Self-employed retirement plans in Brentwood, MO. The flexibility involved with having your own business in Brentwood, MO is a wonderful advantage to being self-employed. But that freedom can come with limited stability, especially in in regards to saving for retirement, as you don't have access to any employer plans. Only a fraction of self-employed individuals have retirement plans they save with, but many would be wise to explore what plans are available. In addition to a more comfortable retirement, 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 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 discover more about our story here). We have a deep understanding that your business and retirement goals extend far beyond spreadsheets and percentages, and we are devoted to offering personalized solutions that reflect where you are and where you want to go. Read on 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 member of our advisory team at your convenience.
Types of Self-Employed Retirement Plans
There are several retirement savings options that the self-employed can establish, each with its own set of advantages and considerations. A Brentwood, MO financial advisor can help you understand the benefits and drawbacks of each option and select the most suitable one for your circumstances. Generally, your self-employed retirement plan options in Brentwood, MO are comprised of:
Traditional or Roth IRA
Plan Overview: IRAs, or Individual Retirement Accounts, are long-term savings plans that allows you to set aside money for the future, with special tax considerations. If you deposit to a traditional IRA, contributions are deducted from your taxable income, and investment earnings grow tax-deferred, but withdrawals in retirement are liable to income tax. On the other hand, Roth IRA deposits are made with after-tax income, but qualified withdrawals in retirement, including investment gains, 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 portion of of their net earnings from self-employment. As a self-employed individual, your contributions are limited to the amount already contributed by you (the employer), which cannot be more than 25%. If you have employees, you would have to contribute the same amount for them as you do for yourself. You may choose to contribute a flat-dollar amount or a percentage of wages to employee accounts. SEP IRAs may be a good self-employed retirement plan if your business goes through periods of variable income. SEP IRAs don't have the costly startup or administrative fees often associated with other retirement plans.
SEPs work like traditional IRAs, where payments are made with money you haven't paid taxes on 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 the self-employed individual, 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 work 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 more savings than some other retirement savings plans, however the possibility of greater retirement savings is often counteracted by having less investment options available. In an individual 401(k) plan, you can make either traditional or Roth deferrals, which each feature the same tax benefits as their IRA contribution counterparts.
Eligibility: Only business owners and their spouses have access to solo 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 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 a fixed monthly figure to self-employed individuals once they've retired. As opposed to other types of retirement plans, a defined benefit plan doesn't fluctuate based on investment gains, but allows self-employed individuals to have an exact dollar figure as their income in retirement. This plan is ideal for high-earning self-employed individuals who want to save a a substantial portion for retirement and want to add substantial contributions. Contributions are tax deferred and withdrawals are taxed at your income level in retirement.
Eligibility: Any self-employed individual who runs a business with no employees besides the owner 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. 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 want to do more
- Companies who have demonstrated consistent profit patterns
- Partners or owners over age 40 who want to make up for earlier years when they didn't save as much
Contribution Limits: The contribution limit is 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 a crucial partner for self-employed individuals. They have the expertise to help you navigate the intricacies of retirement planning and create a customized plan that aligns with your goals. A financial advisor will evaluate where your finances currently are, adjust for your risk tolerance, and help you make smart 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
- Personalize the plan to your needs even further
- Adopt a written plan that follows all IRS guidelines
- 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 you continue on the road to retirement
- Maximize 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 stressed with the different plans available to them. At Correct Capital, our retirement consultants handle the lion's share of your retirement planning for you, and attempt to make achieving the golden years of your dreams as easy as we possibly can. We can help you get set up with your self-employed retirement plan in a straightforward four-step process:
- Schedule a Call — It only takes 20 minutes for one of our advisors to know if we're suitable for you and your business. This brief introduction allows us to understand your needs with no obligation on your part.
- Gather Information — If we both decide to move forward, we'll ask for more info, including the number of employees in your business (if applicable), your current financial situation, 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 the details of your plan 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 our relationship, 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 have a legal and ethical obligation to do what's in your best interest. We pride ourselves in providing straightforward communication and excellent service to help you achieve your self-employed retirement goals.
Other services we offer in Brentwood, MO include:
Call Correct Capital for Your Brentwood, MO Self-Employed Retirement Plan
Your business isn't simply an enterprise to you, and your Brentwood, MO financial advisors need to offer more than just sound financial advice. Correct Capital enjoys getting to know our clients and what makes them and their business tick to deliver personalized self-employed retirement plans. We give all our Brentwood, MO 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 Brentwood, MO, speak to a financial advisor today at 877-930-4015 or fill out our online form.
