Self-employed retirement plans Laredo, TX. The freedom of owning your own business in Laredo, TX is one of the greatest advantages of working for yourself. However, this freedom can come with potential drawbacks, particularly in terms of building your retirement fund, as 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 more secure retirement, seeking advice from a financial advisor in Laredo, TX to establish your self-employed retirement plan delivers significant tax advantages that allow you to move your business forward.
Few Laredo, TX financial advisory and retirement planning firms are as attuned to the requirements of small business owners quite like Correct Capital. Our company’s founder grew up with a father who was a small business owner himself (learn more about our story here), and we have a rich history of helping businesses with their retirement planning needs. We know that your professional and personal aspirations aren’t limited to simple financial figures, and we strive to offer personalized solutions to meet your unique goals. Continue exploring to find out about your self-employed retirement plan options in Laredo, TX, or call Correct Capital at 877-930-401k or contact us online to consult with a small business financial advisor in Laredo, TX today.
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Why Laredo, 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 real benefits today. From flexible contributions to substantial tax savings, partnering with a financial advisor in Laredo, TX helps you create your retirement plan to align with your specific needs.
Flexibility That Fits Your Income
When your earnings vary over time, a plan like a SEP IRA or Solo 401(k) provides the freedom to modify how much you save:
- Customizable Contributions: Contribute more during high-income years and cut back when your earnings dip, so your plan aligns with your financial situation.
- 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 wise move if you anticipate your tax rate will increase in the future.
Save Money on Taxes
Plans designed for the self-employed provide powerful tax benefits:
- Tax-Deductible Contributions: Contributions to a SEP IRA shrink your tax liability, allowing you to keep more of your hard-earned money.
- Tax-Deferred Growth: You won't pay taxes on investment growth until you withdraw it, providing your money more time to grow.
- State-Specific Incentives: Based on your location, you may be eligible for state-specific tax breaks as a business owner. These local incentives make these plans even more advantageous.
- 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
Building a secure retirement requires more than how much you save—it’s also determined by your investment strategy:
- Diversified Portfolios: Distributing your investments across a mix of stocks, bonds, and other assets can help mitigate financial risk while still growing your nest egg.
- Emergency Back-Up: Pairing your retirement plan with a dedicated business safety net ensures you don’t using your retirement funds during financial hardships and incurring penalties.
Plan for the Future of Your Laredo, TX Business
A thoughtful retirement strategy can assist you plan ahead for what’s next with your Laredo, TX business:
- Selling Your Business: When selling your business, accounts such as SEP IRAs or Solo 401(k)s remain yours and don’t transfer with the business. These plans can provide the reliable income you’ll need during retirement. It’s important to note that while selling your business results in a capital gain, deposits into these plans are restricted by contribution limits (e.g., a maximum of $7,000 for IRAs or a maximum of $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’ll owe when you transfer your business.
- Succession Planning: For those winding down or handing over their business, your retirement accounts offer the funds you need as you make this shift. You might want to seek advice from 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 create a strong framework for both your retirement and your business goals.
Why Start a Self-Employed Retirement Plan in Laredo, TX Now?
Time remains one of the most important 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 stress of catching up later in life. This is why it pays to take action now:
The Cost of Waiting
Delaying your retirement savings can have a substantial impact on the total you’ll have when you reach retirement age. The primary reason is compound interest—the concept where your investments grow, and those returns, subsequently, earn even more returns. The longer your money has to grow, the greater the impact of this growth.
Example: Two individuals, Alex and Taylor are both entrepreneurs. They each aim to save $500,000 for retirement by age 65:
- Alex starts saving $5,000 annually at age 30.
- Taylor waits until age 40 but contributes $7,500 annually to catch up.
By age 65, assuming 7% annual return:
- Alex invests $180,000 and achieves a total of $691,184.39*.
- Taylor invests $195,500 but accumulates just $474,367.78*.
How Early Contributions Grow
Even modest contributions invested steadily may result in impressive growth. Consider this example showing the effect of consistent growth:
- Starting at age 25: By investing $200 per month in a retirement plan with an projected return of 7%, you’ll accumulate $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, all because of a 10-year delay.
Starting sooner, the lower your annual savings needs each year to reach your retirement goals.
*The numbers shown in this scenario are estimates derived from NerdWallet’s Compound Interest Calculator, assuming a 7% annual return. These calculations involved multiplying yearly deposits by the years contributed. These examples are intended as illustrative examples and cannot predict actual future outcomes. Outcomes may change based on factors such as market conditions, fees, and your unique situation. Always consult a financial advisor for custom recommendations.
Take Control of Your Financial Future
For self-employed individuals in Laredo, TX, it can be tempting to put more emphasis on reinvesting in your business instead of saving for retirement. However, beginning a plan now enables you to:
- Leverage growth that is tax-deferred or tax-free withdrawals down the road.
- Benefit from adjustable savings that adapt to your earnings.
- Create a long-term safety measure that offers peace of mind, no matter how your business develops.
The sooner you start, the less you’ll need to worry about making up for lost time later in life. Building your retirement savings today 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 Laredo, TX business.
