Self-employed retirement plans Yonkers, NY. The independence of running your own company in Yonkers, NY is one of the greatest advantages of working for yourself. Even so, this flexibility sometimes brings with potential drawbacks, especially when it comes to building your retirement fund, as you don't have access to a workplace retirement plan. Only 13% of self-employed individuals have a workplace retirement plan, but many would be better off looking into other possibilities. In addition to achieving a more comfortable retirement, seeking advice from a financial advisor in Yonkers, NY to set up your self-employed retirement plan offers significant tax advantages that allow both you and your business to thrive.
Few Yonkers, NY wealth management and retirement planning firms understand the needs of small business owners as well as Correct Capital. The father of our founder was a small business owner himself (check out our story here), and our firm take pride in helping businesses with their retirement planning needs. We know that your professional and personal aspirations aren’t limited to basic numbers, and we work tirelessly to create customized solutions that reflect your objectives. Read on to discover about your self-employed retirement plan options in Yonkers, NY, or reach out to Correct Capital at 877-930-401k or contact us online to speak with a self-employed financial advisor in Yonkers, NY today.
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Why Yonkers, NY Self-Employed Individuals Should Have a Retirement Plan
Retirement plans for self-employed individuals not only prepare you for the future, they also deliver immediate benefits today. With customizable contribution options to significant tax savings, working with a financial advisor in Yonkers, NY enables you to design your retirement plan to align with your specific needs.
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 tailor how much you save:
- Customizable Contributions: Save extra during successful years and scale back when revenues are down, so your plan works with your current income.
- Roth Options: Opting for a Roth Solo 401(k) lets you handle taxes upfront, allowing you to withdraw without tax penalties in the future—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 SEP IRA lower your taxable income, so you can keep more of your earnings.
- Tax-Deferred Growth: You won't pay taxes on investment growth until you withdraw it, giving your money more time to compound.
- State-Specific Incentives: In some states, you might access extra tax breaks 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, 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 about how you invest:
- Diversified Portfolios: Spreading your investments across different stocks, bonds, and alternatives serves to mitigate financial risk while helping to grow your retirement fund.
- Emergency Back-Up: Combining your retirement strategy and a business emergency fund ensures you don’t using your retirement funds during tough times and facing tax penalties.
Plan for the Future of Your Yonkers, NY Business
A thoughtful retirement strategy also helps you prepare for what’s next with your Yonkers, NY business:
- Selling Your Business: For those considering a sale, retirement accounts like SEP IRAs and Solo 401(k)s stay in your name and are not part of the sale. These accounts offer the financial stability you’ll need during retirement. It’s important to note that while the sale of a business usually creates a capital gain, contributions to retirement accounts are subject to yearly maximums (e.g., a maximum of $7,000 for IRAs or up to $70,000 for Solo 401(k)s, factoring in catch-up contributions, depending on plan details).
- Minimizing Taxes: Making the most of retirement savings minimizes the taxes you are required to pay when you pass on your business.
- Succession Planning: For those winding down or handing over their business, your retirement savings offer a stable foundation as you make this shift. You may also seek advice from a financial advisor who specializes in succession planning and retirement accounts 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 build a strong framework for both your retirement and your business goals.
Why Start a Self-Employed Retirement Plan in Yonkers, NY Now?
Time is one of the most crucial assets in retirement planning. Starting early not only allows you to build a larger nest egg but also reduces the stress of catching up later in life. Here’s why it pays to take action now:
The Cost of Waiting
Waiting to start your retirement fund could lead to a substantial impact on the amount you’ll have when you reach retirement age. The main reason is compound interest—the concept where your investments generate earnings, and those returns, in turn, generate even more returns. The longer your money has to grow, the larger the benefit of this compounding process.
Example: Alex and Taylor are both entrepreneurs. Their shared goal is to save $500,000 for retirement by age 65:
- Alex initiates savings of $5,000 annually at age 30.
- Taylor postpones starting contributions to age 40 but contributes $7,500 annually to catch up.
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 contributed over time may result in impressive growth. Consider this example showing the impact of compounding:
- Starting at age 25: If you invest $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: Contributing the same $200 per month yields only $235,412.97* by age 65—a shortfall of over $260,000, all because of a 10-year delay.
Saving early, 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. These calculations involved multiplying yearly deposits by the years contributed. These examples are meant to provide general guidance and are not a promise of future results. Actual results may vary due to elements like market conditions, fees, and your unique situation. Always consult a financial advisor for personalized advice.
Take Control of Your Financial Future
As a self-employed person in Yonkers, NY, it is often the case that you focus more on reinvesting in your business over saving for retirement. However, initiating a plan now enables you to:
- Benefit from tax-free future growth or penalty-free withdrawals later on.
- Enjoy adjustable savings that align with your earnings.
- Build a long-term safety measure that offers peace of mind, no matter how your business evolves.
The sooner you start, the less you’ll have to worry about making up for lost time later in life. Taking steps toward your retirement goals today means taking control of your financial future and creating for yourself the freedom to turn your attention to your objectives—both for your retirement years and your Yonkers, NY business.
