Self-employed retirement plans Plano, TX. The flexibility of running your own company in Plano, TX offers many benefits of working for yourself. Even so, this independence sometimes brings with certain challenges, particularly in terms of planning for retirement, since you don't have the benefit of a workplace retirement plan. Only 13% of self-employed individuals have a workplace retirement plan, but many could benefit from looking into other possibilities. In addition to achieving a more comfortable retirement, working with a financial advisor in Plano, TX to establish your self-employed retirement plan delivers significant tax advantages that allow your business to grow and succeed.
Few Plano, TX financial advisory and retirement planning firms understand the needs of entrepreneurs quite like Correct Capital. Our founder's father was a small business owner himself (learn more about our story here), and Correct Capital have a rich history of helping businesses with their retirement planning needs. We understand that your professional and personal aspirations go far beyond basic numbers, and we strive to provide tailored solutions aligned with your vision. Continue exploring to find out about your self-employed retirement plan options in Plano, TX, or give us a call at Correct Capital at 877-930-401k or contact us online to consult with a self-employed financial advisor in Plano, TX today.
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Why Plano, 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 immediate benefits today. Offering flexibility in contributions to considerable tax savings, working with a financial advisor in Plano, TX enables you to customize your retirement plan to suit your individual circumstances.
Flexibility That Fits Your Income
When your earnings vary over time, a plan like a SEP IRA or Solo 401(k) gives you the option to tailor how much you save:
- Customizable Contributions: Save extra during profitable years and reduce savings when revenues are down, ensuring your plan fits your current income.
- Roth Options: 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 wise move if you believe your tax rate is likely to rise in the future.
Save Money on Taxes
Self-employed retirement plans provide significant tax benefits:
- Tax-Deductible Contributions: Contributions to a Solo 401(k) lower your taxable income, helping you keep more of your hard-earned money.
- Tax-Deferred Growth: Investments grow tax-free until withdrawal, giving your money more time to compound.
- State-Specific Incentives: Depending on where you live, you may be eligible for extra credits as a sole proprietor. These local incentives make these plans even more advantageous.
- Retirement Savings Contributions Credit (Saver’s Credit): Those who meet the requirements can claim a tax credit of up to 50% of the first $2,000 contributed a retirement plan, further reducing your tax bill even more.
Protect Your Savings With Smart Investments
Creating a stable future requires more than how much you save—it’s also determined by your investment strategy:
- Diversified Portfolios: Allocating your investments across varied stocks, bonds, and alternatives is a smart way to mitigate financial risk while continuing to build your retirement fund.
- Emergency Back-Up: Supplementing your retirement savings with a financial buffer for your business helps you avoid using your retirement funds during challenging periods and risking extra costs.
Plan for the Future of Your Plano, TX Business
Preparing for retirement enables you to prepare for what’s next with your Plano, TX business:
- Selling Your Business: When selling your business, plans like SEP IRAs or Solo 401(k)s stay in your name and are not part of the sale. These savings can provide the steady income you’ll need later on. It’s important to note that while selling a business often leads to a capital gain, deposits into these plans are subject to yearly maximums (e.g., a maximum of $7,000 for IRAs or up to $70,000 for Solo 401(k)s, with catch-up contributions, based on plan compensation).
- Minimizing Taxes: Making the most of retirement savings helps lower the taxes you’ll owe when you transfer your business.
- Succession Planning: Whether you’re transferring ownership, your nest egg ensure financial security through the transition. You may also work with a financial advisor experienced in both succession and retirement strategies to reduce taxes on the sale.
With the best-fit retirement strategy, you gain control over your financial future, lower your tax bill, and create a solid base for both your retirement and your business goals.
Why Start a Self-Employed Retirement Plan in Plano, TX Now?
