Self-employed retirement plans Amarillo, TX. The freedom of being your own boss in Amarillo, TX is one of the greatest advantages of working for yourself. Even so, this freedom can come with a lack of security, particularly regarding building your retirement fund, because you don't have access to employer-sponsored retirement plans. Only 13% of self-employed individuals have a workplace retirement plan, but many should consider looking into other possibilities. In addition to achieving a more secure retirement, seeking advice from a financial advisor in Amarillo, TX to create your self-employed retirement plan can provide significant tax advantages that help your business to grow and succeed.
Few Amarillo, TX investment consulting and retirement planning firms understand the needs of entrepreneurs better than 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 we are deeply experienced in assisting business owners in their retirement planning needs. We know that your business and retirement aspirations extend well past just monetary concerns, and we strive to create personalized solutions that reflect your objectives. Keep reading to learn more about your self-employed retirement plan options in Amarillo, TX, or call Correct Capital at 877-930-401k or contact us online to consult with a small business financial advisor in Amarillo, TX today.
Why Amarillo, TX 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 immediate benefits today. With customizable contribution options to considerable tax savings, consulting a financial advisor in Amarillo, TX helps you create your retirement plan to fit your specific needs.
Flexibility That Fits Your Income
For those with fluctuating income over time, a plan like a SEP IRA or Solo 401(k) offers the freedom to adjust how much you save:
- Customizable Contributions: Contribute more during high-income years and scale back when income is lower, ensuring your plan aligns with your current income.
- Roth Options: A Roth Solo 401(k) lets you handle taxes upfront, allowing you to withdraw without tax penalties in the future—a wise move if you expect your tax rate to be higher in the future.
Save Money on Taxes
Self-employed retirement plans provide valuable tax benefits:
- Tax-Deductible Contributions: Contributions to a SIMPLE IRA shrink your tax liability, so you can keep more of your earnings.
- Tax-Deferred Growth: Investments grow tax-free until withdrawal, which gives your money more time to grow.
- State-Specific Incentives: Depending on where you live, you could qualify for state-specific tax breaks as a sole proprietor. These local incentives can make these plans even more beneficial.
- 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, cutting down your tax bill even more.
Protect Your Savings With Smart Investments
Planning for a safe retirement isn’t only about how much you save—it’s also about how you invest:
- Diversified Portfolios: Distributing your investments across varied stocks, bonds, and alternatives serves to reduce risk while continuing to build your nest egg.
- Emergency Back-Up: Combining your retirement strategy and a financial buffer for your business ensures you don’t dipping into savings during tough times and facing tax penalties.
Plan for the Future of Your Amarillo, TX Business
Preparing for retirement enables you to think through what’s next with your Amarillo, TX business:
- Selling Your Business: If you’re planning to sell, retirement accounts like SEP IRAs and Solo 401(k)s remain yours and won’t be included in the sale. These savings offer the reliable income you’ll need in the future. Remember that while the sale of a business usually creates a capital gain, retirement plan contributions are subject to yearly maximums (e.g., up to $7,000 for IRAs or as much as $70,000 for Solo 401(k)s, with catch-up contributions, according to plan rules).
- Minimizing Taxes: Using retirement contributions wisely minimizes the taxes you might face when you pass on your business.
- Succession Planning: Whether you’re transferring ownership, your nest egg offer the funds you need during the change. You can also work with a financial advisor experienced in both succession and retirement strategies to minimize tax burdens on the sale.
With the right retirement plan, you gain control over your financial future, reduce your tax burden, and establish a solid base for both your retirement and your business goals.
Why Start a Self-Employed Retirement Plan in Amarillo, TX Now?
There’s no denying that time is one of the most valuable factors when it comes to saving for retirement. Beginning sooner rather than later not only helps you grow a bigger financial cushion but also lowers the financial burden of saving aggressively in the future. Here’s why it pays to take action now:
The Cost of Waiting
Waiting to start your retirement fund can have a significant impact on the savings you’ll have when you stop working. The main reason is compound interest—the powerful process where your investments grow, and those returns, then, generate even more returns. The greater time span your money has to grow, the more significant the effect of this growth.
