Self-employed retirement plans Wichita, KS. The freedom of being your own boss in Wichita, KS offers many benefits of working for yourself. However, this flexibility often comes with a lack of security, especially regarding building your retirement fund, because you don't have the benefit of a workplace retirement plan. Only 13% of self-employed individuals have a workplace retirement plan, but many should consider understanding their retirement options. In addition to having a financially stable retirement, partnering with a financial advisor in Wichita, KS to establish your self-employed retirement plan delivers significant tax advantages that enable your business to grow and succeed.
Few Wichita, KS financial advisory and retirement planning firms are as attuned to the requirements of small business owners as well as Correct Capital. Our company’s founder grew up with a father who was a small business owner himself (read more of our story here), and we take pride in helping businesses with their retirement planning needs. We understand that your goals for your business and retirement extend well past basic numbers, and we work tirelessly to provide customized solutions to meet your unique goals. Continue exploring to find out about your self-employed retirement plan options in Wichita, KS, or give us a call at Correct Capital at 877-930-401k or contact us online to speak with a small business financial advisor in Wichita, KS today.
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Why Wichita, KS Self-Employed Individuals Should Have a Retirement Plan
Retirement plans for self-employed individuals not only prepare you for the future, they also provide tangible benefits today. With customizable contribution options to significant tax savings, consulting a financial advisor in Wichita, KS allows you to create your retirement plan to align with your individual circumstances.
Flexibility That Fits Your Income
If your income changes annually, a plan like a SEP IRA or Solo 401(k) gives you the flexibility to modify how much you save:
- Customizable Contributions: Save extra during successful years and scale back when income is lower, so that your plan works with your current income.
- Roth Options: Choosing a Roth Solo 401(k) lets you handle taxes upfront, enabling you to withdraw without tax penalties in the future—a smart decision if you believe your tax rate is likely to rise in the future.
Save Money on Taxes
Retirement plans for self-employed individuals deliver significant tax benefits:
- Tax-Deductible Contributions: Contributions to a SEP IRA shrink your tax liability, allowing you to keep more of your earnings.
- Tax-Deferred Growth: Your savings grow untaxed until withdrawn, which gives your money more time to accumulate.
- State-Specific Incentives: Based on your location, you could qualify for additional deductions as a sole proprietor. These regional incentives can 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 put into a retirement plan, helping to lower your tax bill even more.
Protect Your Savings With Smart Investments
Planning for a safe retirement requires more than how much you save—it’s also determined by your investment strategy:
- Diversified Portfolios: Spreading your investments across a mix of asset classes like stocks and bonds serves to reduce risk while still growing your nest egg.
- Emergency Back-Up: Supplementing your retirement savings with a business emergency fund helps you avoid using your retirement funds during tough times and risking extra costs.
Plan for the Future of Your Wichita, KS Business
Retirement planning enables you to prepare for what’s next with your Wichita, KS business:
- Selling Your Business: If you’re planning to sell, plans like SEP IRAs or Solo 401(k)s remain your personal assets and won’t be included in the sale. These plans ensure the reliable income you’ll need during retirement. Remember that while the sale of a business usually creates a capital gain, contributions to retirement accounts are capped at annual limits (e.g., up to $7,000 for IRAs or up to $70,000 for Solo 401(k)s, including catch-up contributions, depending on plan details).
- Minimizing Taxes: Using retirement contributions wisely can reduce the taxes you are required to pay when you pass on your business.
- Succession Planning: Whether you’re transferring ownership, your retirement savings offer a stable foundation through the transition. You can also partner with a financial advisor with expertise in succession and retirement planning to reduce taxes on the sale.
With the best-fit retirement strategy, you can take control of your financial future, lower your tax bill, and create a strong framework for both your retirement and your business goals.
Why Start a Self-Employed Retirement Plan in Wichita, KS Now?
