Self-employed retirement plans El Paso, TX. The flexibility of running your own company in El Paso, TX is one of the best aspects of having a self-directed career. Even so, this independence sometimes brings with a lack of security, notably when it comes to planning for retirement, as you don't have access to retirement programs through an employer. Only 13% of self-employed individuals have a workplace retirement plan, although many would be better off exploring their options. In addition to having a financially stable retirement, partnering with a financial advisor in El Paso, TX to set up your self-employed retirement plan delivers significant tax advantages that enable your business to grow and succeed.
Few El Paso, TX investment consulting and retirement planning firms understand the needs of self-employed individuals better than Correct Capital. The father of our founder was a small business owner himself (check out our story here), and Correct Capital have a rich history of assisting business owners in their retirement planning needs. We know that your professional and personal aspirations extend well past just monetary concerns, and we are dedicated to provide personalized solutions aligned with your vision. Continue exploring to find out about your self-employed retirement plan options in El Paso, TX, or give us a call at 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 deliver real benefits today. With customizable contribution options to substantial tax savings, working with a financial advisor in El Paso, TX allows you to create your retirement plan to suit your individual circumstances.
Flexibility That Fits Your Income
If your income changes annually, a plan like a SEP IRA or Solo 401(k) offers the option to modify how much you save:
- Customizable Contributions: Save extra during profitable years and scale back when revenues are down, so that your plan aligns with your current income.
- Roth Options: Opting for a Roth Solo 401(k) lets you pay taxes on contributions now, so you can withdraw your savings tax-free down the road—a smart decision if you believe your tax rate will increase in the future.
Save Money on Taxes
Plans designed for the self-employed deliver powerful tax benefits:
- Tax-Deductible Contributions: Contributions to a SIMPLE IRA shrink your tax liability, allowing you to keep more of your earnings.
- Tax-Deferred Growth: Your savings grow untaxed until withdrawn, giving your money more time to grow.
- State-Specific Incentives: Depending on where you live, you may be eligible for state-specific deductions as a self-employed individual. These state-level incentives can make these plans even more advantageous.
- Retirement Savings Contributions Credit (Saver’s Credit): Eligible individuals can apply for a credit of up to 50% of the first $2,000 put into 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 linked to the way you invest:
- Diversified Portfolios: Spreading your investments across different asset classes like stocks and bonds is a smart way to reduce risk while continuing to build your savings.
- Emergency Back-Up: Combining your retirement strategy and a dedicated business safety net helps you avoid dipping into savings during challenging periods and risking extra costs.
Plan for the Future of Your El Paso, TX Business
Preparing for retirement can assist you think through what’s next with your El Paso, TX business:
- Selling Your Business: When selling your business, retirement accounts like SEP IRAs and Solo 401(k)s remain yours and won’t be included in the sale. These accounts can provide the steady income you’ll need later on. It’s important to note that while the sale of a business usually creates a capital gain, deposits into these plans are subject to yearly maximums (e.g., up to $7,000 for IRAs or up to $70,000 for Solo 401(k)s, with catch-up contributions, according to plan rules).
- Minimizing Taxes: Using retirement contributions wisely minimizes the taxes you are required to pay when you sell your business.
- Succession Planning: For those winding down or handing over their business, your nest egg offer the funds you need through the transition. You might want to partner with a financial advisor experienced in both succession and retirement strategies to reduce taxes during the sale.
With the best-fit retirement strategy, you gain control over your financial future, cut down your tax obligations, 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 is one of the most crucial assets for building your retirement fund. Starting early not only helps you grow a bigger financial cushion but also reduces the financial burden of catching up later in life. This is why it is beneficial to start now:
The Cost of Waiting
Delaying your retirement savings could lead to a major impact on the total you’ll have when you retire. The biggest reason is compound interest—the concept where your investments earn returns, and those returns, then, earn even more returns. The longer your money has to grow, the more significant the effect of this compounding process.
Example: Taylor and Alex are both entrepreneurs. They each aim 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 saves $7,500 annually to bridge the gap.
By age 65, using a projected 7% annual return:
- Alex puts in $180,000 and accumulates $691,184.39*.
- Taylor invests $195,500 but accumulates just $474,367.78*.
How Early Contributions Grow
Even modest contributions invested steadily often create substantial growth. Take a look at this scenario showing the impact of compounding:
- Starting at age 25: Putting aside $200 per month in a retirement plan with an projected return of 7%, you’ll end up with $497,303.29* by age 65.
- Starting at age 35: Investing the same $200 per month would result in only $235,412.97* by age 65—a shortfall of over $260,000, all because of 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 estimates derived from NerdWallet’s Compound Interest Calculator, based on 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 do not guarantee future performance. Actual results may vary due to factors such as market conditions, fees, and personal factors. We recommend consulting a financial advisor for personalized advice.
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 allows you to:
- Benefit from tax-deferred growth or penalty-free withdrawals later on.
- Enjoy adjustable savings that adapt to your cash flow.
- Establish a financial cushion that offers peace of mind, no matter how your business evolves.
Starting early, the less you’ll have to worry about playing catch-up later in life. Building your retirement savings today means gaining control over your financial future and allowing yourself the ability to concentrate on your goals—both for your golden years and your El Paso, TX business.