There’s no denying that time is one of the most important factors for building your retirement fund. Starting early not only lets you accumulate a bigger financial cushion but also lowers the pressure of saving aggressively in the future. The following are reasons why it pays to take action now:
The Cost of Waiting
Delaying your retirement savings can have a major impact on the savings you’ll have when you reach retirement age. The primary reason is compound interest—the financial principle where your investments grow, and those returns, then, accumulate even more returns. The longer your money has to grow, the more significant the effect of compounding.
Example: Alex and Taylor are both self-employed individuals. They each aim to save $500,000 for retirement by age 65:
- Alex begins contributing $5,000 annually at age 30.
- Taylor waits until age 40 but puts away $7,500 annually to make up for lost time.
By age 65, with an assumption of 7% annual return:
- Alex puts in $180,000 and achieves a total of $691,184.39*.
- Taylor puts in $195,500 but achieves a total of only $474,367.78*.
How Early Contributions Grow
Small, consistent savings invested steadily often create impressive growth. Take a look at this scenario showing the impact 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 grow to approximately $497,303.29* by age 65.
- Starting at age 35: Saving 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.
The earlier you begin, the lower your annual savings needs each year to meet your retirement goals.
*The figures provided in this example are based on estimates generated with NerdWallet’s Compound Interest Calculator, assuming a 7% annual return. The contributions were calculated by multiplying the annual deposit amount by the total number of years contributions were made. The scenarios provided are intended as illustrative examples and do not guarantee future performance. Outcomes may change due to variables including market conditions, fees, and personal factors. We recommend consulting a financial advisor for custom recommendations.
Take Control of Your Financial Future
For self-employed individuals in Plano, TX, it might seem easier to prioritize reinvesting in your business instead of saving for retirement. However, initiating a plan now allows you to:
- Leverage tax-free future growth or tax-free withdrawals down the road.
- Take advantage of flexible contributions that align with your income.
- Create a long-term safety measure that provides security, no matter how your business develops.
Getting started now, the less you’ll be required to worry about making up for lost time later in life. Taking steps toward your retirement goals today means gaining control over your financial future and giving yourself the ability to focus on your dreams—both for your retirement years and your Plano, TX business.
Types of Self-Employed Retirement Plans
Multiple retirement savings options available for those working for themselves in Plano, TX, each providing its own benefits and trade-offs. A financial advisor can help you learn about the advantages and disadvantages of each option and choose the one ideal for your unique situation. In most cases, your self-employed retirement plan options in Plano, TX are:
Traditional or Roth IRA
Plan Overview: IRAs, or Individual Retirement Accounts, are retirement savings vehicles that include key tax perks. In a standard IRA, you can usually deduct your contributions from taxable income, and investment earnings grow tax-deferred, but money taken out during retirement are taxable. In contrast, with Roth IRAs, you contribute using income already taxed, but eligible distributions during retirement, including earnings, are exempt from taxes. In both types of accounts, withdrawals don’t incur penalties provided you are at least 59½.
Eligibility: Unlike 401(k)s, which are employer-sponsored, IRAs, including traditional and Roth options are accessible for individuals with an earned income.
Contribution Limits: For 2025, annual contribution limits for IRAs remain $7,000, or $8,000 if you're 50 or older.
Simplified Employee Pension Plan (SEP IRA)
Plan Overview: A Simplified Employee Pension (SEP) IRA serves as a retirement savings option that allows entrepreneurs to contribute a percentage of their net earnings. Contributions must come from an employer, so, as a sole proprietor, you (the employee) would not be able to contribute beyond 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 have the flexibility to contribute a flat-dollar amount or a percentage of wages to employee accounts. SEP IRAs may be ideal for companies with fluctuating revenue streams. In contrast to some alternatives, SEP IRAs are free of expensive setup or ongoing fees.
SEPs function like traditional IRAs, where you contribute pre-tax dollars and retirement distributions are taxable.
Eligibility: Both employers and 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 contribution you can make 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 savings option for the self-employed designed for businesses with no employees or if the only employee is your spouse. Solo 401(k)s operate much like traditional employer-managed 401(k) plans, and enable contributions as both an employee or an employer with pre-tax money. This allows for more savings versus SEPs or IRAs; however, the extra savings options often come with more constrained investment avenues. Using a solo 401(k), 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 may establish and contribute to a solo 401(k).
