Self-employed retirement plans in Brentwood, MO. The flexibility involved with running your own business in Brentwood, MO is a fantastic aspect of being self-employed. But increased leeway can come with a lack of security, particularly in in regards to building a retirement plan, you don't have an employer who will set up a plan for you. Barely more than 10% of self-employed individuals have retirement plans they can contribute to, but many would be wise to explore their options. 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 Brentwood, MO offers significant tax advantages that can help free up much-needed funds for your business.
Not many wealth management and retirement planning firms know what it's like to be self-employed or a small business owner as well as Correct Capital. Our founder's father was a small business owner himself (you can learn more about our story on our website). We know that your business and retirement goals transcend spreadsheets and percentages, and we are committed to providing customized plans that reflect your goals. Continue reading to read more about your self-employed retirement plan options in Brentwood, MO, or call Correct Capital at 877-930-4015 or fill out our online form to speak to a small business financial advisor now.
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 Brentwood, MO financial advisor can help you grasp 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 Brentwood, MO include:
Traditional or Roth IRA
Plan Overview: IRAs, or Individual Retirement Accounts, are personal savings plans that allows you to set aside money for the future, with special tax considerations. If you deposit to a traditional IRA, deposits are deducted from your taxable income, and any gains on investments grow tax-deferred, but distributions in retirement are subject to income tax. In contrast, Roth IRA contributions are made with money you've already paid taxes on, but qualified distributions in retirement, including earnings, are tax-free. In both accounts, withdrawals are penalty-free as long as you are at least 59½.
Eligibility: While many retirement plans, such as 401(k)s, are set up through employment, traditional and Roth IRAs are available to anyone with an earned income.
Contribution Limits: For 2023, the maximum yearly contributions 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 share of of the money they make from their self-employment. Contributions can only be made by an employer, so, as a self-employed individual, you (the employee) would not be able to contribute more than the 25% you (the employer) already contributed. If you have employees, they must receive the same amount you do. You may choose to contribute either a fixed dollar sum or a percentage of annual income to employee accounts. SEP IRAs may be a good self-employed retirement plan for businesses that experience fluctuating income periods. SEP IRAs don't have the costly startup or administrative fees other retirement plans do.
SEPs work like traditional IRAs, where deposits are made with pre-tax money and withdrawals are taxed at your income at the time of distribution.
Eligibility: Any employer, including the self-employed, can set up a SEP.
Contribution Limits: Contribution limits for employees in a SEP IRA are the lesser of:
- 25% of compensation, or
- $66,000
For the self-employed individual, the annual contribution limit is decided by a specific formula.
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 sole proprietors or those who only employ a spouse. Solo 401(k)s function in the same same way as employer-sponsored 401(k) plans, and you can make contributions as an employee and on your own behalf as the employer. This offers greater potential for savings than some other retirement savings plans, however the additional opportunities for saving are often counterbalanced by more limited investment options. In a solo 401(k) plan, you can make either traditional deferrals (with pre-tax money) or Roth deferrals (with after-tax money).
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 a maximum 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 up to 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 the defined contribution plans mentioned above, a defined benefit plan doesn't oscillate based on investment returns, but allows self-employed individuals to know exactly how much they'll get in retirement. This plan is best suited for high-earning self-employed individuals who want to save a a large amount for retirement and are willing to add substantial contributions. Contributions are tax deferred and contributions 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 only recommended for those over 50 who earn at least $250,000 a year. Typically, good candidates for defined benefit plans are:
- Partners or owners who desire to save more than $66,000 (or $73,500 over age 50)
- Companies already contributing 3-4% who are willing to contribute more
- Companies who are sure of their profit patterns
- Partners or owners over age 40 who want to "catch up" or accelerate the retirement savings
Contribution Limits: The contribution limit must be decided by an actuary based on your income, age, and retirement goals. Contribution limits change each year.
The Importance of a Financial Advisor for Your Self-Employed Retirement Plan in Brentwood, MO
A financial advisor in Brentwood, MO specialized in self-employed retirement plans can be indispensable for self-employed individuals. They have the expertise to help you navigate the intricacies of retirement planning and design a personalized approach that gets you where you want to go. A financial advisor will assess your financial situation, understand your risk tolerance, and guide you in making informed decisions about your financial future. 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 that follows all IRS regulations
- 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 guidance as long as you work with us
- Increase your retirement income by maximizing your social security benefits
Self-Employed Retirement Plans in Brentwood, MO: Correct Capital's Process
Brentwood, 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 burdened when looking at their options. At Correct Capital, our retirement consultants handle the lion's share of your retirement planning on your behalf, and attempt to make meeting the golden years of your dreams as easy as we possibly can. We can help you establish and maintain your self-employed retirement plan in four simple steps:
- Schedule a Call — We only need 20 minutes for a member of our advisor team to know if we're suitable for you and your business. This short introduction lets us understand your needs with no obligation on your part.
- 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 financial situation, and your retirement goals. 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 discuss your plan in detail to ensure you understand it.
- Implementation and Monitoring — Once we've started to move forward, we'll put everything in place so you can start saving. As long as we work together, we'll meet with you 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 ethically obligated to do what's in your best interest. We are proud to provide clear communication and top-notch service to help you attain your self-employed retirement goals.
Other services we offer in Brentwood, MO include:
- Succession Planning
- Fiduciary Financial Advisor
- Company 401(k) Plans
- ESOP Advisor
- 401(k) For Small Business
- Small Business Retirement Plans
- Tax Planning
Call Correct Capital for Your Brentwood, MO Self-Employed Retirement Plan
Your business isn't "just a business" to you, and your Brentwood, MO financial advisors need to offer more than just sage financial advice. Correct Capital enjoys getting to know our clients and their business to deliver customized self-employed retirement plans. We offer all our Brentwood, MO clients the same 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 Brentwood, MO, speak to a member of our team today at 877-930-4015 or contact us online.
