Self-employed retirement plans in Central West End, MO. The freedom of having your own business in Central West End, MO is a fantastic aspect of being self-employed. But increased leeway can be accompanied by a lack of security, especially in terms of 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 can contribute to, but many would be better off exploring what plans are available. In addition to a more comfortable retirement, partnering with a financial advisor to get started and maintain your self-employed retirement plan in Central West End, MO offers tax benefits that can help free up much-needed funds for your business.
Only a handful of financial advisory and retirement planning firms will understand the needs of the self-employed and small business owners more 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 just profit, and we are devoted to offering personalized plans that fit your goals. Continue reading to read more about your self-employed retirement plan options in Central West End, MO, or call Correct Capital at 877-930-4015 or fill out our online form to speak to a small business financial advisor now.
What Self-Employed Retirement Plans Are There?
There are several retirement savings plans available for self-employed individuals, and which is best for you depends on your unique situation. A Central West End, MO financial advisor can help you understand the pros and cons of each option and opt for that works best for you. Typically, your self-employed retirement plan options in Central West End, MO 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. If you deposit to a traditional IRA, deposits are typically tax-deductible, and investment earnings grow tax-deferred, but distributions in retirement are liable to income tax. In contrast, Roth IRA deposits are made with money you've already paid taxes on, but you pay no taxes on withdrawals or earnings. In both accounts, distributions 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 percentage of of the money they make from their self-employment. Since you are self-employed, you (the employee) have a contribution limit of no more than the 25% already contributed by you (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 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 experiences periods of variable income. 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 money you haven't paid taxes on and distributions are taxed at your income at the time of distribution.
Eligibility: Self-employed individuals and any employer, can establish a SEP.
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 similarly to 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 counterbalanced by having less investment options available. 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 business owners and their spouses can 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 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 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.
The total contribution 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 401(k)s or IRAs, 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 significant sum for retirement and want to add significant contributions. Contributions are tax deferred and contributions are taxed as income 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 well into the six figures. Those interested in defined benefit plans tend to be:
- Partners or owners who want 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 desire to make up for earlier years when they didn't save as much
Contribution Limits: The contribution limit must be calculated by an actuary based on your income, age, and retirement goals. Contribution limits change annually.
The Importance of a Financial Advisor for Your Self-Employed Retirement Plan in Central West End, MO
A financial advisor in Central West End, MO specialized in self-employed retirement plans can be an invaluable resource for self-employed individuals. They have the experience to help you understand the complexities of retirement planning and create a tailored strategy that aligns with your goals. A financial planner will look at 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
- Personalize 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 Central West End, MO: Correct Capital's Process
Central West End, 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 strive to make meeting the golden years of your dreams as easy as possible for you. 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 understand if we're a good fit for you and your business. This short introduction allows us to understand what you're looking for with no obligation on your part.
- Gather Information — If we both decide to move forward, we'll request information, including how many employees you have (if any), your current financial situation, and your retirement goals. This allows us to put together a personalized plan based entirely on type of advising you need.
- Review Your Plan — Once we've compiled your plan, we'll meet with you and go over your plan in detail to ensure you're comfortable with it.
- Implementation and Monitoring — Once we've enacted your plan, 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 so it stays consistent with your needs.
Our financial planners and retirement consultants are fiduciary advisors who are legally and ethically bound to do what's best for you and only you. We pride ourselves in providing transparent communication and excellent service to help you achieve your self-employed retirement goals.
Other services we offer in Central West End, 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
Call Correct Capital for Your Central West End, MO Self-Employed Retirement Plan
Your business isn't "just a business" to you, and your Central West End, MO financial advisors need to provide you with more than just sound financial advice. Correct Capital takes pride in getting to know our clients and their business to deliver customized self-employed retirement plans. We give all our Central West End, 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 Central West End, MO, speak to a financial advisor today at 877-930-4015 or contact us online.