There’s no denying that time is one of the most crucial assets when it comes to saving for retirement. Beginning sooner rather than later not only lets you accumulate a larger nest egg but also reduces the financial burden of playing catch-up as you get older. The following are reasons why it is beneficial to start now:
The Cost of Waiting
Delaying your retirement savings can have a significant impact on the total you’ll have when you reach retirement age. The main reason is compound interest—the powerful process where your investments earn returns, and those returns, in turn, accumulate even more returns. The greater time span your money has to grow, the larger the impact of this compounding process.
Example: Alex and Taylor are both self-employed individuals. Their shared goal is to save $500,000 for retirement by age 65:
- Alex starts saving $5,000 annually at age 30.
- Taylor postpones starting contributions to age 40 but contributes $7,500 annually to catch up.
By age 65, using a projected 7% annual return:
- Alex invests $180,000 and ends up with $691,184.39*.
- Taylor invests $195,500 but only ends up with $474,367.78*.
How Early Contributions Grow
Even modest contributions contributed over time can lead to substantial growth. Here’s a simple scenario showing the effect of compound interest:
- 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: Investing the same $200 per month would result in only $235,412.97* by age 65—a shortfall of over $260,000, just from a 10-year delay.
The earlier you begin, the less you need to save each year to achieve your retirement goals.
*The numbers shown in this scenario are estimates calculated using NerdWallet’s Compound Interest Calculator, based on a 7% annual return. Annual deposits were multiplied by the number of years to estimate total contributions. The scenarios provided are meant to provide general guidance and do not guarantee future performance. Your individual results may differ depending on variables including market conditions, fees, and individual circumstances. Always consult a financial advisor for guidance tailored to your needs.
Take Control of Your Financial Future
As a self-employed person in Wichita, KS, it is often the case that you put more emphasis on reinvesting in your business instead of saving for retirement. However, starting a plan now allows you to:
- Benefit from tax-free future growth or penalty-free withdrawals down the road.
- Benefit from flexible contributions that align with your cash flow.
- Establish a safety net that ensures stability, no matter how your business evolves.
Starting early, 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 freedom to concentrate on your dreams—both for your future retirement and your Wichita, KS business.
Types of Self-Employed Retirement Plans
There are several retirement savings options designed for entrepreneurs in Wichita, KS, each with its own benefits and trade-offs. A financial advisor can help you understand the pros and cons of each option and choose the one most suitable for your unique situation. Typically, your self-employed retirement plan options in Wichita, KS are:
Traditional or Roth IRA
Plan Overview: IRAs, or Individual Retirement Accounts, are financial tools for retirement that offer key tax perks. In a traditional IRA, you can usually deduct your contributions from taxable income, and returns grow free of current taxes, but withdrawals in retirement are taxed as income. In contrast, Roth IRA contributions from post-tax earnings, but eligible distributions during retirement, including earnings, are exempt from taxes. In both cases, withdrawals are penalty-free if you are at least 59½.
Eligibility: Unlike plans linked to your job, both traditional and Roth IRAs are accessible for individuals with taxable earnings.
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: 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 sole proprietor, you (the employee) cannot make additional contributions above 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 is a good option for businesses that experience periods of inconsistent earnings. In contrast to some alternatives, SEP IRAs are free of costly startup or administrative fees.
SEPs work like standard IRAs, where you contribute pre-tax dollars and money withdrawn is subject to income tax.
Eligibility: Any employer, including the self-employed can set up 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
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), also called an Individual 401(k) or one-participant 401(k) plan, is a retirement savings plan meant for companies that have no employees or when the sole employee is your spouse. This type of plan are similar to standard 401(k) plans, and let you make contributions as both an employee or an employer with pre-tax money. This allows for more savings versus SEPs or IRAs; however, the increased savings potential may be offset by more limited investment options. Using a solo 401(k), you can make either traditional or Roth deferrals, which offer 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: 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-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 those who turn 60-63 in 2025.
