Self-employed retirement plans in Arnold, MO. The flexibility involved with having your own business in Arnold, MO is one of the great things about being self-employed. But increased leeway can be accompanied by limited stability, especially in in regards to saving for retirement, you don't have an employer who will set up a plan for you. Only 13% of self-employed people have retirement plans they save with, but many would be wise to explore what plans are available. In addition to setting you up for the golden years of your dreams, partnering with a financial advisor to set up your self-employed retirement plan in Arnold, MO offers favorable tax incentives that can help you improve your bottom line.
Few financial advisory and retirement planning firms will understand the needs of the self-employed and small business owners than Correct Capital. Our founder's father was a small business owner himself (you can learn more about our story on our website). We have a deep understanding that your business and retirement aspirations extend far beyond figures and numbers, and we are devoted to providing personalized plans that fit where you are and where you want to go. Continue reading to learn more about your self-employed retirement plan options in Arnold, MO, or call Correct Capital at 314-930-401(k) or contact us online to speak to a small business financial advisor at your convenience.
What Self-Employed Retirement Plans Are There?
There are several retirement savings options available for self-employed individuals, and which is best for you depends on your unique situation. A Arnold, MO financial advisor can help you comprehend the pros and cons of each option and select that helps both your short- and long-term goals. Generally, your self-employed retirement plan options in Arnold, MO include:
Traditional or Roth IRA
Plan Overview: IRAs, or Individual Retirement Arrangements, are personal savings plans that allows you to set aside money for the future, with special tax considerations. In a traditional IRA, deposits are deducted from your taxable income, and investment earnings grow tax-deferred, but withdrawals in retirement are subject to income tax. In contrast, Roth IRA payments are made with money you've already paid taxes on, but qualified withdrawals in retirement, including investment gains, are tax-free. In both accounts, withdrawals can be made without penalty if you are at least 59½.
Eligibility: While many retirement plans, such as 401(k)s, are tied to employment, traditional and Roth IRAs are available to anyone with an earned income.
Contribution Limits: For 2023, annual contribution limits for IRAs are $6,500, or $7,500 if you're 50 or older.
Simplified Employee Pension Plan (SEP IRA)
Plan Overview: A Simplified Employee Pension (SEP) IRA is a retirement plan that allows self-employed individuals to contribute a percentage of of their net earnings from self-employment. Given that you are self-employed, your ability to contribute is restricted to the 25% already contributed by you in your position as the employer. If you have employees, you would have to contribute the same amount for them as you do for yourself. You can either contribute either a predetermined fixed dollar amount or a proportion of wages to employee accounts. SEP IRAs may be a suitable self-employed retirement plan if your business goes through cycles of high revenue and low revenue. SEP IRAs don't have the high upfront costs or administrative expenses other retirement plans do.
SEPs work like traditional IRAs, where deposits are made with money you haven't paid taxes on and distributions are taxed as income.
Eligibility: Self-employed individuals and any employer, can establish a simplified employee pension plan.
Contribution Limits: Contribution limits for employees in a SEP IRA are whichever is the least out of:
- 25% of compensation, or
For the self-employed individual, the maximum amount you can contribute in a given year is decided by a specific formula.
Plan Overview: A Solo 401(k) plan, also known as an Individual 401(k) or one-participant 401(k) plan, is a self-employed retirement plan for businesses with no employees or whose only employee is a spouse. Solo 401(k)s work about the same as employer-sponsored 401(k) plans, and you can make contributions as both an employer or employee with pre-tax money. This offers greater potential for savings than some other retirement savings plans, however the additional opportunities for saving are often offset by having less investment options available. In an individual 401(k) plan, you can make either traditional deferrals (with pre-tax money) or Roth deferrals (with after-tax money).
Eligibility: Only self-employed individuals and their spouses have access to one-participant 401(k)s.
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 100% of your earned income from self-employment, up to the annual contribution limit. In 2023, those limits are $22,500, or $30,000 if you are 50 or older.
- Employer profit-sharing contributions (as an employer) which cannot exceed a maximum of 25% of your net self-employment income, which is your net profit minus half of your self-employment tax and the elective deferrals you made.
