Self-employed retirement plans Austin, TX. The flexibility of owning your own business in Austin, TX offers many benefits of working for yourself. Even so, this independence can come with a lack of security, particularly in terms of building your retirement fund, since you don't have the option of retirement programs through an employer. Only 13% of self-employed individuals have a workplace retirement plan, yet countless should consider understanding their retirement options. In addition to having a financially stable retirement, working with a financial advisor in Austin, TX to set up your self-employed retirement plan offers significant tax advantages that enable you to move your business forward.
Few Austin, TX wealth management and retirement planning firms understand the needs of small business owners better than Correct Capital. Our company’s founder grew up with a father who was a small business owner himself (check out 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 go far beyond simple financial figures, and we strive to create customized solutions that reflect your objectives. Continue exploring to find out about your self-employed retirement plan options in Austin, TX, or call Correct Capital at 877-930-401k or contact us online to talk to a self-employed financial advisor in Austin, TX today.
Why Austin, 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 tangible benefits today. With customizable contribution options to substantial tax savings, partnering with a financial advisor in Austin, TX helps you customize your retirement plan to align with your individual circumstances.
Flexibility That Fits Your Income
If your income changes over time, a plan like a SEP IRA or Solo 401(k) provides the option to adjust how much you save:
- Customizable Contributions: Set aside more during successful years and scale back when income is lower, so that your plan works with your current income.
- Roth Options: A Roth Solo 401(k) lets you settle taxes at the time of contribution, enabling you to withdraw without tax penalties in the future—a smart decision if you expect your tax rate is likely to rise in the future.
Save Money on Taxes
Plans designed for the self-employed offer powerful tax benefits:
- Tax-Deductible Contributions: Contributions to a SEP IRA shrink your tax liability, so you can 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 compound.
- State-Specific Incentives: In some states, you might access additional deductions as a sole proprietor. These state-level incentives help make these plans even more advantageous.
- 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, 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 a mix of stocks, bonds, and other assets can help mitigate financial risk while still growing your retirement fund.
- Emergency Back-Up: Combining your retirement strategy and a dedicated business safety net helps you avoid using your retirement funds during tough times and facing tax penalties.
Plan for the Future of Your Austin, TX Business
Preparing for retirement enables you to think through what’s next with your Austin, TX business:
- Selling Your Business: If you’re planning to sell, accounts such as SEP IRAs or Solo 401(k)s remain yours and don’t transfer with the business. These savings offer the steady income you’ll need later on. It’s important to note that while selling a business often leads to a capital gain, contributions to retirement accounts are restricted by contribution limits (e.g., as much as $7,000 for IRAs or as much as $70,000 for Solo 401(k)s, including catch-up contributions, according to plan rules).
- Minimizing Taxes: Making the most of retirement savings helps lower the taxes you might face when you sell your business.
- Succession Planning: If you’re passing the business on, your retirement savings offer the funds you need through the transition. You can also work with a financial advisor experienced in both succession and retirement strategies to help with taxes on the sale.
With the proper savings strategy, you manage your financial future, cut down your tax obligations, and establish a secure foundation for both your retirement and your business goals.
Why Start a Self-Employed Retirement Plan in Austin, TX Now?
There’s no denying that time is one of the most valuable resources when it comes to saving for retirement. Starting early not only helps you grow a larger nest egg but also minimizes the pressure of playing catch-up as you get older. Here’s why it makes sense to begin today:
The Cost of Waiting
Waiting to start your retirement fund may cause a substantial impact on the total you’ll have when you retire. The primary reason is compound interest—the powerful process where your investments earn returns, and those returns, subsequently, generate even more returns. The greater time span your money has to grow, the greater the benefit of this growth.
Example: Alex and Taylor are both self-employed professionals. 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, using a projected 7% annual return:
- Alex contributes $180,000 and achieves a total of $691,184.39*.
- Taylor contributes $195,500 but accumulates just $474,367.78*.
How Early Contributions Grow
Even modest contributions invested steadily often create substantial growth. Consider this example showing the effect of consistent growth:
- Starting at age 25: Putting aside $200 per month in a retirement plan with an projected return of 7%, you’ll grow to approximately $497,303.29* by age 65.
- Starting at age 35: Saving the same $200 per month yields only $235,412.97* by age 65—a difference of over $260,000, all because of a 10-year delay.
The earlier you begin, the less you need to save each year to meet your retirement goals.
*The figures provided in this example are 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. These examples are meant to provide general guidance and are not a promise of future results. Your individual results may differ based on elements like market conditions, fees, and personal factors. We recommend consulting a financial advisor for custom recommendations.
Take Control of Your Financial Future
If you’re self-employed in Austin, TX, it is often the case that you prioritize reinvesting in your business instead of saving for retirement. That said, beginning a plan now gives you the chance to:
- Benefit from tax-deferred growth or withdrawals without taxes down the road.
- Enjoy contribution flexibility that align with your earnings.
- Establish a safety net that provides security, no matter how your business changes.
The sooner you start, 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 creating for yourself the ability to concentrate on your objectives—both for your future retirement and your Austin, TX business.
Types of Self-Employed Retirement Plans
There are several retirement savings options open for self-employed individuals in Austin, TX, each offering its own advantages and considerations. A financial advisor is available to help you learn about the pros and cons of each choice and choose the one ideal for your unique situation. Generally speaking, your self-employed retirement plan options in Austin, TX consist of:
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 conventional IRA, the money you contribute is often tax-deductible, and investment earnings grow tax-deferred, but withdrawals in retirement are taxable. In contrast, Roth IRAs require contributions using income already taxed, but qualified withdrawals in retirement, including earnings, are exempt from taxes. In both accounts, withdrawals come without penalties as long as 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 accessible for individuals with an earned income.
