Self-employed retirement plans El Paso, TX. The independence of being your own boss in El Paso, TX is one of the greatest advantages of having a self-directed career. That said, this independence often comes with a lack of security, particularly regarding building your retirement fund, as you don't have the benefit of employer-sponsored retirement plans. Only 13% of self-employed individuals have a workplace retirement plan, yet countless would be better off understanding their retirement options. In addition to having a more secure retirement, partnering with a financial advisor in El Paso, TX to create your self-employed retirement plan can provide significant tax advantages that allow you to move your business forward.
Few El Paso, TX financial advisory and retirement planning firms are as attuned to the requirements of small business owners quite like Correct Capital. The father of our founder was a small business owner himself (learn more about our story here), and our firm take pride in assisting business owners in their retirement planning needs. We recognize that your professional and personal aspirations aren’t limited to basic numbers, and we work tirelessly to offer tailored solutions to meet your unique goals. Keep reading to learn more about your self-employed retirement plan options in El Paso, TX, or call Correct Capital at 877-930-401k or contact us online to speak with a small business financial advisor in El Paso, TX today.
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Why El Paso, TX Self-Employed Individuals Should Have a Retirement Plan
Retirement plans for self-employed individuals help prepare you for the future, they also provide immediate benefits today. With customizable contribution options to considerable tax savings, working with a financial advisor in El Paso, TX helps you customize your retirement plan to align with your individual circumstances.
Flexibility That Fits Your Income
For those with fluctuating income annually, a plan like a SEP IRA or Solo 401(k) offers the option to modify how much you save:
- Customizable Contributions: Save extra during successful years and cut back when your earnings dip, so your plan works with your financial situation.
- Roth Options: Opting for a Roth Solo 401(k) lets you settle taxes at the time of contribution, enabling you to withdraw tax-free later—a wise move if you expect your tax rate to be higher in the future.
Save Money on Taxes
Self-employed retirement plans deliver valuable tax benefits:
- Tax-Deductible Contributions: Contributions to a SIMPLE IRA reduce what you owe in taxes, allowing you to keep more of your income.
- Tax-Deferred Growth: You won't pay taxes on investment growth until you withdraw it, giving your money more time to grow.
- State-Specific Incentives: In some states, you might access additional credits as a self-employed individual. These state-level incentives make these plans even more beneficial.
- Retirement Savings Contributions Credit (Saver’s Credit): Eligible individuals can take advantage of a credit of up to 50% of the first $2,000 contributed a retirement plan, further reducing 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 varied stocks, bonds, and alternatives is a smart way to mitigate financial risk while continuing to build your retirement fund.
- Emergency Back-Up: Pairing your retirement plan with a financial buffer for your business ensures you don’t tapping into your nest egg during financial hardships and facing tax penalties.
Plan for the Future of Your El Paso, TX Business
Preparing for retirement can assist you plan ahead for what’s next with your El Paso, TX business:
- Selling Your Business: For those considering a sale, retirement accounts like SEP IRAs and Solo 401(k)s stay in your name and don’t transfer with the business. These plans can provide the financial stability you’ll need in the future. Remember that while selling a business often leads to a capital gain, deposits into these plans are subject to yearly maximums (e.g., as much as $7,000 for IRAs or as much as $70,000 for Solo 401(k)s, factoring in catch-up contributions, based on plan compensation).
- Minimizing Taxes: Strategically planning your contributions helps lower the taxes you’ll owe when you sell your business.
- Succession Planning: If you’re passing the business on, your retirement savings ensure financial security through the transition. You may also work with a financial advisor with expertise in succession and retirement planning to reduce taxes on the sale.
With the proper savings strategy, you manage your financial future, reduce your tax burden, and build a secure foundation for both your retirement and your business goals.
Why Start a Self-Employed Retirement Plan in El Paso, TX Now?
