Self-employed retirement plans El Paso, TX. The freedom of running your own company in El Paso, TX is one of the greatest advantages of working for yourself. Even so, this independence often comes with potential drawbacks, especially regarding building your retirement fund, because you don't have access to a workplace retirement plan. 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 financially stable retirement, partnering with a financial advisor in El Paso, TX to set up your self-employed retirement plan can provide significant tax advantages that help your business to grow and succeed.
Few El Paso, TX financial advisory and retirement planning firms are as attuned to the requirements of small business owners as well as Correct Capital. Our founder's father was a small business owner himself (check out our story here), and we are deeply experienced in helping businesses with their retirement planning needs. We recognize that your goals for your business and retirement extend well past simple financial figures, and we are dedicated to offer personalized solutions aligned with your vision. Continue exploring to find out about your self-employed retirement plan options in El Paso, TX, or reach out to Correct Capital at 877-930-401k or contact us online to talk to a self-employed financial advisor in El Paso, TX today.
Why El Paso, 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 provide real benefits today. From flexible contributions to considerable tax savings, working with a financial advisor in El Paso, TX enables you to create your retirement plan to fit your individual circumstances.
Flexibility That Fits Your Income
For those with fluctuating income over time, a plan like a SEP IRA or Solo 401(k) gives you the option to tailor how much you save:
- Customizable Contributions: Save extra during successful years and cut back when revenues are down, so your plan works with your current income.
- Roth Options: Choosing a Roth Solo 401(k) lets you pay taxes on contributions now, so you can withdraw tax-free later—an advantageous choice if you believe your tax rate is likely to rise in the future.
Save Money on Taxes
Plans designed for the self-employed provide powerful tax benefits:
- Tax-Deductible Contributions: Contributions to a Solo 401(k) reduce what you owe in taxes, so you can keep more of your income.
- Tax-Deferred Growth: Your savings grow untaxed until withdrawn, which gives your money more time to compound.
- State-Specific Incentives: Depending on where you live, you could qualify for state-specific tax breaks as a self-employed individual. These state-level incentives help make these plans even more valuable.
- 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, cutting down your tax bill even more.
Protect Your Savings With Smart Investments
Planning for a safe retirement goes beyond just how much you save—it’s also determined by your investment strategy:
- Diversified Portfolios: Spreading your investments across varied asset classes like stocks and bonds can help reduce risk while continuing to build your savings.
- Emergency Back-Up: Supplementing your retirement savings with a financial buffer for your business helps you avoid dipping into savings during financial hardships and risking extra costs.
Plan for the Future of Your El Paso, TX Business
Preparing for retirement can assist you prepare for what’s next with your El Paso, TX business:
- Selling Your Business: If you’re planning to sell, plans like SEP IRAs or Solo 401(k)s remain your personal assets and won’t be included in the sale. These accounts ensure the steady income you’ll need in the future. Keep in mind that while selling your business results in a capital gain, contributions to retirement accounts 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, including catch-up contributions, according to plan rules).
- Minimizing Taxes: Strategically planning your contributions minimizes the taxes you might face when you sell your business.
- Succession Planning: For those winding down or handing over their business, your retirement accounts provide the funds you need during the change. You may also partner with a financial advisor with expertise in succession and retirement planning to help with taxes during the sale.
With the right retirement plan, you gain control over your financial future, reduce your tax burden, and build a strong framework for both your retirement and your business goals.
Why Start a Self-Employed Retirement Plan in El Paso, TX Now?
Time remains one of the most important factors when it comes to saving for retirement. Starting early not only helps you grow a bigger financial cushion but also lowers the financial burden of catching up later in life. The following are reasons why it is beneficial to start now:
The Cost of Waiting
Waiting to start your retirement fund may cause a significant impact on the amount you’ll have when you retire. The biggest reason is compound interest—the financial principle where your investments generate earnings, and those returns, in turn, generate even more returns. The more time your money has to grow, the more significant the benefit of compounding.
Example: Taylor and Alex are both self-employed professionals. 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 saves $7,500 annually to catch up.
By age 65, using a projected 7% annual return:
- Alex puts in $180,000 and accumulates $691,184.39*.
- Taylor puts in $195,500 but achieves a total of only $474,367.78*.
How Early Contributions Grow
Small, consistent savings invested steadily may result in impressive 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 average annual return of 7%, you’ll grow to approximately $497,303.29* by age 65.
- Starting at age 35: Saving the same $200 per month would result in only $235,412.97* by age 65—a difference of over $260,000, just from 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, based on a 7% annual return. These calculations involved multiplying yearly deposits by the years contributed. These examples are meant to provide general guidance and do not guarantee future performance. Your individual results may differ based on elements like market conditions, fees, and your unique situation. Be sure to speak with a financial advisor for custom recommendations.
Take Control of Your Financial Future
If you’re self-employed in El Paso, TX, it is often the case that you put more emphasis on reinvesting in your business over saving for retirement. Even so, starting a plan now enables you to:
- Take advantage of tax-free future growth or tax-free withdrawals in the future.
- Benefit from flexible contributions that align with your earnings.
- Build a safety net that ensures stability, no matter how your business develops.
The sooner you start, the less you’ll be required to worry about playing catch-up later in life. Taking steps toward your retirement goals today means gaining control over your financial future and allowing yourself the ability to concentrate on your objectives—both for your golden years and your El Paso, TX business.
