Self-employed retirement plans Amarillo, TX. The flexibility of owning your own business in Amarillo, TX is one of the best aspects of being self-employed. Even so, this flexibility can come with a lack of security, particularly regarding building your retirement fund, because you don't have the benefit of retirement programs through an employer. Only 13% of self-employed individuals have a workplace retirement plan, but many would be better off understanding their retirement options. In addition to enjoying a more secure retirement, partnering with a financial advisor in Amarillo, TX to establish your self-employed retirement plan delivers significant tax advantages that allow you to move your business forward.
Few Amarillo, TX investment consulting and retirement planning firms truly grasp the challenges faced by self-employed individuals better than Correct Capital. The father of our founder was a small business owner himself (check out our story here), and Correct Capital are deeply experienced in assisting business owners in their retirement planning needs. We recognize that your professional and personal aspirations aren’t limited to 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 give us a call at Correct Capital at 877-930-401k or contact us online to consult with a entrepreneurial financial advisor in Amarillo, TX today.
Why Amarillo, TX Self-Employed Individuals Should Have a Retirement Plan
Retirement plans for self-employed individuals help prepare you for the future, they also offer real benefits today. From flexible contributions to significant tax savings, partnering with a financial advisor in Amarillo, TX allows you to create your retirement plan to fit your individual circumstances.
Flexibility That Fits Your Income
When your earnings vary annually, a plan like a SEP IRA or Solo 401(k) provides the flexibility to modify how much you save:
- Customizable Contributions: Contribute more during profitable years and scale back when income is lower, ensuring your plan works with your financial situation.
- Roth Options: A Roth Solo 401(k) lets you pay taxes on contributions now, so you can withdraw tax-free later—a wise move if you anticipate your tax rate to be higher in the future.
Save Money on Taxes
Plans designed for the self-employed offer valuable tax benefits:
- Tax-Deductible Contributions: Contributions to a Solo 401(k) reduce what you owe in taxes, allowing you to keep more of your hard-earned money.
- Tax-Deferred Growth: You won't pay taxes on investment growth until you withdraw it, which gives your money more time to compound.
- State-Specific Incentives: Based on your location, you might access extra deductions as a self-employed individual. These regional incentives help 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
Planning for a safe retirement requires more than how much you save—it’s also linked to the way you invest:
- Diversified Portfolios: Distributing 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: Supplementing your retirement savings with a dedicated business safety net 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 also helps you think through what’s next with your Amarillo, TX business:
- Selling Your Business: When selling your business, retirement accounts like SEP IRAs and Solo 401(k)s stay in your name and are not part of the sale. These plans can provide the reliable income you’ll need during retirement. Keep in mind that while selling a business often leads to a capital gain, contributions to retirement accounts 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, with catch-up contributions, based on plan compensation).
- Minimizing Taxes: Strategically planning your contributions can reduce the taxes you might face when you sell your business.
- Succession Planning: If you’re passing the business on, your nest egg offer a stable foundation through the transition. You can also seek advice from a financial advisor with expertise in succession and retirement planning to minimize tax burdens during the sale.
With the right retirement plan, you gain control over your financial future, lower your tax bill, and create 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 important factors for building your retirement fund. Starting early not only lets you accumulate a larger nest egg but also lowers the pressure of playing catch-up as you get older. Here’s why it pays to take action now:
The Cost of Waiting
Putting off saving for retirement may cause a substantial impact on the savings you’ll have when you retire. The primary reason is compound interest—the financial principle where your investments generate earnings, and those returns, then, accumulate even more returns. The greater time span your money has to grow, the more significant the effect of compounding.
Example: Alex and Taylor are both entrepreneurs. They each aim 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 saves $7,500 annually to make up for lost time.
By age 65, assuming 7% annual return:
- Alex invests $180,000 and achieves a total of $691,184.39*.
- Taylor invests $195,500 but accumulates just $474,367.78*.
How Early Contributions Grow
Regular, modest investments contributed over time may result in substantial growth. Here’s a simple scenario showing the impact of compound interest:
- Starting at age 25: If you invest $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: Contributing the same $200 per month yields only $235,412.97* by age 65—a gap of over $260,000, all because of a 10-year delay.
Saving early, the lower your annual savings needs each year to meet your retirement goals.
*The figures provided in this example are estimates generated with 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. These examples are meant to provide general guidance and do not guarantee future performance. Your individual results may differ based on variables including market conditions, fees, and individual circumstances. 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 is often the case that you put more emphasis on reinvesting in your business instead of saving for retirement. That said, starting a plan now enables you to:
- Leverage tax-deferred growth or withdrawals without taxes down the road.
- Take advantage of adjustable savings that align with your earnings.
- Establish a financial cushion that offers peace of mind, no matter how your business develops.
Starting early, the less you’ll have to worry about making up for lost time later in life. Building your retirement savings today means taking control of your financial future and giving yourself the opportunity to concentrate on your dreams—both for your golden years and your Amarillo, TX business.
Types of Self-Employed Retirement Plans
There are several retirement savings options designed for entrepreneurs in Amarillo, TX, each offering its own pros and cons. A financial advisor is available to help you learn about the benefits and drawbacks of each choice and choose the one best suited for your needs. Generally speaking, your self-employed retirement plan options in Amarillo, TX include:
Traditional or Roth IRA
Plan Overview: Individual Retirement Accounts (IRAs), as explained here, represent financial tools for retirement that provide specific tax advantages. In a standard IRA, you can usually deduct your contributions from taxable income, and returns grow free of current taxes, but retirement distributions are taxed as income. In contrast, with Roth IRAs, you contribute from post-tax earnings, but retirement withdrawals that qualify, including earnings, are exempt from taxes. 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 accessible for individuals with an earned income.
