Self-employed retirement plans in Concord, MO. The freedom of having your own business in Concord, MO is a wonderful advantage to working for yourself. But that freedom can be accompanied by uncertainty, particularly in in regards to saving for retirement, employer-sponsored plans aren't an option. Only 13% of self-employed individuals have retirement plans they save with, but many would be wise to explore their options. In addition to setting you up for the golden years of your dreams, working with a financial advisor to set up your self-employed retirement plan in Concord, MO offers favorable tax incentives that can help you improve your bottom line.
Few financial advisory and retirement planning firms know what it's like to be self-employed or a small business owner more than Correct Capital. Our founder's father was a small business owner himself (you can learn more about our story here). We know that your business and retirement aspirations transcend figures and numbers, and we are dedicated to offering customized solutions that fit where you are and where you want to go. Read on to discover more about your self-employed retirement plan options in Concord, 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 at your convenience.
What Self-Employed Retirement Plans Are There?
There are a few different retirement savings plans that the self-employed can establish, each with its own set of advantages and considerations. A Concord, MO financial advisor can help you grasp the benefits and drawbacks of each option and select the most suitable one for your circumstances. Generally, your self-employed retirement plan options in Concord, MO are comprised of:
Traditional or Roth IRA
Plan Overview: IRAs, or Individual Retirement Accounts, are investment accounts that offer specific tax advantages. In a traditional IRA, deposits are deducted from your taxable income, and any gains on investments grow tax-deferred, but distributions in retirement are liable to income tax. In contrast, Roth IRA contributions are made with after-tax income, but qualified distributions in retirement, including investment gains, are tax-free. In both a traditional an a Roth IRA, distributions can be made without extra fees 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, 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 share of of the money they make from their self-employment. Contributions can only be made by an employer, so, as a self-employed individual, you (the employee) would not be able to contribute more than the 25% you (the employer) already contributed. If you have employees, they must receive the same amount you do. You can either contribute either a fixed dollar sum or a percentage of annual income 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 the costly startup or administrative fees often associated with other retirement plans.
SEPs work like traditional IRAs, where deposits are made with pre-tax money and distributions are taxed at your income at the time of withdrawal.
Eligibility: Any employer, including the self-employed, can establish a SEP.
Contribution Limits: Contribution limits for employees in a SEP IRA are the lesser of:
- 25% of compensation, or
- $66,000
For the self-employed individual, the annual contribution limit 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 sole proprietors or those who only employ 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 SEPs or IRAs, however the possibility of greater retirement savings is often counteracted by having less investment options available. In a one-participant 401(k) plan, you can make either traditional deferrals (with pre-tax money) or Roth deferrals (with after-tax money).
Eligibility: Only sole proprietors and their spouses have access to individual 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) 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.
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 benefit to self-employed individuals once they've retired. In contrast to the defined contribution plans mentioned above, a defined benefit plan doesn't fluctuate based on investment returns, but allows self-employed individuals to know exactly how much they'll get 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 make 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 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 save 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 want to "catch up" or accelerate the retirement savings
Contribution Limits: The contribution limit is determined by an actuary who calculates for your income, age, and retirement goals. Contribution limits change annually.
The Importance of a Financial Advisor for Your Self-Employed Retirement Plan in Concord, MO
A financial advisor in Concord, MO specialized in self-employed retirement plans can be an invaluable resource for self-employed individuals. They have the expertise to help you understand the complexities of retirement planning and design a customized plan that acts as a roadmap through your financial future. A financial advisor will assess where your finances currently are, 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 pick a plan that best fits your needs and goals
- Customize 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 guidance into and through retirement
- Increase your retirement income by increasing your social security benefits
Self-Employed Retirement Plans in Concord, MO: Correct Capital's Process
Concord, 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 overwhelmed with the different options available to them. At Correct Capital, our retirement consultants handle the lion's share of your retirement planning on your behalf, and strive to make meeting your business and 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 — It only takes a brief 20-minute call for a member of our advisor team to know if we're suitable for you and your business. This short introduction lets us understand what you're looking for with no major time investment for you.
- Gather Information — If we seem like a good fit, we'll request information, including the number of employees in your business (if applicable), your current financial situation, and what kind of retirement you want to live. This allows us to put together a custom 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 discuss the details of your plan to ensure understand how it best correlates to your needs.
- 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 keep you up-to-date with how things are going and adjust your plan so it stays consistent with your needs.
Our financial advisors and retirement consultants are fiduciary advisors who have a legal and ethical obligation to do what's best for you and only you. We are proud to provide clear communication and excellent service to help you reach your self-employed retirement goals.
Other services we offer in Concord, 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 Concord, MO Self-Employed Retirement Plan
Your business isn't simply an enterprise to you, and your Concord, MO financial advisors need to provide you with more than just sound financial advice. Correct Capital enjoys getting to know our clients and their business to deliver tailored self-employed retirement plans. We offer all our Concord, 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 Concord, MO, speak to a member of our team today at 314-930-401(k) or contact us through our website.