Types of Self-Employed Retirement Plans
A variety of retirement savings options open for those working for themselves in Laredo, TX, each providing its own pros and cons. A financial advisor is available to help you understand the benefits and drawbacks of each plan and identify the one ideal for your needs. In most cases, your self-employed retirement plan options in Laredo, TX consist of:
Traditional or Roth IRA
Plan Overview: IRAs, or Individual Retirement Accounts, are long-term savings plans that offer specific tax advantages. In a conventional IRA, you can usually deduct your contributions from taxable income, 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 qualified withdrawals in retirement, including earnings, are exempt from taxes. In both types of accounts, withdrawals are penalty-free as long as 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 taxable earnings.
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 serves as a retirement savings option that enables those who are self-employed to contribute a percentage of their net earnings. 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. It's your choice whether to contribute a fixed dollar figure or a percentage of wages to employee accounts. SEP IRAs works well for entrepreneurs facing fluctuating revenue streams. Unlike other plans, SEP IRAs don’t have expensive setup or ongoing fees.
SEPs function like traditional IRAs, where you contribute pre-tax dollars and retirement distributions are taxable.
Eligibility: Employers of any type, including self-employed individuals can establish a SEP.
Contribution Limits: Contribution limits for employees in a SEP IRA are the lesser of:
- 25% of compensation, or
- $70,000 for 2025
For self-employed individuals, the allowable contribution 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 self-employed retirement plan intended for businesses with no employees or if the only employee is your spouse. These plans function similarly to traditional employer-managed 401(k) plans, and enable contributions as both an employee or an employer with pre-tax money. This offers more savings than SEPs or IRAs; however, the extra savings options can be balanced by more constrained investment avenues. In a solo 401(k) plan, you can make either traditional or Roth deferrals, which offer the same tax benefits as their IRA contribution counterparts.
Eligibility: This plan is exclusively for business owners and their spouses are eligible to open and contribute to a solo 401(k).
Contribution Limits: If you are self-employed with a solo 401(k) plan, you can make two types of contributions:
- Deferrals as an employee of up to 100% of your self-employed earnings, subject to the annual contribution limit. The contribution limits for 2025 include $23,500, or $31,000 if you're over 50, or $34,750 for those who turn 60-63 in 2025.
- Employer profit-sharing contributions (as an employer) are limited to 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.
Your combined contributions must not surpass $70,000, or $77,500 if you're over age 50 (for 2025), $81,250 for those aged 60-63 in 2025.
Individual Defined Benefit Plan
Plan Overview: The defined benefit plan is a retirement option that provides a pre-established payout to self-employed individuals upon retirement. Unlike defined contribution plans mentioned above, this plan is not influenced by market performance, but enables participants to determine what they'll get in retirement. This plan is best suited for higher-income self-employed individuals who are focused on saving a significant sum for retirement and are willing to make larger deposits. Contributions are tax deferred, 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 typically advised for people above age 50 who make $250,000 or more annually. In most cases, good candidates for defined benefit plans tend to be:
- Business owners or partners who desire to contribute more than $70,000 (or $77,500 if over age 50)
- Companies already contributing 3-4% and are willing to do more
- Organizations showing consistent profit patterns
- Partners or owners over age 40 who wish to accelerate savings or boost savings within a short timeframe
Contribution Limits: The maximum allowable contribution must be determined by an actuary based on your income, age, and retirement goals. Allowable contributions are updated yearly.
The Importance of a Financial Advisor in Laredo, TX for Your Self-Employed Retirement Plan
Working with a financial advisor in Laredo, TX focused on self-employed retirement strategies serves as an invaluable resource for self-employed individuals. They offer the knowledge to assist 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, identify your risk preferences, and assist you in choosing wisely about saving and investing for retirement. Included in what we do for you features:
- Guide you in choosing a plan that aligns with your objectives and circumstances
- Further adapt the plan to your needs even further
- Formalize a plan in writing that complies with IRS regulations
- Organize a trust plan to manage your assets
- Make sure you understand the plan's terms
- Monitor and adjust your plan when necessary
- Deliver continuous support and financial insights throughout your retirement planning process
- Maximize what you receive in retirement by maximizing your social security benefits
Self-Employed Retirement Plans in Laredo, TX: Correct Capital's Process
Self-employed individuals in Laredo, TX who lack the time, interest, or knowledge to oversee their own retirement planning on their own can become overwhelmed as they look at their options. Through our team at Correct Capital, our Laredo, TX financial advisors manage the lion's share of your retirement planning 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 a quick, four-step process:
- 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 brief introduction lets us learn about your needs with zero commitment or major time investment on your part.
- Gather Information: Should we agree to proceed, we'll ask for information, including your employee count, your existing financial picture, and your retirement goals. This helps us create a personalized strategy suited specifically for your needs.
- Review Your Plan: When we finalize a plan using the information you provide, we'll schedule a meeting and go over your plan thoroughly to make sure it's clear and show how it aligns with your goals.
- Implementation and Monitoring: When we finalize on your plan, we'll set everything up so you can initiate your savings journey. Throughout our relationship, we'll have regular meetings and review your strategy to ensure it stays suited to your needs.
Our Laredo, TX financial advisors and retirement plan consultants are fiduciary advisors, who are obligated to they are committed by law and ethics to do what's in your best interest.
Other financial advisory services we offer in Laredo, TX include:
- 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 Laredo, TX
Your business isn't "just a business" to you, and your Laredo, 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 create customized self-employed retirement plans. All our clients in Laredo, TX benefit from our I.O.U. promise: all guidance we provide 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.
