Self-employed retirement plans Austin, TX. The flexibility of running your own company in Austin, TX offers many benefits of being self-employed. Even so, this independence sometimes brings with potential drawbacks, especially in terms of planning for retirement, since you don't have the benefit of employer-sponsored retirement plans. Only 13% of self-employed individuals have a workplace retirement plan, yet countless would be better off exploring their options. In addition to having a more secure retirement, working with a financial advisor in Austin, TX to create your self-employed retirement plan delivers significant tax advantages that allow both you and your business to thrive.
Few Austin, TX investment consulting and retirement planning firms are as attuned to the requirements of entrepreneurs as well as Correct Capital. Our founder's father 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 just monetary concerns, and we work tirelessly to provide customized solutions aligned with your vision. Keep reading to learn more about your self-employed retirement plan options in Austin, 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 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. From flexible contributions to significant tax savings, working with a financial advisor in Austin, TX helps you create your retirement plan to fit your unique financial situation.
Flexibility That Fits Your Income
If your income changes over time, a plan like a SEP IRA or Solo 401(k) gives you the flexibility to adjust how much you save:
- Customizable Contributions: Set aside more during high-income years and cut back when income is lower, so that your plan works with your current income.
- Roth Options: Opting for a Roth Solo 401(k) lets you settle taxes at the time of contribution, enabling you to withdraw your savings tax-free down the road—a smart decision if you believe your tax rate is likely to rise 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, helping you keep more of your income.
- Tax-Deferred Growth: Your savings grow untaxed until withdrawn, giving your money more time to grow.
- State-Specific Incentives: Based on your location, you may be eligible for extra tax breaks as a sole proprietor. These regional 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, further reducing your tax bill even more.
Protect Your Savings With Smart Investments
Creating a stable future 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 asset classes like stocks and bonds serves to reduce risk while helping to grow your nest egg.
- Emergency Back-Up: Pairing your retirement plan with a financial buffer for your business helps you avoid tapping into your nest egg during financial hardships and incurring penalties.
Plan for the Future of Your Austin, TX Business
Retirement planning also helps you think through what’s next with your Austin, TX business:
- Selling Your Business: When selling your business, retirement accounts like SEP IRAs and Solo 401(k)s remain yours and are not part of the sale. These savings can provide the steady income you’ll need during retirement. Keep in mind that while selling your business results in a capital gain, contributions to retirement accounts are capped at annual limits (e.g., up to $7,000 for IRAs or a maximum of $70,000 for Solo 401(k)s, including catch-up contributions, based on plan compensation).
- Minimizing Taxes: Making the most of retirement savings helps lower the taxes you’ll owe when you transfer your business.
- Succession Planning: If you’re passing the business on, your nest egg ensure the funds you need as you make this shift. You might want to work with a financial advisor who specializes in succession planning and retirement accounts to minimize tax burdens on the sale.
With the best-fit retirement strategy, you manage your financial future, reduce your tax burden, and establish a secure foundation for both your retirement and your business goals.
Why Start a Self-Employed Retirement Plan in Austin, TX Now?
Time remains one of the most valuable assets in retirement planning. Beginning sooner rather than later not only allows you to build a larger nest egg but also reduces the stress of catching up later in life. The following are reasons why it makes sense to begin today:
The Cost of Waiting
Delaying your retirement savings could lead to a significant impact on the savings you’ll have when you retire. The main reason is compound interest—the financial principle where your investments earn returns, and those returns, then, accumulate even more returns. The longer your money has to grow, the greater the impact of this growth.
Example: Alex and Taylor are both self-employed individuals. Their shared goal is to save $500,000 for retirement by age 65:
- Alex starts saving $5,000 annually at age 30.
- Taylor delays savings until age 40 but puts away $7,500 annually to bridge the gap.
By age 65, with an assumption of 7% annual return:
- Alex contributes $180,000 and ends up with $691,184.39*.
- Taylor puts in $195,500 but accumulates just $474,367.78*.
How Early Contributions Grow
Small, consistent savings made consistently can lead to substantial growth. Here’s a simple scenario showing the effect of compound interest:
- Starting at age 25: Putting aside $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 shortfall of over $260,000, just from a 10-year delay.
The earlier you begin, the less effort required each year to meet your retirement goals.
*These calculations are based on 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 for illustrative purposes only and do not guarantee future performance. Outcomes may change based on variables including market conditions, fees, and personal factors. Be sure to speak with a financial advisor for custom recommendations.
Take Control of Your Financial Future
For self-employed individuals in Austin, TX, it is often the case that you focus more on reinvesting in your business instead of saving for retirement. However, starting a plan now enables you to:
- Benefit from tax-free future growth or penalty-free withdrawals down the road.
- Take advantage of adjustable savings that change with your earnings.
- Establish a financial cushion that ensures stability, no matter how your business develops.
Starting early, the less you’ll need to worry about making up for lost time later in life. Taking steps toward your retirement goals today means gaining control over your financial future and creating for yourself the ability to concentrate on your dreams—both for your retirement years and your Austin, TX business.
