Self-employed retirement plans Arlington, TX. The freedom of being your own boss in Arlington, TX is one of the greatest advantages of working for yourself. Even so, this independence can come with certain challenges, particularly when it comes to retirement savings, because you don't have the benefit of a workplace retirement plan. Only 13% of self-employed individuals have a workplace retirement plan, although many could benefit from exploring their options. In addition to achieving a financially stable retirement, seeking advice from a financial advisor in Arlington, TX to set up your self-employed retirement plan delivers significant tax advantages that allow your business to grow and succeed.
Few Arlington, TX investment consulting and retirement planning firms truly grasp the challenges faced by small business owners quite like 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 our firm are deeply experienced in supporting entrepreneurs with their retirement planning needs. We understand that your business and retirement aspirations aren’t limited to simple financial figures, and we strive to offer personalized solutions aligned with your vision. Read on to discover about your self-employed retirement plan options in Arlington, TX, or reach out to Correct Capital at 877-930-401k or contact us online to consult with a entrepreneurial financial advisor in Arlington, TX today.
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Why Arlington, TX Self-Employed Individuals Should Have a Retirement Plan
Retirement plans for self-employed individuals help prepare you for the future, they also offer tangible benefits today. Offering flexibility in contributions to significant tax savings, consulting a financial advisor in Arlington, TX allows you to create your retirement plan to align with your individual circumstances.
Flexibility That Fits Your Income
When your earnings vary annually, a plan like a SEP IRA or Solo 401(k) gives you the option to adjust how much you save:
- Customizable Contributions: Contribute more during high-income years and reduce savings when revenues are down, so that your plan works with your cash flow.
- Roth Options: A Roth Solo 401(k) lets you handle taxes upfront, enabling you to withdraw without tax penalties in the future—a smart decision if you anticipate your tax rate will increase in the future.
Save Money on Taxes
Retirement plans for self-employed individuals deliver powerful tax benefits:
- Tax-Deductible Contributions: Contributions to a Solo 401(k) lower your taxable income, so you can keep more of your hard-earned money.
- Tax-Deferred Growth: Your savings grow untaxed until withdrawn, providing your money more time to compound.
- State-Specific Incentives: Depending on where you live, you might access additional credits as a self-employed individual. These regional incentives make these plans even more beneficial.
- Retirement Savings Contributions Credit (Saver’s Credit): Qualified participants can take advantage of a 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 goes beyond just how much you save—it’s also about how you invest:
- Diversified Portfolios: Spreading your investments across a mix of stocks, bonds, and other assets can help minimize exposure to risk while continuing to build your nest egg.
- Emergency Back-Up: Pairing your retirement plan with a financial buffer for your business ensures you don’t dipping into savings during challenging periods and facing tax penalties.
Plan for the Future of Your Arlington, TX Business
A thoughtful retirement strategy also helps you plan ahead for what’s next with your Arlington, TX business:
- Selling Your Business: If you’re planning to sell, accounts such as SEP IRAs or Solo 401(k)s stay in your name and won’t be included in the sale. These accounts ensure the financial stability you’ll need later on. Keep in mind that while the sale of a business usually creates a capital gain, retirement plan contributions are restricted by contribution limits (e.g., as much as $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: Strategically planning your contributions helps lower the taxes you’ll owe when you pass on your business.
- Succession Planning: If you’re passing the business on, your retirement savings offer a stable foundation through the transition. You might want to work with a financial advisor experienced in both succession and retirement strategies to help with taxes associated with the transaction.
With the proper savings strategy, you manage your financial future, lower your tax bill, and build a solid base for both your retirement and your business goals.
Why Start a Self-Employed Retirement Plan in Arlington, TX Now?
