisors and retirement plan consultants serve as fiduciary advisors, meaning they are required by law and ethical standards to do what's in your best interest.
Other financial advisory services we offer in Washington, DC 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 Washington, DC
You don't see your business as "just a business", and your Washington, DC financial advisors should provide more than just good financial guidance. With Correct Capital, we take the time to get to know our clients and their businesses to deliver customized self-employed retirement plans. To every client in Washington, DC, we provide our I.O.U. promise: all of the advice you get from us will be independent, objective, and unbiased. To begin on your self-employment retirement plan, reach out to Correct Capital at 877-930-401k or contact us online.