Types of Self-Employed Retirement Plans
There are several retirement savings options available for entrepreneurs in Austin, TX, each providing its own pros and cons. A financial advisor is available to help you learn about the advantages and disadvantages of each choice and identify the one best suited for your needs. In most cases, your self-employed retirement plan options in Austin, TX include:
Traditional or Roth IRA
Plan Overview: IRAs, or Individual Retirement Accounts, are financial tools for retirement that include specific tax advantages. In a traditional IRA, contributions are typically tax-deductible, and returns grow free of current taxes, but money taken out during retirement are subject to income tax. In contrast, with Roth IRAs, you contribute using income already taxed, but retirement withdrawals that qualify, including earnings, are exempt from taxes. In both accounts, withdrawals are penalty-free as long as you are at least 59½.
Eligibility: Unlike plans linked to your job, both traditional and Roth IRAs are accessible for individuals with taxable earnings.
Contribution Limits: For 2025, annual contribution limits for IRAs are set at $7,000, or $8,000 for those aged 50+.
Simplified Employee Pension Plan (SEP IRA)
Plan Overview: A Simplified Employee Pension (SEP) IRA is a retirement plan that allows entrepreneurs to save a percentage of their net business profits. Contributions are strictly employer contributions an employer, so, as a self-employed individual, you (the employee) would not be able to contribute more than 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 fixed dollar figure or a percentage of wages to employee accounts. This type of plan works well for entrepreneurs facing periods of inconsistent earnings. Compared to other retirement options, SEP IRAs don’t have costly startup or administrative fees.
SEPs function like standard IRAs, where contributions are made with pre-tax money and money withdrawn is subject to income tax.
Eligibility: Any employer, including the self-employed can open 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
If you’re self-employed, the contribution you can make 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 savings option for the self-employed meant for businesses without employees or where the only employee is a spouse. This type of plan are similar to employer-sponsored 401(k) plans, and allow you to contribute as both an employer and an employee with pre-tax money. This allows for more savings versus SEPs or IRAs; however, the increased savings potential can be balanced by more constrained investment avenues. In a solo 401(k) plan, you can make either traditional or Roth deferrals, which have the same tax benefits as their IRA contribution counterparts.
Eligibility: Solo 401(k)s are available solely to 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, capped at the annual contribution limit. The contribution limits for 2025 include $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 self-employment income, which is calculated as net profits less half of your self-employment tax and the elective deferrals you made.
The total contribution cannot exceed $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: The defined benefit plan offers a structured retirement solution that delivers a fixed, predetermined benefit to business owners upon retirement. As opposed to defined contribution plans, a defined benefit plan doesn't fluctuate based on investment returns, but allows self-employed individuals to know exactly how much they'll receive in retirement. This strategy is recommended for wealthier entrepreneurs who want to save a substantial amount for retirement and can commit to making sizeable contributions. Contributions grow tax-free until withdrawal, and withdrawals incur taxes as income in retirement.
Eligibility: Entrepreneurs managing a one-person company or with a small staff of under five can open an individual defined benefit plan, but it's most commonly advised for those over 50 who earn at least $250,000 a year. In most cases, good candidates for defined benefit plans include:
- Partners or owners who desire to contribute more than $70,000 (or $77,500 for individuals 50 and older)
- Companies already contributing 3-4% with plans to contribute more
- Organizations 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. Contribution limits change annually.
The Importance of a Financial Advisor in Austin, TX for Your Self-Employed Retirement Plan
Partnering with an advisor in Austin, TX focused on self-employed retirement strategies can be an important asset for self-employed individuals. They offer the knowledge to assist guide you through the challenges of retirement planning and develop a personalized approach that aligns with your goals. Your advisor in Austin, TX will assess where you stand financially, identify your risk preferences, and guide you in selecting the best options about saving and investing for retirement. Part of what we do for you includes:
- Guide you in choosing a plan that best fits your needs and goals
- Tailor the plan to fit you personally even further
- Formalize a plan in writing that complies with IRS regulations
- Arrange a trust plan for assets
- Ensure you comprehend the plan's terms
- Review and modify your plan as needed
- Provide ongoing education and advice throughout your retirement planning process
- Maximize what you receive in retirement by optimizing your social security benefits
Self-Employed Retirement Plans in Austin, TX: Correct Capital's Process
Entrepreneurs in Austin, TX who lack the time, interest, or knowledge to manage their retirement savings strategy on their own can become overwhelmed as they look at their options. At Correct Capital, our Austin, TX financial advisors manage the bulk of your retirement planning for you, working to make meeting your retirement goals as straightforward as possible for you. We are here to assist you in setting up 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 our services align for you and your business. This short conversation lets us get a sense of your goals with zero commitment or major time investment on your part.
- Gather Information: Once we mutually decide to continue, we'll request information, including whether you have employees, your existing financial picture, and your retirement goals. This allows us to put together a tailored approach designed just for you.
- Review Your Plan: When we finalize a plan from the information you provide, we'll sit down with you and go over your plan thoroughly to ensure you understand 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 check in and monitor your plan to keep it tailored to your evolving circumstances.
Our Austin, TX financial advisors and retirement plan consultants are fiduciary advisors, which means they are committed by law and ethics to do what's in your best interest.
Other financial advisory services we offer in Austin, 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 Austin, TX
You don't see your business as "just a business", and your Austin, TX financial advisors need to offer more than simply sound financial advice. At Correct Capital, we take the time to get to know our clients and their businesses to create personalized self-employed retirement plans. We offer all our Austin, TX clients 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.
