Self-employed retirement plans Garland, TX. The freedom of being your own boss in Garland, TX is one of the best aspects of working for yourself. That said, this flexibility sometimes brings with certain challenges, particularly regarding planning for retirement, as you don't have access to employer-sponsored retirement plans. Only 13% of self-employed individuals have a workplace retirement plan, but many could benefit from understanding their retirement options. In addition to having a financially stable retirement, working with a financial advisor in Garland, TX to set up your self-employed retirement plan offers significant tax advantages that allow your business to grow and succeed.
Few Garland, TX financial advisory and retirement planning firms understand the needs of entrepreneurs as well as Correct Capital. Our company’s founder grew up with a father who was a small business owner himself (check out our story here), and Correct Capital are deeply experienced in assisting business owners in their retirement planning needs. We recognize that your goals for your business and retirement extend well past just monetary concerns, and we strive to create customized solutions to meet your unique goals. Keep reading to learn more about your self-employed retirement plan options in Garland, TX, or give us a call at Correct Capital at 877-930-401k or contact us online to consult with a small business financial advisor in Garland, TX today.
Why Garland, TX Self-Employed Individuals Should Have a Retirement Plan
Retirement plans for self-employed individuals help prepare you for the future, they also deliver real benefits today. Offering flexibility in contributions to significant tax savings, working with a financial advisor in Garland, TX helps you create your retirement plan to suit 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 freedom to adjust how much you save:
- Customizable Contributions: Set aside more during successful years and reduce savings when revenues are down, so that your plan works with your cash flow.
- 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 anticipate your tax rate is likely to rise in the future.
Save Money on Taxes
Plans designed for the self-employed provide valuable tax benefits:
- Tax-Deductible Contributions: Contributions to a SIMPLE IRA reduce what you owe in taxes, 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: Based on your location, you could qualify for extra tax breaks as a business owner. These regional incentives help 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, helping to lower your tax bill even more.
Protect Your Savings With Smart Investments
Planning for a safe retirement isn’t only about how much you save—it’s also determined by your investment strategy:
- Diversified Portfolios: Allocating your investments across different stocks, bonds, and other assets is a smart way to minimize exposure to risk while still growing your savings.
- Emergency Back-Up: Supplementing your retirement savings with a business emergency fund prevents you from dipping into savings during challenging periods and incurring penalties.
Plan for the Future of Your Garland, TX Business
A thoughtful retirement strategy also helps you prepare for what’s next with your Garland, TX business:
- Selling Your Business: For those considering a sale, plans like SEP IRAs or Solo 401(k)s remain yours and don’t transfer with the business. These savings ensure the reliable income you’ll need in the future. Keep in mind that while the sale of a business usually creates a capital gain, deposits into these plans are capped at annual limits (e.g., a maximum of $7,000 for IRAs or as much as $70,000 for Solo 401(k)s, with catch-up contributions, based on plan compensation).
- Minimizing Taxes: Strategically planning your contributions minimizes the taxes you are required to pay when you sell your business.
- Succession Planning: Whether you’re transferring ownership, your retirement savings provide financial security as you make this shift. You can also seek advice from a financial advisor experienced in both succession and retirement strategies to reduce taxes during the sale.
With the proper savings strategy, you can take control of 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 Garland, TX Now?
There’s no denying that time is one of the most crucial assets when it comes to saving for retirement. Getting a head start not only allows you to build a bigger financial cushion but also reduces the pressure of catching up later in life. Here’s why it is beneficial to start now:
The Cost of Waiting
Delaying your retirement savings can have a substantial impact on the amount you’ll have when you retire. The biggest reason is compound interest—the concept where your investments grow, and those returns, in turn, generate even more returns. The longer 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 starts saving $5,000 annually at age 30.
- Taylor delays savings until age 40 but contributes $7,500 annually to bridge the gap.
By age 65, using a projected 7% annual return:
- Alex contributes $180,000 and achieves a total of $691,184.39*.
- Taylor invests $195,500 but achieves a total of only $474,367.78*.
How Early Contributions Grow
Small, consistent savings contributed over time often create substantial growth. Take a look at this 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: Investing the same $200 per month leaves you with only $235,412.97* by age 65—a gap of over $260,000, simply due to a 10-year delay.
Saving early, the less you need to save each year to meet your retirement goals.
*The numbers shown in this scenario are estimates derived from NerdWallet’s Compound Interest Calculator, based on a 7% annual return. These calculations involved multiplying yearly deposits by the years contributed. The scenarios provided are for illustrative purposes only and cannot predict actual future outcomes. Your individual results may differ due to factors such as market conditions, fees, and your unique situation. We recommend consulting a financial advisor for personalized advice.
Take Control of Your Financial Future
For self-employed individuals in Garland, TX, it can be tempting to put more emphasis on reinvesting in your business instead of saving for retirement. That said, initiating a plan now enables you to:
- Benefit from tax-free future growth or tax-free withdrawals later on.
- Benefit from adjustable savings that adapt to your earnings.
- Create a financial cushion that provides security, no matter how your business evolves.
Starting early, the less you’ll be required to worry about catching up later in life. Saving for retirement now means taking control of your financial future and creating for yourself the opportunity to focus on your goals—both for your retirement years and your Garland, TX business.
Types of Self-Employed Retirement Plans
There are several retirement savings options available for self-employed individuals in Garland, TX, each with its own advantages and considerations. A financial advisor is available to help you understand the pros and cons of each plan and identify the one ideal for your circumstances. Generally speaking, your self-employed retirement plan options in Garland, TX consist of:
Traditional or Roth IRA
Plan Overview: IRAs, or Individual Retirement Accounts, are retirement savings vehicles that provide distinct tax benefits. In a conventional IRA, contributions are typically tax-deductible, and returns grow free of current taxes, but money taken out during retirement are taxed as income. In contrast, Roth IRA contributions from post-tax earnings, but retirement withdrawals that qualify, including earnings, are tax-free. In both types of accounts, withdrawals are penalty-free if you are at least 59½.
