Self-employed retirement plans Laredo, TX. The flexibility of running your own company in Laredo, TX offers many benefits of being self-employed. Even so, this flexibility often comes with potential drawbacks, especially regarding building your retirement fund, as you don't have access to retirement programs through an employer. Only 13% of self-employed individuals have a workplace retirement plan, but many would be better off looking into other possibilities. In addition to enjoying a more comfortable retirement, seeking advice from a financial advisor in Laredo, TX to create your self-employed retirement plan offers significant tax advantages that help both you and your business to thrive.
Few Laredo, TX financial advisory and retirement planning firms are as attuned to the requirements of small business owners quite like Correct Capital. Our founder's father was a small business owner himself (check out our story here), and Correct Capital are deeply experienced in helping businesses with their retirement planning needs. We understand that your goals for your business and retirement aren’t limited to basic numbers, and we are dedicated to create personalized solutions that reflect your objectives. Keep reading to learn more about your self-employed retirement plan options in Laredo, TX, or call Correct Capital at 877-930-401k or contact us online to talk to a small business financial advisor in Laredo, TX today.
Why Laredo, TX Self-Employed Individuals Should Have a Retirement Plan
Retirement plans for self-employed individuals help prepare you for the future, they also deliver immediate benefits today. From flexible contributions to significant tax savings, consulting a financial advisor in Laredo, TX allows you to create your retirement plan to suit your specific needs.
Flexibility That Fits Your Income
If your income changes over time, a plan like a SEP IRA or Solo 401(k) offers the flexibility to modify how much you save:
- Customizable Contributions: Set aside more during profitable years and reduce savings when income is lower, so your plan works with your cash flow.
- Roth Options: Opting for a Roth Solo 401(k) lets you handle taxes upfront, so you can withdraw your savings tax-free down the road—a smart decision if you anticipate your tax rate will increase in the future.
Save Money on Taxes
Retirement plans for self-employed individuals provide significant tax benefits:
- Tax-Deductible Contributions: Contributions to a SEP IRA lower your taxable income, helping you keep more of your earnings.
- Tax-Deferred Growth: You won't pay taxes on investment growth until you withdraw it, providing your money more time to compound.
- State-Specific Incentives: Based on your location, you could qualify for additional credits as a self-employed individual. These state-level incentives can make these plans even more beneficial.
- Retirement Savings Contributions Credit (Saver’s Credit): Qualified participants can take advantage of a credit of up to 50% of the first $2,000 they contribute a retirement plan, helping to lower your tax bill even more.
Protect Your Savings With Smart Investments
Creating a stable future goes beyond just how much you save—it’s also about how you invest:
- Diversified Portfolios: Distributing your investments across varied stocks, bonds, and other assets is a smart way to reduce risk while helping to grow your savings.
- Emergency Back-Up: Combining your retirement strategy and a dedicated business safety net prevents you from using your retirement funds during tough times and risking extra costs.
Plan for the Future of Your Laredo, TX Business
Preparing for retirement also helps you prepare for what’s next with your Laredo, TX business:
- Selling Your Business: If you’re planning to sell, retirement accounts like SEP IRAs and Solo 401(k)s stay in your name and won’t be included in the sale. These savings ensure the financial stability you’ll need later on. It’s important to note that while selling a business often leads to a capital gain, retirement plan contributions are capped at annual limits (e.g., up to $7,000 for IRAs or up to $70,000 for Solo 401(k)s, including catch-up contributions, according to plan rules).
- Minimizing Taxes: Strategically planning your contributions can reduce the taxes you are required to pay when you pass on your business.
- Succession Planning: If you’re passing the business on, your retirement savings offer the funds you need through the transition. You can also seek advice from a financial advisor with expertise in succession and retirement planning to minimize tax burdens on the sale.
With the right retirement plan, you manage your financial future, cut down your tax obligations, and build a secure foundation for both your retirement and your business goals.
Why Start a Self-Employed Retirement Plan in Laredo, TX Now?
Time is one of the most crucial resources for building your retirement fund. Beginning sooner rather than later not only lets you accumulate a bigger financial cushion but also minimizes the financial burden of playing catch-up as you get older. The following are reasons why it is beneficial to start now:
The Cost of Waiting
Putting off saving for retirement could lead to a major impact on the savings you’ll have when you reach retirement age. The primary reason is compound interest—the concept where your investments grow, and those returns, then, generate even more returns. The longer your money has to grow, the greater the impact of compounding.
Example: Two individuals, Alex and Taylor are both self-employed professionals. 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 puts away $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 contributes $195,500 but only ends up with $474,367.78*.
How Early Contributions Grow
Small, consistent savings invested steadily may result in substantial 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 average annual return 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, just from a 10-year delay.
Saving early, the less effort required each year to meet your retirement goals.
*The numbers shown in this scenario represent estimates derived from NerdWallet’s Compound Interest Calculator, based on a 7% annual return. Annual deposits were multiplied by the number of years to estimate total contributions. This information is meant to provide general guidance and cannot predict actual future outcomes. Outcomes may change due to factors such as market conditions, fees, and personal factors. Always consult a financial advisor for personalized advice.
Take Control of Your Financial Future
For self-employed individuals in Laredo, TX, it might seem easier to focus more on reinvesting in your business instead of saving for retirement. However, beginning a plan now enables you to:
- Benefit from tax-deferred growth or withdrawals without taxes down the road.
- Benefit from adjustable savings that change with your income.
- Create a financial cushion that offers peace of mind, no matter how your business evolves.
Starting early, the less you’ll be required to worry about catching up later in life. Taking steps toward your retirement goals today means taking control of your financial future and allowing yourself the freedom to concentrate on your objectives—both for your future retirement and your Laredo, TX business.