Example: Alex and Taylor are both self-employed individuals. Both of them want 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 make up for lost time.
By age 65, assuming 7% annual return:
- Alex contributes $180,000 and accumulates $691,184.39*.
- Taylor invests $195,500 but achieves a total of only $474,367.78*.
How Early Contributions Grow
Small, consistent savings contributed over time often create impressive growth. Take a look at this scenario showing the effect of compound interest:
- Starting at age 25: By investing $200 per month in a retirement plan with an expected yearly growth rate of 7%, you’ll accumulate $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 shortfall 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.
*The numbers shown in this scenario are based on estimates generated with NerdWallet’s Compound Interest Calculator, with the assumption of a 7% annual return. Annual deposits were multiplied by the number of years to estimate total contributions. The scenarios provided are for illustrative purposes only and do not guarantee future performance. Actual results may vary due to elements like market conditions, fees, and your unique situation. Be sure to speak with a financial advisor for custom recommendations.
Take Control of Your Financial Future
If you’re self-employed in Amarillo, TX, it can be tempting to put more emphasis on reinvesting in your business rather than saving for retirement. However, starting a plan now allows you to:
- Benefit from growth that is tax-deferred or penalty-free withdrawals later on.
- Benefit from adjustable savings that adapt to your cash flow.
- Establish a long-term safety measure that offers peace of mind, no matter how your business changes.
Starting early, the less you’ll be required to worry about playing catch-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 objectives—both for your retirement years and your Amarillo, TX business.
Types of Self-Employed Retirement Plans
Multiple retirement savings options open for those working for themselves in Amarillo, TX, each providing its own pros and cons. A financial advisor can help you learn about the pros and cons of each plan and identify the one ideal for your unique situation. Generally speaking, your self-employed retirement plan options in Amarillo, TX include:
Traditional or Roth IRA
Plan Overview: IRAs, or Individual Retirement Accounts, are retirement savings vehicles that provide specific tax advantages. In a standard IRA, the money you contribute is often tax-deductible, and investment earnings grow tax-deferred, but withdrawals in retirement are subject to income tax. In contrast, Roth IRA contributions from post-tax earnings, but eligible distributions during retirement, including earnings, are not taxed. In both cases, withdrawals come without penalties as long as you are at least 59½.
Eligibility: Unlike 401(k)s, which are employer-sponsored, IRAs, including traditional and Roth options are accessible for individuals with taxable earnings.
Contribution Limits: For 2025, annual contribution limits for IRAs remain $7,000, or $8,000 if you're 50 or older.
Simplified Employee Pension Plan (SEP IRA)
Plan Overview: The Simplified Employee Pension IRA offers a way to save for retirement that enables entrepreneurs to set aside a portion of their self-employment income. Contributions must come from an employer, so, as a independent business owner, you (the employee) cannot make additional contributions more than the 25% you (the employer) already contributed. If you have employees, you must 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 works well for companies with periods of inconsistent earnings. Compared to other retirement options, SEP IRAs lack the high fees associated with starting or maintaining other plans.
SEPs work like conventional IRAs, where the contributions are tax-deferred and withdrawals are taxed as income.
Eligibility: Any employer, including the self-employed can establish a SEP.
Contribution Limits: Contribution limits for employees in a SEP IRA are the lesser 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: Solo 401(k)s, also called an Individual 401(k) or one-participant 401(k) plan, is a retirement savings plan intended 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 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 additional opportunities can be balanced by more limited investment options. Using a solo 401(k), 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:
- Elective deferrals (as an employee) of up to 100% of your self-employment income, up 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.
- Employer profit-sharing contributions (as an employer) cannot exceed 25% of your net earnings from self-employment, which is your net profit minus half of your self-employment tax and the elective deferrals you made.
Your combined contributions must not surpass $70,000, or $77,500 for individuals aged 50+ (in 2025), $81,250 for individuals turning 60-63 in 2025.