- Employer profit-sharing contributions (as an employer) cannot exceed 25% of your adjusted self-employment income, which is your net profit minus half of your self-employment tax and the deferrals you made.
Total contributions are capped at $70,000, or $77,500 if you're over age 50 (for 2025), $81,250 for individuals turning 60-63 in 2025.
Individual Defined Benefit Plan
Plan Overview: A defined benefit plan offers a structured retirement solution that provides a set amount to business owners upon retirement. As opposed to defined contribution plans, investment returns don’t affect the payout, but lets individuals clearly understand exactly how much they'll receive in retirement. This plan is ideal for higher-income professionals who aim to accumulate a large amount for retirement and can commit to making sizeable contributions. Contributions are tax deferred, and withdrawals are taxed as income upon retirement.
Eligibility: Entrepreneurs running an owner-only business or employing fewer than five people are eligible to open an individual defined benefit plan, but it's generally recommended for people above age 50 who generate a minimum of $250,000 yearly. Typically, good candidates for defined benefit plans tend to be:
- Partners or owners who aim to deposit more than $70,000 (or $77,500 for those aged 50+)
- Companies already contributing 3-4% and are willing to do more
- Organizations with proven consistent profit patterns
- Business leaders over age 40 who aim to quickly build retirement savings or accelerate the retirement savings
Contribution Limits: The cap on contributions must be determined by an actuary based on your financial situation, age, and savings targets. Contribution limits change annually.
The Importance of a Financial Advisor in Wichita, KS for Your Self-Employed Retirement Plan
A financial advisor in Wichita, KS experienced with retirement plans for the self-employed serves as an essential partner for self-employed individuals. They bring the skills needed to guide you through the challenges of retirement planning and craft a personalized approach that aligns with your goals. Your advisor in Wichita, KS will assess where you stand financially, understand your risk tolerance, and guide you in choosing wisely about saving and investing for retirement. A key part of what we do for you includes:
- Help you choose a plan that aligns with your objectives and circumstances
- Customize the plan to your specific situation even further
- Create a written plan in accordance with IRS guidelines
- Arrange a trust plan for assets
- Ensure you comprehend the plan's terms
- Track and fine-tune your plan when necessary
- Provide ongoing education and advice throughout your retirement planning process
- Boost your retirement earnings by maximizing your social security benefits
Self-Employed Retirement Plans in Wichita, KS: Correct Capital's Process
Self-employed individuals in Wichita, KS who lack the time, interest, or knowledge to oversee their own retirement planning on their own may end up overwhelmed when faced with their options. Through our team at Correct Capital, our Wichita, KS financial advisors handle the majority of your savings plan setup for you, to help make meeting your retirement goals as easy as possible for you. We will guide you in creating your self-employed retirement plan in a quick, four-step process:
- 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 helps us get a sense of your goals with no pressure or extensive time commitment on your part.
- Gather Information: Should we agree to proceed, we'll request information, including whether you have employees, your present financial standing, and your long-term savings targets. This helps us create a custom plan designed just for you.
- Review Your Plan: When we finalize a plan from the information you provide, we'll schedule a meeting and review your plan step by step to help you fully grasp it and explain its fit to your circumstances.
- Implementation and Monitoring: After we agree on your plan, we'll set everything up so you can start saving. Throughout our relationship, we'll have regular meetings and review your strategy to make sure it remains aligned with your goals.
Our Wichita, KS financial advisors and retirement plan consultants are fiduciary advisors, meaning they are required by law and ethical standards to act in your best interest.
Other financial advisory services we offer in Wichita, KS 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 Wichita, KS
Your business isn't "just a business" to you, and your Wichita, KS financial advisors should provide more than simply sound financial advice. With Correct Capital, we make it a priority to understand our clients and their businesses to provide customized self-employed retirement plans. To every client in Wichita, KS, 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, contact Correct Capital now at 877-930-401k or contact us online.