There’s no denying that time is one of the most crucial assets when it comes to saving for retirement. Beginning sooner rather than later not only helps you grow a larger nest egg but also reduces the stress of catching up later in life. The following are reasons why it is beneficial to start now:
The Cost of Waiting
Putting off saving for retirement can have a substantial impact on the savings you’ll have when you retire. The primary reason is compound interest—the concept where your investments grow, and those returns, in turn, accumulate even more returns. The longer your money has to grow, the more significant the benefit of this compounding process.
Example: Taylor and Alex are both self-employed individuals. Both of them want to save $500,000 for retirement by age 65:
- Alex starts saving $5,000 annually at age 30.
- Taylor postpones starting contributions to age 40 but contributes $7,500 annually to bridge the gap.
By age 65, assuming 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
Regular, modest investments invested steadily can lead to impressive growth. Take a look at this scenario showing the power of compounding:
- Starting at age 25: Putting aside $200 per month in a retirement plan with an average annual return 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 gap of over $260,000, simply due to a 10-year delay.
The earlier you begin, the lower your annual savings needs each year to meet your retirement goals.
*The figures provided in this example represent estimates generated with NerdWallet’s Compound Interest Calculator, assuming a 7% annual return. Annual deposits were multiplied by the number of years to estimate total contributions. This information is for illustrative purposes only and do not guarantee future performance. Your individual results may differ depending on factors such as market conditions, fees, and personal factors. We recommend consulting a financial advisor for custom recommendations.
Take Control of Your Financial Future
As a self-employed person in Arlington, TX, it might seem easier to focus more on reinvesting in your business rather than saving for retirement. However, beginning a plan now enables you to:
- Leverage growth that is tax-deferred or penalty-free withdrawals in the future.
- Benefit from flexible contributions that change with your cash flow.
- Establish a long-term safety measure that ensures stability, no matter how your business changes.
Starting early, the less you’ll be required to worry about catching up later in life. Building your retirement savings today means gaining control over your financial future and allowing yourself the opportunity to concentrate on your goals—both for your golden years and your Arlington, TX business.
Types of Self-Employed Retirement Plans
Multiple retirement savings options open for those working for themselves in Arlington, TX, each offering its own advantages and considerations. A financial advisor will guide you to evaluate the pros and cons of each option and identify the one best suited for your needs. In most cases, your self-employed retirement plan options in Arlington, TX are:
Traditional or Roth IRA
Plan Overview: Individual Retirement Accounts (IRAs), as explained here, represent long-term savings plans that offer 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 subject to income tax. In contrast, Roth IRAs require contributions from post-tax earnings, but eligible distributions during retirement, including earnings, are not taxed. In both cases, withdrawals are penalty-free if you are at least 59½.
Eligibility: While many retirement plans, such as 401(k)s, are tied to employment, IRAs, including traditional and Roth options are available to anyone with a source of income.
Contribution Limits: For 2025, annual contribution limits for IRAs remain $7,000, or $8,000 if you qualify for catch-up contributions.
Simplified Employee Pension Plan (SEP IRA)
Plan Overview: SEP IRAs is a retirement plan that permits entrepreneurs to contribute a percentage of their net earnings. Contributions can only be made by an employer, so, as a sole proprietor, you (the employee) cannot make additional contributions above 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. It's your choice whether to contribute a fixed dollar figure or a percentage of wages to employee accounts. This type of plan works well for companies with fluctuating revenue streams. Unlike other plans, SEP IRAs don’t have expensive setup or ongoing fees.
SEPs work like standard IRAs, where the contributions are tax-deferred and money withdrawn is subject to income tax.
Eligibility: Any employer, including the self-employed 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
As a self-employed person, the allowable contribution is based on a special calculation.
Solo 401(k)
Plan Overview: Solo 401(k)s, 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 traditional employer-managed 401(k) plans, and let you make contributions as both the employer and the employee with pre-tax money. This allows for more savings compared to SEPs or IRAs; however, the increased savings potential often come with more restricted investment choices. In a solo 401(k) plan, you can make either traditional or Roth deferrals, which offer 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:
- Employee contributions of up to 100% of your self-employment income, subject to the annual contribution limit. The contribution limits for 2025 include $23,500, or $31,000 if you are 50 or older, or $34,750 if you attain age 60-63 in 2025.