Types of Self-Employed Retirement Plans
A variety of retirement savings options open for self-employed individuals in Yonkers, NY, each providing its own pros and cons. A financial advisor is available to help you learn about the advantages and disadvantages of each plan and determine the one most suitable for your unique situation. Generally speaking, your self-employed retirement plan options in Yonkers, NY include:
Traditional or Roth IRA
Plan Overview: Individual Retirement Accounts (IRAs), as explained here, represent retirement savings vehicles that offer key tax perks. In a standard IRA, contributions are typically tax-deductible, and investment earnings grow tax-deferred, but money taken out during retirement are taxed as income. In contrast, Roth IRA contributions from post-tax earnings, but eligible distributions during retirement, including earnings, are not taxed. In both types of accounts, withdrawals are penalty-free provided you are at least 59½.
Eligibility: Unlike plans linked to your job, traditional and Roth IRAs are available to anyone with taxable earnings.
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 is a retirement plan that enables entrepreneurs 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) cannot make additional contributions above the 25% you (the employer) allocate. If you have employees, you must 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. A SEP IRA may be ideal for entrepreneurs facing fluctuating revenue streams. Unlike other plans, SEP IRAs are free of expensive setup or ongoing fees.
SEPs function like conventional IRAs, where the contributions are tax-deferred and money withdrawn is subject to income tax.
Eligibility: Employers of any type, including self-employed individuals 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 amount eligible to be contributed is based on a special calculation.
Solo 401(k)
Plan Overview: The Solo 401(k), commonly known as an Individual 401(k) or one-participant 401(k) plan, is a self-employed retirement plan meant for companies that have no employees or where the only employee is a spouse. This type of plan operate much like employer-sponsored 401(k) plans, and enable contributions as both an employer and an employee with pre-tax money. This provides more savings versus SEPs or IRAs; however, the extra savings options may be offset by more limited investment options. 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: Only business owners and their spouses can set up 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:
- 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 if you attain age 60-63 in 2025.
- Profit-sharing contributions (as an employer) cannot exceed 25% of your adjusted self-employment income, which is defined as net profit minus half of your self-employment tax and the deferrals you made.
Your combined contributions must not surpass $70,000, or $77,500 for those aged 50 and older (in 2025), $81,250 for those aged 60-63 in 2025.
Individual Defined Benefit Plan
Plan Overview: The defined benefit plan represents a type of retirement plan that provides a fixed, predetermined benefit to entrepreneurs upon retirement. Unlike defined contribution plans mentioned above, this plan is not influenced by market performance, but allows self-employed individuals to know the precise amount they'll have in retirement. This strategy is recommended for high-earning self-employed individuals who are focused on saving a large amount for retirement and are willing to make larger deposits. Contributions grow tax-free until withdrawal, and withdrawals incur taxes as income upon retirement.
Eligibility: Any self-employed individual operating a solo business or with less than five employees are eligible to open an individual defined benefit plan, but it's generally advised for individuals aged 50+ who generate a minimum of $250,000 yearly. Generally, good candidates for defined benefit plans include:
- Entrepreneurs who want to invest more than $70,000 (or $77,500 for individuals 50 and older)
- Businesses currently investing 3-4% with plans to contribute more
- Organizations that have demonstrated consistent profit patterns
- Entrepreneurs over age 40 who desire to "catch up" or increase their retirement contributions rapidly
Contribution Limits: The maximum allowable contribution must be determined by an actuary determined by your earnings, age, and retirement objectives. Contribution limits change annually.
The Importance of a Financial Advisor in Yonkers, NY for Your Self-Employed Retirement Plan
Partnering with an advisor in Yonkers, NY specialized in self-employed retirement plans is an invaluable resource for self-employed individuals. They have the expertise to help guide you through the challenges of retirement planning and design a personalized approach that matches your objectives. A financial advisor in Yonkers, NY will review your finances, identify your risk preferences, and assist you in making informed decisions about saving and investing for retirement. Part of what we do for you features:
- Assist in selecting a plan that suits your unique requirements
- Customize the plan to fit you personally even further
- Adopt a written plan that complies with IRS regulations
- Arrange a trust plan for assets
- Make sure you understand the plan's terms
- Track and fine-tune your plan as needed
- Offer continued financial education and guidance to help you navigate your retirement journey
- Boost your retirement earnings by making the most of your social security
Self-Employed Retirement Plans in Yonkers, NY: Correct Capital's Process
Yonkers, NY business owners who don’t have the time or expertise to oversee their retirement savings strategy on their own often feel overwhelmed as they look at their options. At Correct Capital, our Yonkers, NY financial advisors take on the majority of your retirement strategy for you, to help make meeting your financial objectives as easy as possible for you. We are here to assist you in setting up 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 we're suited to your needs for you and your business. This initial call lets us understand what you're looking for with no obligation or major time investment on your part.
- Gather Information: Should we agree to proceed, we'll request information, including whether you have employees, your current financial situation, and your long-term savings targets. This allows us to put together a tailored approach suited specifically for your needs.
- Review Your Plan: When we finalize a plan from the information you provide, we'll schedule a meeting and review your plan in detail to help you fully grasp it and understand how it best correlates to your needs.
- Implementation and Monitoring: After we agree on your plan, we'll put everything in place so you can begin contributing. As time goes on, we'll have regular meetings and review your strategy to make sure it remains aligned with your goals.
Our Yonkers, NY financial advisors and retirement plan consultants act as fiduciary advisors, meaning they are committed by law and ethics to act in your best interest.
Other financial advisory services we offer in Yonkers, NY 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 Yonkers, NY
You don't see your business as "just a business", and your Yonkers, NY financial advisors must deliver more than simply sound financial advice. At 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 Yonkers, NY, we provide our I.O.U. promise: all of the advice you get from us 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.
