Self-employed retirement plans Amarillo, TX. The flexibility of owning your own business in Amarillo, TX is one of the best aspects of working for yourself. Even so, this freedom often comes with a lack of security, notably in terms of building your retirement fund, as you don't have the option of retirement programs through an employer. Only 13% of self-employed individuals have a workplace retirement plan, but many would be better off looking into other possibilities. In addition to enjoying 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 you to move your business forward.
Few Amarillo, TX investment consulting and retirement planning firms truly grasp the challenges faced by self-employed individuals quite like Correct Capital. The father of our founder was a small business owner himself (learn more about our story here), and we take pride in helping businesses with their retirement planning needs. We recognize that your professional and personal aspirations go far beyond basic numbers, and we are dedicated to offer tailored solutions aligned with your vision. Read on to discover about your self-employed retirement plan options in Amarillo, TX, or reach out to Correct Capital at 877-930-401k or contact us online to speak with a small business financial advisor in Amarillo, TX today.
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Why Amarillo, TX Self-Employed Individuals Should Have a Retirement Plan
Retirement plans for self-employed individuals not only prepare you for the future, they also offer tangible benefits today. Offering flexibility in contributions to significant tax savings, partnering with a financial advisor in Amarillo, TX enables you to design your retirement plan to suit your specific needs.
Flexibility That Fits Your Income
If your income changes from year to year, a plan like a SEP IRA or Solo 401(k) gives you the freedom to adjust how much you save:
- Customizable Contributions: Set aside more during profitable years and cut back when your earnings dip, 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 your savings tax-free down the road—an advantageous choice if you believe your tax rate to be higher in the future.
Save Money on Taxes
Retirement plans for self-employed individuals offer powerful tax benefits:
- Tax-Deductible Contributions: Contributions to a Solo 401(k) reduce what you owe in taxes, allowing you to keep more of your earnings.
- Tax-Deferred Growth: You won't pay taxes on investment growth until you withdraw it, providing your money more time to compound.
- State-Specific Incentives: In some states, you might access state-specific tax breaks as a sole proprietor. These regional incentives can make these plans even more advantageous.
- 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, cutting down your tax bill even more.
Protect Your Savings With Smart Investments
Building a secure retirement isn’t only about how much you save—it’s also determined by your investment strategy:
- Diversified Portfolios: Allocating your investments across different stocks, bonds, and alternatives can help mitigate financial risk while continuing to build your nest egg.
- Emergency Back-Up: Combining your retirement strategy and a dedicated business safety net ensures you don’t tapping into your nest egg during challenging periods and facing tax penalties.
Plan for the Future of Your Amarillo, TX Business
A thoughtful retirement strategy also helps you think through what’s next with your Amarillo, TX business:
- Selling Your Business: For those considering a sale, accounts such as SEP IRAs or Solo 401(k)s remain yours and don’t transfer with the business. These accounts ensure the financial stability you’ll need in the future. Keep in mind that while selling a business often leads to a capital gain, retirement plan contributions are subject to yearly maximums (e.g., up to $7,000 for IRAs or a maximum of $70,000 for Solo 401(k)s, with catch-up contributions, based on plan compensation).
- Minimizing Taxes: Using retirement contributions wisely minimizes the taxes you are required to pay when you transfer your business.
- Succession Planning: If you’re passing the business on, your retirement accounts provide the funds you need during the change. You may also seek advice from a financial advisor experienced in both succession and retirement strategies to reduce taxes on the sale.
With the proper savings strategy, you gain control over 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 Amarillo, TX Now?
Time remains one of the most valuable assets for building your retirement fund. Getting a head start not only allows you to build a bigger financial cushion but also lowers the pressure of catching up later in life. Here’s why it is beneficial to start now:
The Cost of Waiting
Waiting to start your retirement fund can have a substantial impact on the amount you’ll have when you reach retirement age. The biggest reason is compound interest—the concept where your investments generate earnings, and those returns, in turn, generate even more returns. The greater time span your money has to grow, the larger the effect 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 starts saving $5,000 annually at age 30.
- Taylor waits until age 40 but saves $7,500 annually to catch up.
By age 65, assuming 7% annual return:
- Alex contributes $180,000 and ends up with $691,184.39*.
- Taylor contributes $195,500 but achieves a total of only $474,367.78*.
How Early Contributions Grow
Small, consistent savings made consistently may result in impressive growth. Take a look at this scenario 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: Saving the same $200 per month leaves you with only $235,412.97* by age 65—a shortfall of over $260,000, simply due to a 10-year delay.
Saving early, the lower your annual savings needs each year to reach your retirement goals.
*The figures provided in this example 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. These examples are for illustrative purposes only and cannot predict actual future outcomes. Actual results may vary due to elements like 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 Amarillo, TX, it can be tempting to put more emphasis on reinvesting in your business rather than saving for retirement. However, beginning a plan now enables you to:
- Benefit from tax-free future growth or tax-free withdrawals later on.
- Take advantage of flexible contributions that align with your earnings.
- Create a safety net that offers peace of mind, no matter how your business develops.
Starting early, the less you’ll have to worry about playing catch-up later in life. Saving for retirement now means taking control of your financial future and giving yourself the ability to focus on your goals—both for your golden years and your Amarillo, TX business.
