Self-employed retirement plans Grand Prairie, TX. The freedom of being your own boss in Grand Prairie, TX is one of the greatest advantages of having a self-directed career. That said, this independence often comes with certain challenges, particularly regarding planning for retirement, because you don't have the benefit of a workplace retirement plan. Only 13% of self-employed individuals have a workplace retirement plan, yet countless would be better off understanding their retirement options. In addition to having a financially stable retirement, working with a financial advisor in Grand Prairie, TX to create your self-employed retirement plan can provide significant tax advantages that enable you to move your business forward.
Few Grand Prairie, TX financial advisory and retirement planning firms truly grasp the challenges faced by small business owners better than Correct Capital. Our company’s founder grew up with a father who was a small business owner himself (read more of our story here), and we have a rich history of assisting business owners in their retirement planning needs. We know that your goals for your business and retirement extend well past basic numbers, and we work tirelessly to provide tailored solutions to meet your unique goals. Continue exploring to find out about your self-employed retirement plan options in Grand Prairie, 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 Grand Prairie, TX today.
Why Grand Prairie, TX Self-Employed Individuals Should Have a Retirement Plan
Retirement plans for self-employed individuals not only prepare you for the future, they also provide immediate benefits today. From flexible contributions to considerable tax savings, consulting a financial advisor in Grand Prairie, TX helps you create your retirement plan to fit your specific needs.
Flexibility That Fits Your Income
For those with fluctuating income from year to year, a plan like a SEP IRA or Solo 401(k) provides the flexibility to modify how much you save:
- Customizable Contributions: Contribute more during profitable years and scale back when your earnings dip, ensuring your plan aligns 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—an advantageous choice if you anticipate your tax rate is likely to rise in the future.
Save Money on Taxes
Retirement plans for self-employed individuals offer significant tax benefits:
- Tax-Deductible Contributions: Contributions to a Solo 401(k) shrink your tax liability, allowing you to keep more of your income.
- Tax-Deferred Growth: Your savings grow untaxed until withdrawn, providing your money more time to grow.
- State-Specific Incentives: Depending on where you live, you could qualify for extra tax breaks as a self-employed individual. These regional incentives can make these plans even more valuable.
- Retirement Savings Contributions Credit (Saver’s Credit): Qualified participants can apply for 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 requires more than how much you save—it’s also determined by your investment strategy:
- Diversified Portfolios: Allocating your investments across a mix of asset classes like stocks and bonds is a smart way to mitigate financial risk while helping to grow your savings.
- Emergency Back-Up: Pairing your retirement plan with a dedicated business safety net helps you avoid using your retirement funds during financial hardships and facing tax penalties.
Plan for the Future of Your Grand Prairie, TX Business
A thoughtful retirement strategy can assist you prepare for what’s next with your Grand Prairie, TX business:
- Selling Your Business: For those considering a sale, retirement accounts like SEP IRAs and Solo 401(k)s stay in your name and are not part of the sale. These savings offer the financial stability you’ll need during retirement. Remember that while selling a business often leads to a capital gain, retirement plan contributions are restricted by contribution limits (e.g., a maximum of $7,000 for IRAs or up to $70,000 for Solo 401(k)s, factoring in catch-up contributions, depending on plan details).
- Minimizing Taxes: Using retirement contributions wisely helps lower the taxes you’ll owe when you sell your business.
- Succession Planning: If you’re passing the business on, your retirement savings offer a stable foundation during the change. You may also seek advice from a financial advisor with expertise in succession and retirement planning to reduce taxes during the sale.
With the best-fit retirement strategy, you gain control over your financial future, lower your tax bill, and establish a strong framework for both your retirement and your business goals.
Why Start a Self-Employed Retirement Plan in Grand Prairie, TX Now?
Time is one of the most important assets in retirement planning. Getting a head start not only lets you accumulate a more substantial retirement fund but also lowers the pressure of playing catch-up as you get older. Here’s why it is beneficial to start now:
The Cost of Waiting
Delaying your retirement savings could lead to a substantial impact on the total you’ll have when you retire. The biggest reason is compound interest—the powerful process where your investments earn returns, and those returns, then, earn even more returns. The more time your money has to grow, the larger the benefit of this growth.
Example: Two individuals, 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, with an assumption of 7% annual return:
- Alex puts in $180,000 and ends up with $691,184.39*.
- Taylor invests $195,500 but accumulates just $474,367.78*.
How Early Contributions Grow
Small, consistent savings contributed over time can lead to significant growth. Consider this example showing the effect of consistent growth:
- Starting at age 25: If you invest $200 per month in a retirement plan with an expected yearly growth rate of 7%, you’ll end up with $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 difference of over $260,000, simply due to a 10-year delay.
Saving early, the lower your annual savings needs each year to achieve your retirement goals.
*These calculations are based on estimates derived from NerdWallet’s Compound Interest Calculator, assuming a 7% annual return. Annual deposits were multiplied by the number of years to estimate total contributions. These examples are meant to provide general guidance and cannot predict actual future outcomes. Actual results may vary depending on elements like market conditions, fees, and your unique situation. We recommend consulting a financial advisor for custom recommendations.
Take Control of Your Financial Future
If you’re self-employed in Grand Prairie, TX, it is often the case that you put more emphasis on reinvesting in your business instead of saving for retirement. Even so, beginning a plan now enables you to:
- Take advantage of growth that is tax-deferred or withdrawals without taxes later on.
- Benefit from adjustable savings that align with your income.
- Build a financial cushion that offers peace of mind, no matter how your business evolves.
Starting early, the less you’ll have to worry about making up for lost time later in life. Saving for retirement now means taking control of your financial future and creating for yourself the opportunity to concentrate on your goals—both for your future retirement and your Grand Prairie, TX business.
