Self-employed retirement plans in Chesterfield, MO. The flexibility involved with having your own business in Chesterfield, MO is a wonderful advantage to being self-employed. But that freedom can be accompanied by uncertainty, especially in terms of building a retirement plan, you don't have an employer who will set up a plan for you. Only 13% of self-employed individuals have a workplace retirement plan, 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 Chesterfield, MO offers tax benefits that can help propel you and your business forward.
Only a handful of 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 on our website). We know that your business and retirement goals extend far beyond mere monetary figures, and we are devoted to providing customized plans that fit where you are and where you want to go. Read on to read more about your self-employed retirement plan options in Chesterfield, MO, or call Correct Capital at 314-930-401(k) or contact us online to speak to a member of our advisory team now.
What Self-Employed Retirement Plans Are There?
There are many retirement savings options that the self-employed can establish, and which is best for you depends on your unique situation. A Chesterfield, MO financial advisor can help you comprehend the pros and cons of each option and choose that helps both your short- and long-term goals. Generally, your self-employed retirement plan options in Chesterfield, MO are comprised of:
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, deposits are deducted from your taxable income, and any gains on investments grow tax-deferred, but distributions in retirement are taxed as if it were income. On the other hand, Roth IRA payments are made with money you've already paid taxes on, but you pay no taxes on withdrawals or investment gains. In both accounts, distributions can be made without extra fees as long as you are at least 59½.
Eligibility: While many retirement plans, such as 401(k)s, are set up through an employer, 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 portion of of the money they make from their 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 must contribute an equal amount to their plans. 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 for businesses that experience fluctuating income periods. SEP IRAs don't have expensive initial setup or administrative charges other retirement plans do.
SEPs work like traditional IRAs, where contributions are made with pre-tax money and withdrawals 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 self-employed people, the annual contribution limit is decided by a unique calculation.
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 add funds as an employee and on your own behalf as the employer. This offers more savings than SEPs or IRAs, however the additional opportunities for saving are often counteracted by more limited investment options. In a solo 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 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) 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.
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 provides a an assured monthly figure to self-employed individuals after they've left the workforce. As opposed to other types of retirement plans, a defined benefit plan doesn't go up and down based on investment returns, 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 large amount for retirement and want to make substantial contributions. Contributions are tax deferred and contributions are taxed as income 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. Typically, good candidates for defined benefit plans are:
- 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 contribute more
- Companies who are sure of their 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 change each year.
How a Financial Advisor Can Help Guide Your Self-Employed Retirement Plan in Chesterfield, MO
A financial advisor in Chesterfield, MO specialized in self-employed retirement plans can be a crucial partner for self-employed individuals. They have the knowledge to help you navigate the complexities of retirement planning and design a tailored strategy that acts as a roadmap through your financial future. A financial advisor will look at your financial situation, help you figure out 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
- Personalize the plan to your needs even further
- Adopt a written plan in accordance with 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 support into and through retirement
- Increase your retirement income by increasing your social security benefits
Self-Employed Retirement Plans in Chesterfield, MO: Correct Capital's Process
Chesterfield, 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 options available to them. At Correct Capital, our retirement consultants handle the bulk of the retirement planning work on your behalf, and attempt to make achieving your business and retirement aspirations as simple as possible for you. 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 short 20-minute call for a member of our advisor team to know if we're a good fit for you and your business. This short introduction allows us to understand your needs with no obligation on your part.
- Gather Information — If we seem like a good fit, we'll ask for information, 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 custom 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 it's what you were looking for.
- 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 keep you up-to-date with how things are going and monitor your plan so it stays consistent with 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 straightforward communication and excellent service to help you attain your self-employed retirement goals.
Other services we offer in Chesterfield, MO include:
- 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
- Retirement Planning
Call Correct Capital for Your Chesterfield, MO Self-Employed Retirement Plan
Your business isn't "just a business" to you, and your Chesterfield, MO financial advisors need to offer more than simply sound financial advice. Correct Capital enjoys getting to know our clients and their business to deliver customized self-employed retirement plans. We give all our Chesterfield, 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 Chesterfield, MO, call Correct Capital today at 314-930-401(k) or contact us through our website.