Types of Self-Employed Retirement Plans
Multiple retirement savings options designed for entrepreneurs in El Paso, TX, each offering its own advantages and considerations. A financial advisor will guide you to evaluate the advantages and disadvantages of each choice and determine the one ideal for your circumstances. In most cases, your self-employed retirement plan options in El Paso, TX consist of:
Traditional or Roth IRA
Plan Overview: Individual Retirement Accounts (IRAs), as explained here, represent retirement savings vehicles that offer key tax perks. In a standard IRA, you can usually deduct your contributions from taxable income, and investment earnings grow tax-deferred, but withdrawals in retirement are subject to income tax. In contrast, with Roth IRAs, you contribute using income already taxed, but eligible distributions during retirement, including earnings, are not taxed. In both cases, withdrawals come without penalties provided you are at least 59½.
Eligibility: While many retirement plans, such as 401(k)s, are tied to employment, both traditional and Roth IRAs are open to those with a source of 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: The Simplified Employee Pension IRA is a retirement plan that enables self-employed individuals to set aside a portion of their self-employment income. 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) already contributed. If you have employees, you must contribute the same amount for them as you do for yourself. You may choose to contribute a flat-dollar amount or a percentage of wages to employee accounts. SEP IRAs works well for companies with cycles of high revenue and low revenue. Unlike other plans, SEP IRAs lack the high fees associated with starting or maintaining other plans.
SEPs work like standard IRAs, where contributions are made with pre-tax money and withdrawals are taxed as income.
Eligibility: Employers of any type, including self-employed individuals can set up 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 allowable contribution is based on a special calculation.
Solo 401(k)
Plan Overview: Solo 401(k)s, also called an Individual 401(k) or one-participant 401(k) plan, is a retirement savings plan meant for companies that have no employees or if the only employee is your spouse. These plans are similar to employer-sponsored 401(k) plans, and enable contributions as both the employer and the employee with pre-tax money. This offers more savings compared to SEPs or IRAs; however, the extra savings options often come with more restricted investment choices. 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 can set up and contribute to a solo 401(k).
Contribution Limits: As a self-employed individual 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 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) 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 deferrals you made.
Your combined contributions must not surpass $70,000, or $77,500 if you're over age 50 (in 2025), $81,250 for individuals turning 60-63 in 2025.
Individual Defined Benefit Plan
Plan Overview: A defined benefit plan is a retirement option that delivers a fixed, predetermined benefit to entrepreneurs upon retirement. As opposed to defined contribution plans, this plan is not influenced by market performance, but enables participants to determine what they'll get in retirement. This plan is recommended for wealthier self-employed individuals who are focused on saving a substantial amount for retirement and can commit to making larger deposits. Contributions grow tax-free until withdrawal, and withdrawals are taxed as income during retirement.
Eligibility: Any self-employed individual operating a solo business or with less than five employees can open an individual defined benefit plan, but it's most commonly advised for people above age 50 who make $250,000 or more annually. Generally, good candidates for defined benefit plans tend to be:
- Entrepreneurs who aim to deposit more than $70,000 (or $77,500 if over age 50)
- Companies already contributing 3-4% but are open to increasing contributions
- Companies showing consistent profit patterns
- Partners or owners over age 40 who aim to quickly build retirement savings or boost savings within a short timeframe
Contribution Limits: The maximum allowable contribution requires calculation from an actuary determined by your earnings, age, and retirement objectives. Contribution limits are updated yearly.
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 focused on self-employed retirement strategies can be an important asset for entrepreneurs. They bring the skills needed to guide you through the challenges of retirement planning and craft a tailored strategy that matches your objectives. An expert in your area will review your finances, determine how much risk you’re comfortable with, and guide you in choosing wisely about saving and investing for retirement. Part of what we do for you features:
- Assist in selecting a plan that aligns with your objectives and circumstances
- Customize the plan to fit you personally even further
- Create a written plan in accordance with IRS guidelines
- Set up an asset trust plan
- Make sure you understand 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
- Increase your retirement income by making the most of your social security
Self-Employed Retirement Plans in El Paso, TX: Correct Capital's Process
Entrepreneurs in El Paso, TX who don’t have the time or expertise to manage their own retirement planning themselves may end up overwhelmed when faced with their available plans. Through our team at Correct Capital, our El Paso, TX financial advisors take on the majority of your savings plan setup for you, and strive to ensure meeting your future savings targets as hassle-free as possible for you. We can help you get set 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 can determine if our services align for you and your business. This short conversation allows us to get a sense of your goals with no pressure or major time investment on your part.
- Gather Information: Once we mutually decide to continue, we'll ask for information, including whether you have employees, your current financial situation, and your future objectives. This allows us to put together a custom plan that aligns with your goals.
- Review Your Plan: Once we've developed a plan using the information you provide, we'll meet with you and discuss your plan in detail to help you fully grasp it and explain its fit to your circumstances.
- Implementation and Monitoring: When we finalize on your plan, we'll implement the necessary steps so you can begin contributing. As time goes on, we'll have regular meetings and track your progress to ensure it stays suited to your needs.
Our El Paso, TX financial advisors and retirement plan consultants serve as fiduciary advisors, who are obligated to they are legally and ethically bound to prioritize your needs above all else.
Other financial advisory services we offer in El Paso, TX include:
- Family Wealth Planning
- 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
Call Correct Capital for Your Self-Employed Retirement Plan in El Paso, TX
Your business isn't "just a business" to you, and your El Paso, TX financial advisors must deliver more than just good financial guidance. At Correct Capital, we take the time to get to know our clients and their businesses to deliver customized self-employed retirement plans. To every client in El Paso, TX, we provide our I.O.U. promise: all of the advice you get from us will be independent, objective, and unbiased. To get started on your self-employment retirement plan, contact Correct Capital now at 877-930-401k or contact us online.