There’s no denying that time is one of the most crucial assets in retirement planning. Starting early not only helps you grow a more substantial retirement fund but also reduces the financial burden of catching up later in life. This is why it makes sense to begin today:
The Cost of Waiting
Waiting to start your retirement fund may cause a major impact on the total you’ll have when you stop working. The primary reason is compound interest—the concept where your investments generate earnings, and those returns, in turn, accumulate even more returns. The greater time span your money has to grow, the larger the benefit of compounding.
Example: Two individuals, Alex and Taylor are both self-employed professionals. Their shared goal is 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 contributes $7,500 annually to bridge the gap.
By age 65, with an assumption of 7% annual return:
- Alex invests $180,000 and accumulates $691,184.39*.
- Taylor puts in $195,500 but only ends up with $474,367.78*.
How Early Contributions Grow
Small, consistent savings invested steadily often create substantial growth. Consider this example showing the effect of compounding:
- Starting at age 25: By investing $200 per month in a retirement plan with an expected yearly growth rate of 7%, you’ll grow to approximately $497,303.29* by age 65.
- Starting at age 35: Saving the same $200 per month leaves you with only $235,412.97* by age 65—a difference of over $260,000, simply due to a 10-year delay.
Saving early, the less you need to save each year to reach your retirement goals.
*The figures provided in this example represent estimates calculated using 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. This information is intended as illustrative examples and cannot predict actual future outcomes. Actual results may vary due to factors such as 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 El Paso, TX, it can be tempting to prioritize reinvesting in your business over saving for retirement. That said, beginning a plan now enables you to:
- Leverage growth that is tax-deferred or tax-free withdrawals in the future.
- Benefit from contribution flexibility that change with your income.
- Create a safety net that ensures stability, no matter how your business evolves.
Getting started now, the less you’ll need to worry about making up for lost time later in life. Building your retirement savings today means gaining control over your financial future and creating for yourself the opportunity to turn your attention to your dreams—both for your golden years and your El Paso, TX business.
Types of Self-Employed Retirement Plans
A variety of retirement savings options available for entrepreneurs in El Paso, TX, each with its own pros and cons. A financial advisor will guide you to evaluate the advantages and disadvantages of each choice and identify the one best suited for your needs. Typically, your self-employed retirement plan options in El Paso, TX are:
Traditional or Roth IRA
Plan Overview: IRAs, or Individual Retirement Accounts, are long-term savings plans that offer key tax perks. In a traditional IRA, you can usually deduct your contributions from taxable income, and earnings grow without immediate taxation, but money taken out during retirement are taxed as income. In contrast, Roth IRA contributions from post-tax earnings, 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, both traditional and Roth IRAs are available to anyone with an earned income.
Contribution Limits: For 2025, annual contribution limits for IRAs are set at $7,000, or $8,000 for those aged 50+.
Simplified Employee Pension Plan (SEP IRA)
Plan Overview: SEP IRAs offers a way to save for retirement 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) cannot make additional contributions 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 may choose to contribute a fixed dollar figure or a percentage of wages to employee accounts. SEP IRAs is a good option for companies with cycles of high revenue and low revenue. In contrast to some alternatives, SEP IRAs don’t have costly startup or administrative fees.
SEPs operate like traditional IRAs, where you contribute pre-tax dollars and withdrawals are taxed as income.
Eligibility: Employers of any type, including self-employed individuals can set up 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), also called an Individual 401(k) or one-participant 401(k) plan, is a retirement savings plan meant for businesses without employees or when the sole employee is your spouse. This type of plan function similarly to traditional employer-managed 401(k) plans, and enable contributions as both an employer and an employee with pre-tax money. This offers more savings than SEPs or IRAs; however, the extra savings options often come with more constrained investment avenues. In a solo 401(k) plan, you can make either traditional or Roth deferrals, which share the same tax benefits as their IRA contribution counterparts.
Eligibility: This plan is exclusively for business owners and their spouses can set up and contribute to a solo 401(k).
Contribution Limits: For self-employed individuals with a solo 401(k) plan, you have the ability to make two types of contributions:
- Employee contributions of up to 100% of your self-employed earnings, subject to the annual contribution limit. In 2025, those limits are $23,500, or $31,000 if you're over 50, or $34,750 if you attain age 60-63 in 2025.
