Self-employed retirement plans in Belleville, IL. The flexibility involved with running your own business in Belleville, IL is a wonderful advantage to being self-employed. But that freedom can be accompanied by limited stability, especially in in regards to building a retirement plan, as you don't have access to any employer plans. Only 13% of self-employed individuals 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 retirement of your dreams, working with a financial advisor to set up your self-employed retirement plan in Belleville, IL offers favorable tax incentives that can help you improve your bottom line.
Only a handful of financial advisory and retirement planning firms know what it's like to be self-employed or a small business owner than Correct Capital. In fact, we were inspired by a self-employed individual, our founder's father (you can discover more about our story on our website). We have a deep understanding that your business and retirement goals transcend just profit, and we are dedicated to offering customized plans that reflect where you are and where you want to go. Continue reading to learn more about your self-employed retirement plan options in Belleville, IL, or call Correct Capital at 314-930-401(k) or fill out our online form to speak to a member of our advisory team today.
Types of Self-Employed Retirement Plans
There are many retirement savings plans that the self-employed can establish, each with its own set of advantages and considerations. A Belleville, IL financial advisor can help you comprehend the advantages and disadvantages of each option and choose the most suitable one for your circumstances. Generally, your self-employed retirement plan options in Belleville, IL include:
Traditional or Roth IRA
Plan Overview: IRAs, or Individual Retirement Accounts, are investment accounts that provides individuals with tax advantages to save for retirement. In a traditional IRA, contributions are typically tax-deductible, and any gains on investments grow tax-deferred, but distributions in retirement are taxed as regular income. In contrast, Roth IRA contributions are made with after-tax income, but you pay no taxes on withdrawals or investment gains. In both accounts, withdrawals can be made without extra fees if you are at least 59½.
Eligibility: While many retirement plans, such as 401(k)s, are tied to employment, traditional and Roth IRAs can be set up by 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 the money they make from their 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, they must receive the same amount you do. You can either contribute either a predetermined fixed dollar amount or a proportion of annual income to employee accounts. SEP IRAs may be a good self-employed retirement plan for businesses that go through fluctuating income periods. SEP IRAs don't have the high upfront costs or administrative expenses often associated with other retirement plans.
SEPs work like traditional IRAs, where deposits are made with pre-tax money and withdrawals are taxed as income.
Eligibility: Any employer, including the self-employed, 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
- $66,000
For self-employed people, the annual contribution limit is decided by a special calculation.
Solo 401(k)
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 function similarly to employer-sponsored 401(k) plans, and you can add funds as an employee and on your own behalf as the employer. This offers greater potential for savings than SEPs or IRAs, however the possibility of greater retirement savings is often counterbalanced by more limited investment options. In an individual 401(k) plan, you can make either traditional or Roth deferrals, which each enjoy the same tax advantages as their IRA contribution counterparts.
Eligibility: Only sole proprietors and their spouses have access to individual 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) of 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. As opposed to 401(k)s or IRAs, a defined benefit plan doesn't go up and down based on investment gains, but allows self-employed people 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 significant sum for retirement and are willing to make substantial contributions. Contributions are tax deferred and contributions are taxed at your income level in retirement.
Eligibility: Any self-employed individual who runs a business where they're the only owner or has less than five employees can establish an individual defined benefit plan, but it's typically only recommended for those over 50 who earn at least $250,000 a year. Those interested in defined benefit plans tend to be:
- Partners or owners who desire to contribute more than $66,000 (or $73,500 over age 50)
- Companies already contributing 3-4% who are want to do more
- Companies who have demonstrated consistent profit patterns
- Partners or owners over age 40 who desire to "catch up" or accelerate the retirement savings
Contribution Limits: The contribution limit must be determined by an actuary who calculates for your income, age, and retirement goals. Contribution limits are adjusted annually.
Why You Need a Financial Advisor for Your Self-Employed Retirement Plan in Belleville, IL
A financial advisor in Belleville, IL specialized in self-employed retirement plans can be a valuable asset for self-employed individuals. They have the experience to help you navigate the intricacies of retirement planning and develop a personalized approach that gets you where you want to go. A financial advisor will evaluate your financial situation, 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
- Tailor the plan to your needs even further
- Adopt a written plan that follows all IRS rules
- Arrange a trust plan for assets
- Create a record keeping system
- Help you understand the plan's terms
- Monitor and adjust your plan as needed
- Offer continued financial education and support into and through retirement
- Maximize your retirement income by increasing your social security benefits
Self-Employed Retirement Plans in Belleville, IL: Correct Capital's Process
Belleville, IL 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 with the different plans available to them. At Correct Capital, our financial advisors handle the bulk of the retirement planning work for you, and strive to make achieving your business and retirement aspirations as easy as possible for you. We can help you get set up with your self-employed retirement plan in four simple steps:
- Schedule a Call — It only takes 20 minutes for one of our advisors to understand if we're a good fit for you and your business. This brief introduction allows us to understand your needs with no major time investment for you.
- Gather Information — If we both decide to move forward, we'll request more info, including the number of employees in your business (if applicable), your current finances, and what kind of retirement you want to live. This allows us to put together a custom plan based entirely on type of advising you need.
- Review Your Plan — After we put together a plan based on the information you provide, we'll meet with you and discuss your plan in detail to ensure it's what you were looking for.
- Implementation and Monitoring — Once we've enacted your plan, we'll put everything in place so your savings can start growing immediately. Throughout your time partnering with us, we'll keep you up-to-date with how things are going and adjust your plan to ensure it stays suited to your needs.
Our financial advisors and retirement consultants are fiduciary advisors who are legally and morally bound to do what's in your best interest. We pride ourselves in providing clear communication and excellent service to assist you reach your self-employed retirement goals.
Other services we offer in Belleville, IL 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
Call Correct Capital for Your Belleville, IL Self-Employed Retirement Plan
Your business isn't simply an enterprise to you, and your Belleville, IL financial advisors need to offer more than just sound financial advice. Correct Capital takes pride in getting to know our clients and their business to deliver tailored self-employed retirement plans. We offer all our Belleville, IL clients our I.O.U. promise: all of the advice we give you will be independent, objective, and unbiased. To get started on your self-employment retirement plan in Belleville, IL, speak to a financial advisor today at 314-930-401(k) or fill out our online form.