Contribution Limits: As a self-employed individual with a solo 401(k) plan, you can 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. The contribution limits for 2025 include $23,500, or $31,000 if you're over 50, or $34,750 for individuals aged 60-63 in 2025.
- Contributions as an employer (as an employer) cannot exceed 25% of your adjusted self-employment income, which is defined as net profit minus half of your self-employment tax and the employee contributions you made.
Your combined contributions must not surpass $70,000, or $77,500 if you're over age 50 (in 2025), $81,250 if you attain age 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 entrepreneurs upon retirement. Unlike defined contribution plans mentioned above, this plan is not influenced by market performance, but enables participants to determine exactly how much they'll get in retirement. This strategy is ideal for higher-income entrepreneurs who are focused on saving a significant sum for retirement and can commit to making substantial contributions. Contributions grow tax-free until withdrawal, and withdrawals incur taxes as income during retirement.
Eligibility: Entrepreneurs managing a one-person company or with a small staff of under five are eligible to open an individual defined benefit plan, but it's most commonly recommended for those over 50 who earn at least $250,000 a year. Generally, good candidates for defined benefit plans are:
- Partners or owners who desire to contribute more than $70,000 (or $77,500 if over age 50)
- Companies already contributing 3-4% with plans to contribute more
- Organizations showing consistent profit patterns
- Entrepreneurs over age 40 who aim to quickly build retirement savings or accelerate the retirement savings
Contribution Limits: The cap on contributions is calculated by an actuary determined by your earnings, age, and retirement objectives. Limits on contributions are updated yearly.
The Importance of a Financial Advisor in Plano, TX for Your Self-Employed Retirement Plan
Partnering with an advisor in Plano, TX focused on self-employed retirement strategies can be an important asset for self-employed individuals. They offer the knowledge to assist understand the intricacies of saving for retirement and craft a tailored strategy that matches your objectives. An expert in your area will evaluate your financial situation, identify your risk preferences, and guide you in selecting the best options about saving and investing for retirement. A key part of what we do for you involves:
- Help you choose a plan that best fits your needs and goals
- Customize the plan to fit you personally even further
- Create a written plan in accordance with IRS guidelines
- Organize a trust plan to manage your assets
- Help you understand the plan's terms
- Review and modify your plan when necessary
- 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 Plano, TX: Correct Capital's Process
Entrepreneurs in Plano, TX who don’t have the time or expertise to oversee their own retirement planning themselves can become overwhelmed when faced with their options. With Correct Capital, our Plano, TX financial advisors take on the lion's share of your retirement strategy for you, and strive to ensure meeting your financial objectives as straightforward as possible for you. We can help you get set up your self-employed retirement plan in four simple steps:
- Schedule a Call: A quick 20-minute call is all it takes, a member of our advisor team can help understand if our services align for you and your business. This initial call lets us get a sense of your goals with no pressure or extensive time commitment on your part.
- Gather Information: Should we agree to proceed, we'll ask for information, including how many employees you have (if any), your present financial standing, and your long-term savings targets. This helps us create a tailored approach 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 discuss your plan step by step to make sure it's clear and explain its fit to your circumstances.
- Implementation and Monitoring: Once we've agreed on your plan, we'll implement the necessary steps so you can begin contributing. 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 Plano, TX financial advisors and retirement plan consultants serve as 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 Plano, 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 Plano, TX
You don't see your business as "just a business", and your Plano, TX financial advisors need to offer more than just good financial guidance. At Correct Capital, we make it a priority to understand our clients and their businesses to create personalized self-employed retirement plans. To every client in Plano, TX, we provide our I.O.U. promise: all of the advice you get from us will be independent, objective, and unbiased. To take the first step on your self-employment retirement plan, call Correct Capital today at 877-930-401k or contact us online.