Individual Defined Benefit Plan
Plan Overview: The defined benefit plan represents a type of retirement plan that provides a pre-established payout to self-employed individuals upon retirement. In contrast to the plans discussed earlier, a defined benefit plan doesn't fluctuate based on investment returns, but enables participants to determine the precise amount they'll have in retirement. This plan is ideal for higher-income entrepreneurs who are focused on saving a large amount for retirement and can commit to making larger deposits. Contributions are tax deferred, and withdrawals are taxable as income in retirement.
Eligibility: Self-employed professionals running an owner-only business or with a small staff of under five may establish an individual defined benefit plan, but it's generally advised for those over 50 who generate a minimum of $250,000 yearly. In most cases, good candidates for defined benefit plans include:
- Partners or owners who aim to deposit more than $70,000 (or $77,500 for those aged 50+)
- Companies already contributing 3-4% but are open to increasing contributions
- Companies with proven consistent profit patterns
- Business leaders over age 40 who wish to accelerate savings or increase their retirement contributions rapidly
Contribution Limits: The contribution limit is calculated by an actuary determined by your income, age, and retirement goals. Limits on contributions change annually.
The Importance of a Financial Advisor in Amarillo, TX for Your Self-Employed Retirement Plan
Working with a financial advisor in Amarillo, TX specialized in self-employed retirement plans can be an invaluable resource for those working for themselves. They offer the knowledge to assist guide you through the challenges of retirement planning and design a customized plan that reflects your aspirations. Your advisor in Amarillo, TX will review your finances, understand your risk tolerance, and help you in selecting the best options about saving and investing for retirement. Included in what we do for you includes:
- Guide you in choosing a plan that suits your unique requirements
- Further adapt the plan to your specific situation even further
- Create a written plan that complies with IRS regulations
- Set up an asset trust plan
- Help you understand the plan's terms
- Review and modify your plan when necessary
- Provide ongoing education and advice to help you navigate your retirement journey
- Boost your retirement earnings by making the most of your social security
Self-Employed Retirement Plans in Amarillo, TX: Correct Capital's Process
Amarillo, TX business owners who don’t have the time or expertise to manage their self-employed retirement plan independently may end up overwhelmed when faced with their available plans. With Correct Capital, our Amarillo, TX financial advisors take on the lion's share of your savings plan setup for you, working to make meeting your retirement goals as straightforward as possible for you. We will guide you in creating your self-employed retirement plan in just four steps:
- Schedule a Call: A quick 20-minute call is all it takes, a member of our advisor team will assess if our services align for you and your business. This brief introduction allows us to understand what you're looking for with no pressure or significant effort on your part.
- Gather Information: If we both decide to move forward, we'll ask for information, including how many employees you have (if any), your present financial standing, and your long-term savings targets. This enables us to craft a tailored approach that aligns with your goals.
- Review Your Plan: Once we've developed a plan using the information you provide, we'll sit down with you and discuss your plan in detail 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 begin contributing. As time goes on, we'll meet with you and monitor your plan to ensure it stays suited to your needs.
Our Amarillo, TX financial advisors and retirement plan consultants act as fiduciary advisors, who are obligated to they are committed by law and ethics to do what's in your best interest.
Other financial advisory services we offer in Amarillo, TX include:
- Financial Planning for Business Owners
- Comprehensive Financial Planning
- Retirement Income Planning
- Investment Planning
- Retirement Financial Planning
- Independent Financial Advisor
- Roth Conversion
- Investment Management
- 401(k) Audit
- High-Net-Worth Wealth Management
Call Correct Capital for Your Self-Employed Retirement Plan in Amarillo, TX
You don't see your business as "just a business", and your Amarillo, TX financial advisors need to offer more than basic financial recommendations. With Correct Capital, we make it a priority to understand our clients and their businesses to create customized self-employed retirement plans. We offer all our Amarillo, TX clients our I.O.U. promise: all of the advice you get from us will be independent, objective, and unbiased. To get started on your self-employment retirement plan, contact Correct Capital now at 877-930-401k or contact us online.