Types of Self-Employed Retirement Plans
There are several retirement savings options open for self-employed individuals in Laredo, TX, each providing its own pros and cons. A financial advisor will guide you to learn about the benefits and drawbacks of each plan and choose the one best suited for your needs. Generally speaking, your self-employed retirement plan options in Laredo, TX are:
Traditional or Roth IRA
Plan Overview: Individual Retirement Accounts (IRAs), as explained here, represent financial tools for retirement that offer key tax perks. In a conventional IRA, you can usually deduct your contributions from taxable income, and returns grow free of current taxes, but withdrawals in retirement are taxable. In contrast, Roth IRA contributions using income already taxed, but retirement withdrawals that qualify, including earnings, are exempt from taxes. In both cases, withdrawals are penalty-free if you are at least 59½.
Eligibility: Unlike 401(k)s, which are employer-sponsored, 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: A Simplified Employee Pension (SEP) IRA offers a way to save for retirement that permits those who are self-employed to save a percentage of their net business profits. Contributions are strictly employer contributions an employer, so, as a independent business owner, you (the employee) cannot make additional contributions more than 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 flat-dollar amount or a percentage of wages to employee accounts. A SEP IRA works well for businesses that experience periods of inconsistent earnings. Compared to other retirement options, SEP IRAs lack expensive setup or ongoing fees.
SEPs operate like conventional IRAs, where contributions are made with pre-tax money and retirement distributions are taxable.
Eligibility: Any employer, including the self-employed can set up 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 allowable contribution is based on a special calculation.
Solo 401(k)
Plan Overview: A Solo 401(k) plan, commonly known as an Individual 401(k) or one-participant 401(k) plan, is a retirement savings plan designed for businesses without employees or when the sole employee is your spouse. This type of plan operate much like employer-sponsored 401(k) plans, and allow you to contribute as both an employer and an employee with pre-tax money. This allows for more savings compared to SEPs or IRAs; however, the increased savings potential can be balanced by 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: This plan is exclusively for business owners and their spouses may establish 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 are 50 or older, or $34,750 if you attain age 60-63 in 2025.
- Contributions as an employer (as an employer) are limited to 25% of your adjusted self-employment income, which is calculated as net profits less half of your self-employment tax and the deferrals you made.
Total contributions are capped at $70,000, or $77,500 if you're over age 50 (in 2025), $81,250 for those aged 60-63 in 2025.
Individual Defined Benefit Plan
Plan Overview: Defined benefit plans represents a type of retirement plan that guarantees a set amount to self-employed individuals upon retirement. As opposed to defined contribution plans, investment returns don’t affect the payout, but enables participants to determine what they'll get in retirement. This strategy is best suited for higher-income self-employed individuals who want to save a large amount for retirement and are prepared to contribute sizeable contributions. Contributions are tax deferred, and withdrawals incur taxes as income in retirement.
Eligibility: Entrepreneurs managing a one-person company or employing fewer than five people can open an individual defined benefit plan, but it's most commonly recommended for individuals aged 50+ who generate a minimum of $250,000 yearly. In most cases, good candidates for defined benefit plans are:
- Partners or owners 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 aim to quickly build retirement savings or increase their retirement contributions rapidly
Contribution Limits: The contribution limit is calculated by an actuary using your income, age, and retirement goals. Contribution limits are adjusted each year.
The Importance of a Financial Advisor in Laredo, TX for Your Self-Employed Retirement Plan
Partnering with an advisor in Laredo, TX specialized in self-employed retirement plans serves as an invaluable resource for self-employed individuals. They have the expertise to help guide you through the challenges of retirement planning and craft a customized plan that aligns with your goals. A financial advisor in Laredo, TX will assess where you stand financially, understand your risk tolerance, and help you in making informed decisions about saving and investing for retirement. Part of what we do for you features:
- Help you choose a plan that aligns with your objectives and circumstances
- Tailor the plan to fit you personally even further
- Create a written plan as required by IRS rules
- Arrange a trust plan for assets
- Help you understand the plan's terms
- Review and modify your plan to keep it aligned with your goals
- Provide ongoing education and advice to help you navigate your retirement journey
- Maximize what you receive in retirement by maximizing your social security benefits
Self-Employed Retirement Plans in Laredo, TX: Correct Capital's Process
Laredo, TX business owners who aren’t equipped with the time or understanding to handle their retirement savings strategy on their own may end up overwhelmed when faced with their choices. Through our team at Correct Capital, our Laredo, TX financial advisors manage the bulk of your savings plan setup for you, to help make meeting your retirement goals as straightforward 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 can determine if we're a good fit for you and your business. This short conversation allows us to get a sense of your goals with zero commitment or major time investment on your part.
- Gather Information: Once we mutually decide to continue, we'll gather information, including how many employees you have (if any), your present financial standing, and your retirement goals. This helps us create a tailored approach designed just for you.
- Review Your Plan: Once we've developed a plan using the information you provide, we'll schedule a meeting and go over your plan in detail to ensure you understand it and understand how it best correlates to your needs.
- Implementation and Monitoring: After we agree on your plan, we'll implement the necessary steps so you can initiate your savings journey. Over the course of our partnership, we'll meet with you and review your strategy to make sure it remains aligned with your goals.
Our Laredo, TX financial advisors and retirement plan consultants act as fiduciary advisors, who are obligated to they are required by law and ethical standards to prioritize your needs above all else.
Other financial advisory services we offer in Laredo, 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 Laredo, TX
Your business isn't "just a business" to you, and your Laredo, TX financial advisors need to offer more than simply sound financial advice. At Correct Capital, we focus on building a relationship with our clients and their businesses to provide tailored self-employed retirement plans. We offer all our Laredo, TX clients 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, call Correct Capital today at 877-930-401k or contact us online.
