Self-employed retirement plans in Clarkson Valley, MO. The freedom of running your own business in Clarkson Valley, MO is a fantastic aspect of working for yourself. But that freedom can come with a lack of security, particularly in terms of building a retirement plan, as you don't have access to any employer plans. Barely more than 10% 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, working with a financial advisor to set up your self-employed retirement plan in Clarkson Valley, MO offers tax benefits that can help drive you and your business forward.
Few wealth management and retirement planning firms know what it's like to be self-employed or a small business owner more than Correct Capital. In fact, we were inspired by a small business owner, our founder's father (you can learn more about our story here). We have a deep understanding that your business and retirement goals extend far beyond mere monetary figures, and we are devoted to providing personalized solutions that reflect your goals. Continue reading to read more about your self-employed retirement plan options in Clarkson Valley, MO, or call Correct Capital at 314-930-401(k) or fill out our online form to speak to a member of our advisory team today.
What Self-Employed Retirement Plans Are There?
There are several retirement savings options that the self-employed can contribute to, each with its own set of benefits and considerations. A Clarkson Valley, MO financial advisor can help you comprehend the pros and cons of each option and opt for that works best for you. 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 personal savings plans that provides individuals with tax advantages to save for retirement. 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 taxed as regular income. On the other hand, Roth IRA deposits are made with money you've already paid taxes on, but you pay no taxes on withdrawals or earnings. In both a traditional an a Roth IRA, withdrawals can be made without penalty as long as 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, 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 percentage of of their net earnings from 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 must contribute an equal amount to their plans. You may choose to contribute either a fixed dollar sum or a percentage of wages to employee accounts. SEP IRAs may be a suitable self-employed retirement plan for businesses that go through fluctuating income periods. SEP IRAs don't have the costly startup or administrative fees often associated with other retirement plans.
SEPs work like traditional IRAs, where deposits are made with money you've yet to pay taxes on and distributions are taxed as income.
Eligibility: Any employer, including the self-employed, can set up 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 the self-employed individual, the amount eligible to be contributed is based on a special 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 who only employ a spouse. Solo 401(k)s work 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 increased savings opportunities than SEPs or IRAs, however the additional opportunities for saving are often offset 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 self-employed individuals and their spouses can set up 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 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 offers a a predetermined 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 oscillate based on investment returns, but allows self-employed individuals to know exactly what they'll receive in retirement. This plan is best suited for high-earning self-employed individuals who want to save a a substantial portion for retirement and are willing to add substantial contributions. Contributions are tax deferred and withdrawals are taxed as income in retirement.
Eligibility: Any self-employed individual who runs an owner-only business or has less than five employees can establish 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 contribute 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 make up for earlier years when they didn't save as much
Contribution Limits: The contribution limit must be determined by an actuary who calculates for your income, age, and retirement goals. Contribution limits change annually.
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 valuable asset for self-employed individuals. They have the knowledge to help you understand the complexities of retirement planning and develop a personalized approach that gets you where you want to go. A financial advisor 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
- Customize 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 guidance as you continue on the road to retirement
- Increase 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, interest, or knowledge to handle their self-employed retirement plan themselves can become burdened 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 strive 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 a straightforward four-step process:
- Schedule a Call — We only need a short 20-minute call for one of our advisors to know if we're a good fit for you and your business. This brief introduction allows us to get a feel for what you're looking for with no obligation on your part.
- Gather Information — If we both decide to move forward, we'll request more info, including how many employees you have (if any), your current finances, and your retirement goals. This allows us to put together a personalized plan based entirely on type of advising you need.
- Review Your Plan — After we put together a plan based on the information you provide, we'll meet with you and go over the specifics of your plan to ensure you're comfortable with it.
- 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 meet with you and adjust your plan so it stays consistent with your needs.
Our financial advisors 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 clear communication and excellent service to assist you attain your self-employed retirement goals.
Other services we offer in Clarkson Valley, 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 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 offer more than merely sage financial advice. Correct Capital takes pride in getting to know our clients and what makes them and their business tick to deliver tailored self-employed retirement plans. We offer all our Clarkson Valley, 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 Clarkson Valley, MO, speak to a member of our team today at 314-930-401(k) or fill out our online form.