On an annual basis, contributions cannot exceed $66,000, or $73,500 if you're over age 50 (in 2023).
Individual Defined Benefit Plan
Plan Overview: A defined benefit plan is a retirement plan that offers a an assured monthly figure to self-employed individuals after they've left the workforce. In contrast to the defined contribution plans mentioned above, a defined benefit plan doesn't oscillate because of investment returns, but allows self-employed individuals to have an exact dollar figure as their income in retirement. This plan is best suited for high-earning self-employed individuals who want to save a a substantial portion for retirement and want to add significant contributions. Contributions are tax deferred and withdrawals are taxed at your income level in retirement.
Eligibility: Any self-employed individual who runs an owner-only business or has less than five employees can open an individual defined benefit plan, but it's typically not a great idea unless you're over 50 and earn at least $250,000 a year. Those interested in defined benefit plans tend to be:
- Partners or owners who want to contribute more than $66,000 (or $73,500 over age 50)
- Companies already contributing 3-4% who are want to contribute more
- Companies who are sure of their profit patterns
- Partners or owners over age 40 who want to make up for earlier years when they couldn't save as much
Contribution Limits: The contribution limit is decided by an actuary who calculates for your income, age, and retirement goals. Contribution limits change each year.
The Importance of a Financial Advisor for Your Self-Employed Retirement Plan in Arnold, MO
A financial advisor in Arnold, MO specialized in self-employed retirement plans can be a crucial partner for self-employed individuals. They have the experience to help you understand the complexities of retirement planning and implement a tailored strategy that acts as a roadmap through your financial future. A financial planner will assess where your finances currently are, adjust for your risk tolerance, and guide you in making informed decisions about saving and investing for retirement. Part of what we do for you includes:
- Help you pick a plan that best fits your needs and goals
- Customize the plan to your needs even further
- Adopt a written plan in accordance with IRS regulations
- Arrange a trust plan for assets
- Implement a record keeping system
- Help you understand the plan's terms
- Monitor and adjust your plan as needed
- Offer continued financial education and guidance as long as you work with us
- Maximize your retirement income by maximizing your social security benefits
Self-Employed Retirement Plans in Arnold, MO: Correct Capital's Process
Arnold, MO business owners who don't want to invest the time, interest, and skill set to manage their own self-employed retirement plan can become overwhelmed when looking at their options. At Correct Capital, our financial advisors handle the bulk of the retirement planning work for you, and strive to make meeting your business and retirement goals as simple as we possibly can. We can help you establish and maintain your self-employed retirement plan in a straightforward four-step process:
- Schedule a Call — It only takes a brief 20-minute call for a member of our advisor team to know if we're a good fit for you and your business. This brief introduction allows us to get a feel for what you're looking for with no major time investment for you.
- Gather Information — If we both decide to move forward, we'll ask for information, including the number of employees in your business (if applicable), your current finances, and what kind of retirement you want to have. This allows us to put together a personalized plan suited specifically for your needs.
- Review Your Plan — After we put together a plan based on the information you provide, we'll meet with you and go over your plan in detail to ensure understand how it best correlates to your needs.
- Implementation and Monitoring — Once we've agreed on your plan, we'll put everything in place so your savings can start growing immediately. As long as we work together, we'll meet with you and adjust your plan so it stays consistent with your needs.
Our financial advisors and retirement consultants are fiduciary advisors who have a legal and moral obligation to do what's in your best interest. We pride ourselves in providing clear communication and top-notch service to help you reach your self-employed retirement goals.
Other services we offer in Arnold, MO include:
- Succession Planning
- Fiduciary Financial Advisor
- Company 401(k) Plans
- ESOP Advisor
- 401(k) For Small Business
- Small Business Retirement Plans
- Tax Planning
- Social Security Consultants Near Me
- Retirement Calculator
Call Correct Capital for Your Arnold, MO Self-Employed Retirement Plan
Your business isn't "just a business" to you, and your Arnold, MO financial advisors need to provide you with more than merely sage financial advice. Correct Capital enjoys getting to know our clients and what makes them and their business tick to deliver tailored self-employed retirement plans. We offer all our Arnold, MO 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 in Arnold, MO, call Correct Capital today at 314-930-401(k) or fill out our online form.