Types of Self-Employed Retirement Plans
There are several retirement savings options designed for self-employed individuals in El Paso, TX, each providing its own advantages and considerations. A financial advisor can help you learn about the advantages and disadvantages of each option and determine the one most suitable for your circumstances. In most cases, your self-employed retirement plan options in El Paso, TX consist of:
Traditional or Roth IRA
Plan Overview: IRAs, or Individual Retirement Accounts, are long-term savings plans that offer distinct tax benefits. In a standard 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, Roth IRA contributions are made with after-tax income, but qualified withdrawals in retirement, including earnings, are exempt from taxes. In both cases, withdrawals are penalty-free if you are at least 59½.
Eligibility: Unlike plans linked to your job, 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're 50 or older.
Simplified Employee Pension Plan (SEP IRA)
Plan Overview: SEP IRAs offers a way to save for retirement that permits self-employed individuals to contribute a percentage of their net earnings. Contributions must come from an employer, so, as a sole proprietor, you (the employee) are limited to contributions from the employer role 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. It's your choice whether to contribute a fixed dollar figure or a percentage of wages to employee accounts. A SEP IRA may be ideal for companies with 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 operate like traditional IRAs, where you contribute pre-tax dollars and retirement distributions are taxable.
Eligibility: Employers of any type, including self-employed individuals 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
For self-employed individuals, the contribution you can make is based on a special calculation.
Solo 401(k)
Plan Overview: The Solo 401(k), commonly known as an Individual 401(k) or one-participant 401(k) plan, is a self-employed retirement plan intended for companies that have no employees or where the only employee is a spouse. This type of plan operate much like standard 401(k) plans, and enable contributions as both an employee or an employer with pre-tax money. This offers more savings versus SEPs or IRAs; however, the additional opportunities often come with more restricted investment choices. With this type of plan, you can make either traditional or Roth deferrals, which share 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: As a self-employed individual with a solo 401(k) plan, you can make two types of contributions:
- Employee contributions of up to 100% of your self-employed earnings, capped at the annual contribution limit. In 2025, those limits are $23,500, or $31,000 if you are 50 or older, or $34,750 for those who turn 60-63 in 2025.
- Employer 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 elective deferrals you made.
Total contributions are capped at $70,000, or $77,500 for individuals aged 50+ (in 2025), $81,250 if you attain age 60-63 in 2025.
Individual Defined Benefit Plan
Plan Overview: A defined benefit plan represents a type of retirement plan that guarantees a fixed, predetermined benefit to self-employed individuals upon retirement. Unlike defined contribution plans mentioned above, this plan is not influenced by market performance, but allows self-employed individuals to know the precise amount they'll receive in retirement. This option is recommended for higher-income entrepreneurs who aim to accumulate a large amount for retirement and are prepared to contribute substantial contributions. Contributions are tax deferred, and withdrawals incur taxes as income during retirement.
Eligibility: Self-employed professionals operating a solo business or with a small staff of under five can open an individual defined benefit plan, but it's typically suggested for those over 50 who make $250,000 or more annually. Typically, good candidates for defined benefit plans are:
- Business owners or partners who aim to deposit more than $70,000 (or $77,500 for individuals 50 and older)
- Organizations that already put in 3-4% and are willing to do more
- Businesses with proven consistent profit patterns
- Entrepreneurs over age 40 who wish to accelerate savings or increase their retirement contributions rapidly
Contribution Limits: The maximum allowable contribution must be determined by an actuary using your earnings, age, and retirement objectives. Allowable contributions change annually.
The Importance of a Financial Advisor in El Paso, TX for Your Self-Employed Retirement Plan
Working with a financial advisor in El Paso, TX specialized in self-employed retirement plans serves as an essential partner for entrepreneurs. They have the expertise to help understand the intricacies of saving for retirement and craft a tailored strategy that reflects your aspirations. An expert in your area will review your finances, understand your risk tolerance, 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 suits your unique requirements
- Further adapt the plan to your specific situation even further
- Formalize a plan in writing in accordance with IRS guidelines
- Arrange a trust plan for assets
- Ensure you comprehend the plan's terms
- Monitor and adjust your plan as needed
- Deliver continuous support and financial insights as you continue on the road to retirement
- Increase your retirement income by optimizing your social security benefits
Self-Employed Retirement Plans in El Paso, TX: Correct Capital's Process
Entrepreneurs in El Paso, TX who lack the time, interest, or knowledge to handle their own retirement planning independently can become overwhelmed by their options. With Correct Capital, our El Paso, TX financial advisors handle the bulk of your retirement planning for you, and strive to ensure meeting your financial objectives as easy 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: It only takes 20 minutes, a member of our advisor team will assess if our services align for you and your business. This short conversation lets us learn about your needs with no obligation or extensive time commitment on your part.
- Gather Information: Should we agree to proceed, we'll request information, including whether you have employees, your present financial standing, and your future objectives. This enables us to craft a tailored approach suited specifically for your needs.
- Review Your Plan: When we finalize a plan based on the information you provide, we'll meet with you and review your plan in detail to ensure you understand it and understand how it best correlates to your needs.
- Implementation and Monitoring: Once we've agreed on your plan, we'll put everything in place so you can start saving. Throughout our relationship, we'll have regular meetings and review your strategy to ensure it stays suited to your needs.
Our El Paso, TX financial advisors and retirement plan consultants are fiduciary advisors, meaning they are legally and ethically bound to act in your best interest.
Other financial advisory services we offer in El Paso, 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 El Paso, TX
To you, your business is more than "just a business", and your El Paso, TX financial advisors need to offer more than just good financial guidance. At Correct Capital, we take the time to get to know our clients and their businesses to provide tailored self-employed retirement plans. We offer all our El Paso, TX clients our I.O.U. promise: everything we recommend will be independent, objective, and unbiased. To get started on your self-employment retirement plan, reach out to Correct Capital at 877-930-401k or contact us online.