Types of Self-Employed Retirement Plans
There are several retirement savings options available for self-employed individuals in Grand Prairie, TX, each providing its own pros and cons. A financial advisor is available to help you evaluate the advantages and disadvantages of each plan and choose the one ideal for your needs. Generally speaking, your self-employed retirement plan options in Grand Prairie, TX include:
Traditional or Roth IRA
Plan Overview: IRAs, or Individual Retirement Accounts, are retirement savings vehicles that include distinct tax benefits. In a traditional IRA, contributions are typically tax-deductible, and earnings grow without immediate taxation, but retirement distributions are taxed as income. In contrast, Roth IRA contributions from post-tax earnings, but qualified withdrawals in retirement, including earnings, are tax-free. In both cases, withdrawals come without penalties as long as you are at least 59½.
Eligibility: Unlike 401(k)s, which are employer-sponsored, both traditional and Roth IRAs are open to those with taxable earnings.
Contribution Limits: For 2025, annual contribution limits for IRAs remain $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 allows self-employed individuals to set aside a portion of their self-employment income. Contributions are strictly employer contributions an employer, so, as a independent business owner, you (the employee) cannot make additional contributions beyond the 25% you (the employer) allocate. If you have employees, you must 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. This type of plan works well for entrepreneurs facing periods of inconsistent earnings. Unlike other plans, SEP IRAs lack the high fees associated with starting or maintaining other plans.
SEPs function like standard IRAs, where the contributions are tax-deferred and retirement distributions are taxable.
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 the lesser of:
- 25% of compensation, or
- $70,000 for 2025
As a self-employed person, the contribution you can make 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 savings option for the self-employed intended for businesses with no employees or where the only employee is a spouse. Solo 401(k)s are similar to traditional employer-managed 401(k) plans, and enable contributions as both the employer and the employee with pre-tax money. This allows for more savings versus SEPs or IRAs; however, the extra savings options may be offset by more limited investment options. 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: This plan is exclusively for business owners and their spouses may establish 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:
- Deferrals as an employee of up to 100% of your self-employment income, subject to the annual contribution limit. In 2025, those limits are $23,500, or $31,000 if you're over 50, or $34,750 if you attain age 60-63 in 2025.
- Contributions as an employer (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.
Total contributions are capped at $70,000, or $77,500 if you're over age 50 (as of 2025), $81,250 for individuals turning 60-63 in 2025.
Individual Defined Benefit Plan
Plan Overview: A defined benefit plan represents a type of retirement plan that delivers a pre-established payout to self-employed individuals upon retirement. Unlike defined contribution plans mentioned above, a defined benefit plan doesn't fluctuate based on investment returns, but lets individuals clearly understand the precise amount they'll have in retirement. This option is recommended for high-earning self-employed individuals who are focused on saving a significant sum for retirement and are prepared to contribute sizeable contributions. Contributions offer tax-deferred growth, and withdrawals are taxed as income during retirement.
Eligibility: Entrepreneurs running an owner-only business or with less than five employees are eligible to open an individual defined benefit plan, but it's typically suggested for those over 50 who generate a minimum of $250,000 yearly. Typically, good candidates for defined benefit plans tend to be:
- Partners or owners who aim to deposit more than $70,000 (or $77,500 if over age 50)
- Companies already contributing 3-4% with plans to contribute more
- Businesses that have demonstrated 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 is calculated by an actuary using your income, age, and retirement goals. Limits on contributions are updated yearly.
The Importance of a Financial Advisor in Grand Prairie, TX for Your Self-Employed Retirement Plan
Partnering with an advisor in Grand Prairie, TX focused on self-employed retirement strategies can be an essential partner for entrepreneurs. They bring the skills needed to guide you through the challenges of retirement planning and design a personalized approach that matches your objectives. Your advisor in Grand Prairie, TX will assess where you stand financially, identify your risk preferences, and help you in choosing wisely 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
- Tailor the plan to your needs 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
- Track and fine-tune your plan as needed
- Deliver continuous support and financial insights throughout your retirement planning process
- Increase your retirement income by maximizing your social security benefits
Self-Employed Retirement Plans in Grand Prairie, TX: Correct Capital's Process
Self-employed individuals in Grand Prairie, TX who aren’t equipped with the time or understanding to oversee their own retirement planning themselves may end up overwhelmed when faced with their choices. With Correct Capital, our Grand Prairie, TX financial advisors handle the bulk of your retirement strategy for you, and strive to ensure meeting your future savings targets as hassle-free 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 can determine if we're suited to your needs for you and your business. This short conversation helps us learn about your needs with no obligation or significant effort on your part.
- Gather Information: If we both decide to move forward, we'll request information, including your employee count, your current financial situation, and your retirement goals. This allows us to put together a custom plan that aligns with your goals.
- Review Your Plan: After we put together a plan from the information you provide, we'll meet with you and go over your plan step by step to ensure you understand it and understand how it best correlates to your needs.
- Implementation and Monitoring: When we finalize on your plan, we'll implement the necessary steps so you can start saving. As time goes on, we'll meet with you and monitor your plan to make sure it remains aligned with your goals.
Our Grand Prairie, TX financial advisors and retirement plan consultants act as fiduciary advisors, who are obligated to they are legally and ethically bound to do what's in your best interest.
Other financial advisory services we offer in Grand Prairie, TX include:
- 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 Grand Prairie, TX
To you, your business is more than "just a business", and your Grand Prairie, TX financial advisors need to offer more than just good financial guidance. 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 Grand Prairie, TX clients our I.O.U. promise: all guidance we provide 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.