Types of Self-Employed Retirement Plans
Multiple retirement savings options available for those working for themselves in Amarillo, TX, each offering its own benefits and trade-offs. A financial advisor will guide you to evaluate the pros and cons of each choice and determine the one most suitable for your needs. In most cases, your self-employed retirement plan options in Amarillo, TX include:
Traditional or Roth IRA
Plan Overview: Individual Retirement Accounts (IRAs), as explained here, represent long-term savings plans that provide specific tax advantages. In a traditional IRA, you can usually deduct your contributions from taxable income, and investment earnings grow tax-deferred, but money taken out during retirement are taxable. In contrast, Roth IRAs require contributions from post-tax earnings, but eligible distributions during retirement, including earnings, are exempt from taxes. In both types of accounts, withdrawals come without penalties as long as you are at least 59½.
Eligibility: Unlike 401(k)s, which are employer-sponsored, both traditional and Roth IRAs are open to those 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 set aside a portion of their self-employment income. Contributions are strictly employer contributions an employer, so, as a self-employed individual, you (the employee) would not be able to contribute above the 25% you (the employer) have designated. If you have employees, you must contribute the same amount for them as you do for yourself. It's your choice whether to contribute a flat-dollar amount or a percentage of wages to employee accounts. A SEP IRA is a good option for entrepreneurs facing periods of inconsistent earnings. Compared to other retirement options, SEP IRAs are free of expensive setup or ongoing 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 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 allowable contribution 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 savings option for the self-employed meant for companies that have no employees or where the only employee is a spouse. Solo 401(k)s are similar to standard 401(k) plans, and allow you to contribute as both the employer and the employee with pre-tax money. This provides more savings versus SEPs or IRAs; however, the extra savings options can be balanced by 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 are eligible to open and contribute to a solo 401(k).
Contribution Limits: For self-employed individuals 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 self-employment income, up to the annual contribution limit. For 2025, the limits will be $23,500, or $31,000 for those aged 50 and above, or $34,750 for individuals aged 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.
Total contributions are capped at $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: Defined benefit plans represents a type of retirement plan that delivers a set amount to business owners upon retirement. In contrast to the plans discussed earlier, investment returns don’t affect the payout, but enables participants to determine what they'll have in retirement. This option is best suited for wealthier self-employed individuals who are focused on saving a large amount for retirement and are willing to make substantial contributions. Contributions offer tax-deferred growth, and withdrawals are taxable as income during retirement.
Eligibility: Entrepreneurs operating a solo business or employing fewer than five people can open an individual defined benefit plan, but it's most commonly suggested for individuals aged 50+ who make $250,000 or more annually. In most cases, good candidates for defined benefit plans include:
- Partners or owners who aim to deposit more than $70,000 (or $77,500 if over age 50)
- Businesses currently investing 3-4% with plans to contribute more
- Businesses showing consistent profit patterns
- Partners or owners over age 40 who wish to accelerate savings or boost savings within a short timeframe
Contribution Limits: The cap on contributions is calculated by an actuary using your earnings, age, and retirement objectives. Contribution limits are adjusted each year.
The Importance of a Financial Advisor in Amarillo, TX for Your Self-Employed Retirement Plan
Partnering with an advisor in Amarillo, TX focused on self-employed retirement strategies serves as an invaluable resource for self-employed individuals. They bring the skills needed to navigate the complexities of retirement planning and develop a personalized approach that reflects your aspirations. A financial advisor in Amarillo, TX will review your finances, determine how much risk you’re comfortable with, and guide you in selecting the best options about saving and investing for retirement. A key part of what we do for you features:
- Assist in selecting a plan that best fits your needs and goals
- Further adapt the plan to your needs even further
- Adopt a written plan as required by IRS rules
- Organize a trust plan to manage your assets
- Make sure you understand the plan's terms
- Track and fine-tune your plan as needed
- Provide ongoing education and advice as you continue on the road to retirement
- Increase your retirement income by optimizing your social security benefits
Self-Employed Retirement Plans in Amarillo, TX: Correct Capital's Process
Amarillo, TX business owners who aren’t equipped with the time or understanding to oversee their self-employed retirement plan independently often feel overwhelmed when faced with their available plans. With Correct Capital, our Amarillo, TX financial advisors handle the bulk of your retirement strategy for you, working to make meeting your retirement goals as hassle-free 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 can help understand if our services align for you and your business. This short conversation helps us understand what you're looking for with zero commitment or extensive time commitment on your part.
- Gather Information: If we both decide to move forward, we'll gather 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 suited specifically for your needs.
- Review Your Plan: After we put together a plan from the information you provide, we'll schedule a meeting and go over your plan thoroughly to make sure it's clear and show how it aligns with your goals.
- Implementation and Monitoring: When we finalize on your plan, we'll set everything up so you can begin contributing. Throughout our relationship, we'll check in and review your strategy to ensure it stays suited to your needs.
Our Amarillo, TX financial advisors and retirement plan consultants are 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:
- 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
You don't see your business as "just a business", and your Amarillo, TX financial advisors should provide more than basic financial recommendations. At Correct Capital, we take the time to get to know 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 guidance we provide will be independent, objective, and unbiased. To take the first step on your self-employment retirement plan, reach out to Correct Capital at 877-930-401k or contact us online.