- Contributions as an employer (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 individuals turning 60-63 in 2025.
Individual Defined Benefit Plan
Plan Overview: Defined benefit plans represents a type of retirement plan that provides a fixed, predetermined benefit to entrepreneurs upon retirement. In contrast to the plans discussed earlier, a defined benefit plan doesn't fluctuate based on investment returns, but lets individuals clearly understand what they'll receive in retirement. This strategy is ideal for higher-income entrepreneurs who want to save a significant sum for retirement and are prepared to contribute sizeable contributions. Contributions are tax deferred, and withdrawals are taxed as income in retirement.
Eligibility: Entrepreneurs operating a solo business or employing fewer than five people may establish an individual defined benefit plan, but it's generally suggested for people above age 50 who earn at least $250,000 a year. Generally, good candidates for defined benefit plans tend to be:
- Business owners or partners who want to invest more than $70,000 (or $77,500 if over age 50)
- Companies already contributing 3-4% with plans to contribute more
- Businesses with proven consistent profit patterns
- Partners or owners over age 40 who wish to accelerate savings or increase their retirement contributions rapidly
Contribution Limits: The cap on contributions must be determined by an actuary using your earnings, age, and retirement objectives. Allowable contributions change annually.
The Importance of a Financial Advisor in Arlington, TX for Your Self-Employed Retirement Plan
A financial advisor in Arlington, TX specialized in self-employed retirement plans serves as an invaluable resource for those working for themselves. They offer the knowledge to assist guide you through the challenges of retirement planning and craft a tailored strategy that aligns with your goals. Your advisor in Arlington, TX will evaluate your financial situation, understand your risk tolerance, and help you in selecting the best options about saving and investing for retirement. Part of what we do for you involves:
- Help you choose a plan that best fits your needs and goals
- Tailor 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
- Monitor and adjust your plan when necessary
- Provide ongoing education and advice as you continue on the road to retirement
- Increase your retirement income by making the most of your social security
Self-Employed Retirement Plans in Arlington, TX: Correct Capital's Process
Arlington, TX business owners who lack the time, interest, or knowledge to manage their self-employed retirement plan themselves often feel overwhelmed as they look at their options. Through our team at Correct Capital, our Arlington, TX financial advisors manage the bulk of your savings plan setup for you, to help make meeting your retirement goals as easy as possible for you. We will guide you in creating your self-employed retirement plan in four simple steps:
- Schedule a Call: In just 20 minutes, a member of our advisor team will assess if we're a good fit for you and your business. This short conversation lets us learn about your needs with zero commitment or major time investment on your part.
- Gather Information: If we both decide to move forward, we'll request information, including your employee count, your present financial standing, and your long-term savings targets. This enables us to craft a tailored approach designed just for you.
- Review Your Plan: After we put together a plan based on the information you provide, we'll schedule a meeting and go over your plan in detail to make sure it's clear and show how it aligns with your goals.
- Implementation and Monitoring: After we agree on your plan, we'll put everything in place so you can start saving. Over the course of our partnership, we'll have regular meetings and monitor your plan to ensure it stays suited to your needs.
Our Arlington, TX financial advisors and retirement plan consultants are fiduciary advisors, meaning they are committed by law and ethics to do what's in your best interest.
Other financial advisory services we offer in Arlington, 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 Arlington, TX
Your business isn't "just a business" to you, and your Arlington, TX financial advisors must deliver more than basic financial recommendations. At Correct Capital, we take the time to get to know our clients and their businesses to create personalized self-employed retirement plans. To every client in Arlington, TX, we provide our I.O.U. promise: everything we recommend will be independent, objective, and unbiased. To take the first step on your self-employment retirement plan, call Correct Capital today at 877-930-401k or contact us online.