Contribution Limits: For 2025, annual contribution limits for IRAs are capped at $7,000, or $8,000 for those aged 50+.
Simplified Employee Pension Plan (SEP IRA)
Plan Overview: The Simplified Employee Pension IRA is a retirement plan that enables self-employed individuals to save a percentage of their net business profits. Contributions are strictly employer contributions an employer, so, as a independent business owner, you (the employee) cannot make additional contributions above the 25% you (the employer) have designated. If you have employees, it's required to contribute the same amount for them as you do for yourself. You may choose to contribute a set monetary value or a percentage of wages to employee accounts. SEP IRAs is a good option for entrepreneurs facing periods of inconsistent earnings. Compared to other retirement options, SEP IRAs don’t have the high fees associated with starting or maintaining other plans.
SEPs work like traditional IRAs, where the contributions are tax-deferred and retirement distributions are taxable.
Eligibility: Both employers and self-employed individuals can set up a SEP.
Contribution Limits: Contribution limits for employees in a SEP IRA are the lesser 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: A Solo 401(k) plan, commonly known as an Individual 401(k) or one-participant 401(k) plan, is a self-employed retirement plan intended for businesses with no employees or when the sole employee is your spouse. These plans are similar to employer-sponsored 401(k) plans, and enable contributions as both an employer and an employee with pre-tax money. This allows for more savings compared to SEPs or IRAs; however, the extra savings options may be offset 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 have the ability to make two types of contributions:
- Elective deferrals (as an employee) of up to 100% of your earned income from self-employment, subject to the annual contribution limit. For 2025, the limits will be $23,500, or $31,000 if you're over 50, or $34,750 for those who turn 60-63 in 2025.
- Employer profit-sharing contributions (as an employer) are limited to 25% of your net self-employment income, which is your net profit minus half of your self-employment tax and the deferrals you made.
The total contribution cannot exceed $70,000, or $77,500 if you're over age 50 (as of 2025), $81,250 for those aged 60-63 in 2025.
Individual Defined Benefit Plan
Plan Overview: A defined benefit plan is a retirement option that delivers a pre-established payout to business owners upon retirement. As opposed to defined contribution plans, investment returns don’t affect the payout, but lets individuals clearly understand the precise amount they'll receive in retirement. This strategy is ideal for higher-income self-employed individuals who are focused on saving a substantial amount for retirement and are willing to make substantial contributions. Contributions are tax deferred, and withdrawals are taxed as income upon retirement.
Eligibility: Entrepreneurs running an owner-only business or with a small staff of under five can open an individual defined benefit plan, but it's typically advised for individuals aged 50+ who make $250,000 or more annually. Typically, good candidates for defined benefit plans tend to be:
- Entrepreneurs who desire to contribute 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 wish to accelerate savings or accelerate the retirement savings
Contribution Limits: The cap on contributions must be determined by an actuary using your income, age, and retirement goals. Contribution limits are updated yearly.
The Importance of a Financial Advisor in Austin, TX for Your Self-Employed Retirement Plan
Partnering with an advisor in Austin, TX experienced with retirement plans for the self-employed can be an invaluable resource for those working for themselves. They bring the skills needed to understand the intricacies of saving for retirement and develop a tailored strategy that aligns with your goals. An expert in your area will review your finances, identify your risk preferences, and help you in selecting the best options about saving and investing for retirement. A key part of what we do for you involves:
- 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 that complies with IRS regulations
- Set up an asset trust plan
- Ensure you comprehend the plan's terms
- Track and fine-tune your plan when necessary
- Offer continued financial education and guidance as you continue on the road to retirement
- Boost your retirement earnings by making the most of your social security
Self-Employed Retirement Plans in Austin, TX: Correct Capital's Process
Entrepreneurs in Austin, TX who aren’t equipped with the time or understanding to manage their retirement savings strategy independently may end up overwhelmed by their available plans. Through our team at Correct Capital, our Austin, TX financial advisors handle the majority of your retirement planning for you, and strive to ensure meeting your future savings targets as straightforward 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: A quick 20-minute call is all it takes, a member of our advisor team will assess if we're a good fit for you and your business. This initial call allows us to learn about your needs with no obligation 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 existing financial picture, and your future objectives. This enables us to craft a custom plan 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 help you fully grasp it and explain its fit to your circumstances.
- Implementation and Monitoring: Once we've agreed on your plan, we'll set everything up so you can start saving. As time goes on, we'll meet with you and track your progress to make sure it remains aligned with your goals.
Our Austin, TX financial advisors and retirement plan consultants act as fiduciary advisors, meaning they are legally and ethically bound to act in your best interest.
Other financial advisory services we offer in Austin, TX include:
- Independent Financial Advisor
- Roth Conversion
- 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 Austin, TX
You don't see your business as "just a business", and your Austin, TX financial advisors must deliver more than simply sound financial advice. With Correct Capital, we make it a priority to understand our clients and their businesses to provide personalized self-employed retirement plans. We offer all our Austin, TX clients our I.O.U. promise: all of the advice you get from us will be independent, objective, and unbiased. To begin on your self-employment retirement plan, contact Correct Capital now at 877-930-401k or contact us online.