Contribution Limits: For 2025, annual contribution limits for IRAs are capped at $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 serves as a retirement savings option that permits self-employed individuals to contribute a percentage of their net earnings. Contributions can only be made by an employer, so, as a self-employed individual, you (the employee) would not be able to contribute beyond 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 flat-dollar amount or a percentage of wages to employee accounts. A SEP IRA is a good option for businesses that experience fluctuating revenue streams. Compared to other retirement options, SEP IRAs are free of costly startup or administrative fees.
SEPs work like traditional IRAs, where contributions are made with pre-tax money and money withdrawn is subject to income tax.
Eligibility: Both employers and self-employed individuals can establish 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
For self-employed individuals, the amount eligible to be contributed is based on a special calculation.
Solo 401(k)
Plan Overview: A Solo 401(k) plan, commonly known as an Individual 401(k) or one-participant 401(k) plan, is a self-employed retirement plan meant for businesses with no employees or where the only employee is a spouse. These plans operate much like employer-sponsored 401(k) plans, and allow you to contribute as both an employee or an employer with pre-tax money. This allows for more savings compared to SEPs or IRAs; however, the additional opportunities may be offset by more limited investment options. 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 can make two types of contributions:
- Deferrals as an employee of up to 100% of your self-employment income, up to the annual contribution limit. In 2025, those limits are $23,500, or $31,000 if you're over 50, or $34,750 for those who turn 60-63 in 2025.
- Contributions as an employer (as an employer) must not surpass 25% of your net earnings from self-employment, which is calculated as net profits less half of your self-employment tax and the deferrals you made.
Your combined contributions must not surpass $70,000, or $77,500 if you're over age 50 (in 2025), $81,250 for individuals turning 60-63 in 2025.
Individual Defined Benefit Plan
Plan Overview: A defined benefit plan is a retirement option that provides a fixed, predetermined benefit to self-employed individuals upon retirement. Unlike defined contribution plans mentioned above, investment returns don’t affect the payout, but allows self-employed individuals to know exactly how much they'll receive in retirement. This plan is best suited for high-earning entrepreneurs who want to save a substantial amount for retirement and are prepared to contribute larger deposits. Contributions are tax deferred, and withdrawals are taxable as income during retirement.
Eligibility: Entrepreneurs managing a one-person company or with a small staff of under five are eligible to open an individual defined benefit plan, but it's typically recommended for those over 50 who make $250,000 or more annually. In most cases, good candidates for defined benefit plans include:
- Partners or owners who want to invest more than $70,000 (or $77,500 if over age 50)
- Organizations that already put in 3-4% and are willing to do more
- Companies with proven consistent profit patterns
- Business leaders over age 40 who desire to "catch up" or boost savings within a short timeframe
Contribution Limits: The contribution limit requires calculation from an actuary using your income, age, and retirement goals. Limits on contributions are updated yearly.
The Importance of a Financial Advisor in Amarillo, TX for Your Self-Employed Retirement Plan
Working with a financial advisor in Amarillo, TX experienced with retirement plans for the self-employed can be an invaluable resource for entrepreneurs. They bring the skills needed to navigate the complexities of retirement planning and design a customized plan that matches your objectives. An expert in your area will assess where you stand financially, identify your risk preferences, and help you in choosing wisely about saving and investing for retirement. A key part of what we do for you involves:
- Assist in selecting a plan that aligns with your objectives and circumstances
- Customize the plan to fit you personally even further
- Formalize a plan in writing as required by IRS rules
- Arrange a trust plan for assets
- Make sure you understand the plan's terms
- Review and modify your plan as needed
- Provide ongoing education and advice as you continue on the road to retirement
- Increase your retirement income by maximizing your social security benefits
Self-Employed Retirement Plans in Amarillo, TX: Correct Capital's Process
Self-employed individuals in Amarillo, TX who lack the time, interest, or knowledge to oversee their own retirement planning themselves can become overwhelmed by their choices. At Correct Capital, our Amarillo, TX financial advisors handle the majority of your retirement planning for you, working to make meeting your retirement goals as hassle-free 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: A quick 20-minute call is all it takes, a member of our advisor team can help understand if we're suited to your needs for you and your business. This initial call allows us to learn about your needs with no obligation or significant effort on your part.
- Gather Information: If we both decide to move forward, we'll request information, including how many employees you have (if any), your current financial situation, and your long-term savings targets. This helps us create a custom plan designed just for you.
- Review Your Plan: Once we've developed a plan using the information you provide, we'll meet with you and discuss your plan in detail to make sure it's clear and explain its fit to your circumstances.
- Implementation and Monitoring: Once we've agreed on your plan, we'll implement the necessary steps so you can start saving. Throughout our relationship, we'll have regular meetings and monitor your plan to make sure it remains aligned with your goals.
Our Amarillo, TX financial advisors and retirement plan consultants serve as fiduciary advisors, who are obligated to they are committed by law and ethics to prioritize your needs above all else.
Other financial advisory services we offer in Amarillo, 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 Amarillo, TX
To you, your business is more than "just a business", and your Amarillo, TX financial advisors must deliver more than simply sound financial advice. Correct Capital takes pride in, we take the time to get to know our clients and their businesses to provide personalized self-employed retirement plans. All our clients in Amarillo, TX benefit from 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.