Eligibility: Unlike plans linked to your job, traditional and Roth IRAs 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: SEP IRAs offers a way to save for retirement that enables entrepreneurs to set aside a portion of their self-employment income. Contributions must come from an employer, so, as a independent business owner, you (the employee) are limited to contributions from the employer role 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 may choose to contribute a fixed dollar figure or a percentage of wages to employee accounts. A SEP IRA is a good option for businesses that experience fluctuating revenue streams. Compared to other retirement options, SEP IRAs lack the high fees associated with starting or maintaining other plans.
SEPs operate like traditional IRAs, where the contributions are tax-deferred and withdrawals are taxed as income.
Eligibility: Any employer, including the self-employed can establish a SEP.
Contribution Limits: Contribution limits for employees in a SEP IRA must not exceed:
- 25% of compensation, or
- $70,000 for 2025
If you’re self-employed, the amount eligible to be contributed is based on a special calculation.
Solo 401(k)
Plan Overview: The Solo 401(k), sometimes referred to as an Individual 401(k) or one-participant 401(k) plan, is a retirement savings plan designed for businesses with no employees or if the only employee is your spouse. These plans operate much like traditional employer-managed 401(k) plans, and allow you to contribute as both the employer and the employee with pre-tax money. This provides more savings versus SEPs or IRAs; however, the additional opportunities often come with more restricted investment choices. 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 can set up and contribute to a solo 401(k).
Contribution Limits: As a self-employed individual 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 earned income from self-employment, up 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.
- 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 employee contributions you made.
The total contribution cannot exceed $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: A defined benefit plan offers a structured retirement solution that provides a set amount to self-employed individuals 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 what they'll receive in retirement. This option is ideal for higher-income self-employed individuals who aim to accumulate a substantial amount for retirement and are prepared to contribute larger deposits. Contributions offer tax-deferred growth, and withdrawals are taxed as income in retirement.
Eligibility: Entrepreneurs running an owner-only business or employing fewer than five people are eligible to open an individual defined benefit plan, but it's typically suggested for individuals aged 50+ who generate a minimum of $250,000 yearly. Generally, good candidates for defined benefit plans include:
- Entrepreneurs who desire to contribute more than $70,000 (or $77,500 if over age 50)
- Businesses currently investing 3-4% but are open to increasing contributions
- Businesses that have demonstrated consistent profit patterns
- Partners or owners over age 40 who desire to "catch up" or increase their retirement contributions rapidly
Contribution Limits: The maximum allowable contribution requires calculation from an actuary based on your financial situation, age, and savings targets. Allowable contributions are adjusted each year.
The Importance of a Financial Advisor in Garland, TX for Your Self-Employed Retirement Plan
Working with a financial advisor in Garland, TX focused on self-employed retirement strategies is an invaluable resource for entrepreneurs. They offer the knowledge to assist guide you through the challenges of retirement planning and craft a customized plan that matches your objectives. A financial advisor in Garland, TX will assess where you stand financially, understand your risk tolerance, and assist you in choosing wisely about saving and investing for retirement. Part of what we do for you includes:
- Guide you in choosing a plan that aligns with your objectives and circumstances
- Customize the plan to your needs even further
- Create a written plan that complies with IRS regulations
- Organize a trust plan to manage your assets
- 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
- Maximize what you receive in retirement by maximizing your social security benefits
Self-Employed Retirement Plans in Garland, TX: Correct Capital's Process
Garland, TX business owners who aren’t equipped with the time or understanding to oversee their self-employed retirement plan themselves often feel overwhelmed when faced with their available plans. Through our team at Correct Capital, our Garland, TX financial advisors take on the bulk of your savings plan setup for you, working to make meeting your retirement goals as straightforward as possible for you. We will guide you in creating your self-employed retirement plan in four simple steps:
- Schedule a Call: It only takes 20 minutes, a member of our advisor team will assess if we're suited to your needs for you and your business. This brief introduction helps us get a sense of your goals with no pressure or extensive time commitment on your part.
- Gather Information: If we both decide to move forward, we'll request information, including whether you have employees, your existing financial picture, and your future objectives. This helps us create a personalized strategy designed just for you.
- Review Your Plan: After we put together a plan based on the information you provide, we'll sit down with you and review your plan step by step to make sure it's clear and show how it aligns with your goals.
- Implementation and Monitoring: Once we've agreed on your plan, we'll implement the necessary steps so you can initiate your savings journey. Throughout our relationship, we'll meet with you and track your progress to keep it tailored to your evolving circumstances.
Our Garland, TX financial advisors and retirement plan consultants are fiduciary advisors, meaning they are required by law and ethical standards to prioritize your needs above all else.
Other financial advisory services we offer in Garland, TX include:
- Comprehensive Financial Planning
- Retirement Income Planning
- Investment Planning
- Retirement Financial Planning
- Investment Management
- 401(k) Audit
- High-Net-Worth Wealth Management
Call Correct Capital for Your Self-Employed Retirement Plan in Garland, TX
Your business isn't "just a business" to you, and your Garland, TX financial advisors should provide more than just good financial guidance. With Correct Capital, we make it a priority to understand our clients and their businesses to create tailored self-employed retirement plans. All our clients in Garland, TX benefit from our I.O.U. promise: all guidance we provide will be independent, objective, and unbiased. To take the first step on your self-employment retirement plan, reach out to Correct Capital at 877-930-401k or contact us online.
