Self-employed retirement plans in Concord, MO. The freedom of having your own business in Concord, MO is one of the great things about working for yourself. But that freedom can come with limited stability, particularly in in regards to building a retirement plan, 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 wise to look into 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 Concord, MO offers significant tax advantages 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 as well as Correct Capital. Our founder's father was a small business owner himself (you can discover more about our story here). We know that your business and retirement aspirations transcend mere monetary figures, and we are devoted 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 877-930-4015 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 contribute to, each with its own set of advantages and considerations. A Concord, MO financial advisor can help you understand the pros and cons of each option and select the most suitable one for your situation. Typically, your self-employed retirement plan options in Concord, MO are comprised of:
Traditional or Roth IRA
Plan Overview: IRAs, or Individual Retirement Arrangements, are personal savings plans that allows you to set aside money for the future, with special tax considerations. If you deposit to a traditional IRA, deposits are deducted from your taxable income, and investment earnings grow tax-deferred, but distributions in retirement are subject to income tax. In contrast, Roth IRA deposits are made with after-tax income, but qualified distributions in retirement, including investment gains, are tax-free. In both accounts, 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 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 their annual income from self-employment. Given that you are self-employed, your ability to contribute is restricted to the 25% already contributed by you in your position as the employer. If you have employees, they must receive the same amount you do. You may choose to 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 go through cycles of high revenue and low revenue. SEP IRAs don't have the costly startup or administrative fees other retirement plans do.
SEPs work like traditional IRAs, where contributions are made with money you haven't paid taxes on and distributions are taxed at your income at the time of distribution.
Eligibility: Any employer, including the self-employed, 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
- $66,000
For self-employed people, the annual contribution limit is based on 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 who only employ a spouse. Solo 401(k)s function similarly to employer-sponsored 401(k) plans, and you can add funds as both an employer or employee with pre-tax money. This offers more savings than some other retirement savings plans, however the possibility of greater retirement savings is often counteracted by having less investment options available. In a solo 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 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) of 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.
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 offers a a predetermined monthly figure to self-employed individuals upon retirement. As opposed to the defined contribution plans mentioned above, a defined benefit plan doesn't fluctuate because of investment gains, but allows self-employed people to know exactly how much they'll get in retirement. This plan is ideal for high-earning self-employed individuals who want to save a a substantial portion for retirement and want to make significant contributions. Contributions are tax deferred and contributions are taxed at your income level in retirement.
Eligibility: Any self-employed individual who runs a business where they're the only owner 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. 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 willing to do 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 must be calculated by an actuary who calculates for your income, age, and retirement goals. Contribution limits are adjusted each year.
Why You Need 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 a crucial partner for self-employed individuals. They have the know-how to help you understand the intricacies of retirement planning and create a personalized approach that aligns with your goals. A financial planner will evaluate your financial situation, adjust for your risk tolerance, and help you make smart 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
- Tailor the plan to your needs even further
- Adopt a written plan in accordance with 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 support into and through retirement
- Increase your retirement income by maximizing 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 burdened 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 endeavor to make meeting your business and retirement goals as simple as we possibly can. 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 one of our advisors to understand if we're a good fit for you and your business. This short introduction lets us understand what you're looking for with no obligation on your part.
- Gather Information — If we both decide to move forward, we'll ask for more info, including the number of employees in your business (if applicable), 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 — Once we've compiled your plan, we'll meet with you and go over your plan in detail to ensure you understand it.
- Implementation and Monitoring — Once we've agreed on 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 to ensure it stays suited to 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 are proud to provide clear communication and high-quality service to help you attain 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
Call Correct Capital for Your Concord, MO Self-Employed Retirement Plan
Your business isn't merely a business to you, and your Concord, MO financial advisors need to provide you with more than just wise financial advice. Correct Capital enjoys getting to know our clients and what makes them and their business tick to deliver customized self-employed retirement plans. We give all our Concord, 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 Concord, MO, speak to a member of our team today at 877-930-4015 or contact us through our website.