- Employer profit-sharing contributions (as an employer) must not surpass 25% of your net self-employment income, which is defined as net profit minus half of your self-employment tax and the employee contributions you made.
Your combined contributions must not surpass $70,000, or $77,500 for individuals aged 50+ (for 2025), $81,250 for those aged 60-63 in 2025.
Individual Defined Benefit Plan
Plan Overview: Defined benefit plans represents a type of retirement plan that guarantees a fixed, predetermined benefit to entrepreneurs upon retirement. As opposed to defined contribution plans, a defined benefit plan doesn't fluctuate based on investment returns, but lets individuals clearly understand exactly how much they'll receive in retirement. This option is ideal for wealthier professionals who want to save a substantial amount for retirement and can commit to making sizeable contributions. Contributions are tax deferred, and withdrawals incur taxes as income during retirement.
Eligibility: Self-employed professionals operating a solo business or with less than five employees may establish an individual defined benefit plan, but it's typically suggested for individuals aged 50+ who make $250,000 or more annually. In most cases, good candidates for defined benefit plans are:
- Business owners or partners who want to invest more than $70,000 (or $77,500 for individuals 50 and older)
- Businesses currently investing 3-4% but are open to increasing contributions
- Businesses with proven consistent profit patterns
- Partners or owners over age 40 who wish to accelerate savings or accelerate the retirement savings
Contribution Limits: The maximum allowable contribution must be determined by an actuary using your financial situation, age, and savings targets. Contribution limits are adjusted each year.
The Importance of a Financial Advisor in El Paso, TX for Your Self-Employed Retirement Plan
Working with a financial advisor in El Paso, TX specialized in self-employed retirement plans serves as an invaluable resource for self-employed individuals. They have the expertise to help understand the intricacies of saving for retirement and design a tailored strategy that aligns with your goals. Your advisor in El Paso, TX will assess where you stand financially, identify your risk preferences, and assist you in making informed decisions about saving and investing for retirement. Part of what we do for you involves:
- Help you choose a plan that aligns with your objectives and circumstances
- Customize the plan to your needs even further
- Create a written plan in accordance with IRS guidelines
- 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
- Offer continued financial education and guidance as you continue on the road to retirement
- Boost your retirement earnings by maximizing your social security benefits
Self-Employed Retirement Plans in El Paso, TX: Correct Capital's Process
Self-employed individuals in El Paso, TX who lack the time, interest, or knowledge to manage their self-employed retirement plan themselves often feel overwhelmed by their choices. At Correct Capital, our El Paso, TX financial advisors take on the majority of your retirement strategy for you, working to make meeting your future savings targets as easy 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 help understand if our services align for you and your business. This brief introduction allows us to get a sense of your goals with no pressure or major time investment on your part.
- Gather Information: Once we mutually decide to continue, we'll gather information, including whether you have employees, your present financial standing, and your long-term savings targets. This allows us to put together a tailored approach designed just for you.
- Review Your Plan: When we finalize a plan using the information you provide, we'll meet with you and review your plan in detail to make sure it's clear and explain its fit to your circumstances.
- Implementation and Monitoring: When we finalize on your plan, we'll put everything in place so you can begin contributing. Over the course of our partnership, we'll have regular meetings and monitor your plan to make sure it remains aligned with your goals.
Our El Paso, TX financial advisors and retirement plan consultants serve as fiduciary advisors, who are obligated to they are required by law and ethical standards to do what's in your best interest.
Other financial advisory services we offer in El Paso, TX 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 El Paso, TX
Your business isn't "just a business" to you, and your El Paso, TX financial advisors must deliver more than basic financial recommendations. Correct Capital takes pride in, we focus on building a relationship with our clients and their businesses to provide tailored self-employed retirement plans. We offer all our El Paso, TX clients our I.O.U. promise: everything we recommend will be independent, objective, and unbiased. To begin on your self-employment retirement plan, call Correct Capital today at 877-930-401k or contact us online.
