Self-employed retirement plans in Clarkson Valley, MO. The freedom of having your own business in Clarkson Valley, MO is a wonderful advantage to working for yourself. But that freedom can come with a lack of security, particularly in in regards to saving for retirement, you don't have an employer who will set up a plan for you. Only a fraction of self-employed individuals have a workplace retirement plan, but many would be better off exploring their options. In addition to setting you up for the retirement of your dreams, partnering with a financial advisor to set up your self-employed retirement plan in Clarkson Valley, MO offers tax benefits that can help you improve your bottom line.
Not many 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 small business owner, our founder's father (you can discover more about our story here). We know that your business and retirement goals go beyond figures and numbers, and we are committed to providing personalized plans that fit your goals. Continue reading to learn more about your self-employed retirement plan options in Clarkson Valley, MO, or call Correct Capital at 877-930-4015 or contact us online to speak to a small business financial advisor now.
What Self-Employed Retirement Plans Are There?
There are many retirement savings plans that the self-employed can establish, and which is best for you depends on your unique situation. A Clarkson Valley, MO financial advisor can help you understand the pros and cons of each option and select the most suitable one for your specific needs. Typically, your self-employed retirement plan options in Clarkson Valley, MO are comprised of:
Traditional or Roth IRA
Plan Overview: IRAs, or Individual Retirement Accounts, are long-term savings plans that offer specific tax advantages. In a traditional IRA, contributions 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 after-tax income, but qualified withdrawals in retirement, including earnings, are tax-free. In both a traditional an a Roth IRA, distributions can be made without penalty 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, 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 exceed 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 either a fixed dollar sum or a percentage of wages to employee accounts. SEP IRAs may be a good self-employed retirement plan for businesses that experience periods of variable income. SEP IRAs don't have expensive initial setup or administrative charges often associated with other retirement plans.
SEPs work like traditional IRAs, where contributions are made with money you've yet to pay taxes on and withdrawals are taxed as income.
Eligibility: Self-employed individuals and any employer, 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 self-employed people, the amount eligible to be contributed is decided by a unique 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 about the same as employer-sponsored 401(k) plans, and you can add funds as both an employer or employee with pre-tax money. This offers greater potential for savings than some other retirement savings plans, however the possibility of greater retirement savings is 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 self-employed individuals 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 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) 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 provides a a predetermined monthly figure to self-employed individuals upon retirement. As opposed to 401(k)s or IRAs, a defined benefit plan doesn't oscillate because of investment gains, but allows self-employed people 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 significant sum for retirement and want to add substantial 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 establish 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 want to contribute more than $66,000 (or $73,500 over age 50)
- Companies already contributing 3-4% who are willing to do more
- Companies who are sure of their profit patterns
- Partners or owners over age 40 who want to make up for earlier years when they couldn't save as much
Contribution Limits: The contribution limit must be decided by an actuary based on your income, age, and retirement goals. Contribution limits change every year.
How a Financial Advisor Can Help Guide Your Self-Employed Retirement Plan in Clarkson Valley, MO
A financial advisor in Clarkson Valley, 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 intricacies of retirement planning and develop a tailored strategy that acts as a roadmap through your financial future. A financial advisor will assess your financial situation, understand your risk tolerance, and help you make sound decisions for yourself, both as employer and future retiree. Part of what we do for you includes:
- Help you choose 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 regulations
- Arrange a trust plan for assets
- Implement 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 increasing your social security benefits
Self-Employed Retirement Plans in Clarkson Valley, MO: Correct Capital's Process
Clarkson Valley, MO business owners who don't have the time, desire, or knowledge to handle their self-employed retirement plan themselves can become burdened when looking at their options. At Correct Capital, our financial advisors handle the lion's share of your retirement planning for you, and endeavor to make meeting your retirement goals as simple as possible for you. We can help you establish and maintain your self-employed retirement plan in four simple steps:
- Schedule a Call — It only takes a short 20-minute call for one of our advisors to know if we're a good fit for you and your business. This short introduction lets us understand your needs with no major time investment on your part.
- Gather Information — If we seem like a good fit, we'll ask for information, including how many employees you have (if any), your current financial situation, and what kind of retirement you want to have. 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 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. As long as we work together, we'll meet with you and monitor 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 are proud to provide clear communication and top-notch service to help you attain your self-employed retirement goals.
Other services we offer in Clarkson Valley, MO include:
Call Correct Capital for Your Clarkson Valley, MO Self-Employed Retirement Plan
Your business isn't merely a business to you, and your Clarkson Valley, MO financial advisors need to provide you with more than merely wise financial advice. Correct Capital takes pride in getting to know our clients and what makes them and their business tick to deliver customized self-employed retirement plans. We give all our Clarkson Valley, 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 Clarkson Valley, MO, call Correct Capital today at 877-930-4015 or contact us online.
