Self-employed retirement plans in Crestwood, MO. The flexibility involved with running your own business in Crestwood, MO is one of the great things about being self-employed. But increased leeway can be accompanied by a lack of security, particularly in in regards to building a retirement plan, employer-sponsored plans aren't an option. Only a fraction of self-employed individuals have a workplace retirement plan, but many would be better off exploring their options. In addition to a more comfortable retirement, working with a financial advisor to get started and maintain your self-employed retirement plan in Crestwood, MO offers significant tax advantages 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 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 go beyond mere monetary figures, and we are devoted to offering customized plans that reflect your goals. Read on to learn more about your self-employed retirement plan options in Crestwood, 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 now.
Types of Self-Employed Retirement Plans
There are many retirement savings plans that the self-employed can establish, each with its own set of advantages and considerations. A Crestwood, MO financial advisor can help you comprehend the benefits and drawbacks of each option and opt for the most suitable one for your specific needs. Generally, your self-employed retirement plan options in Crestwood, MO include:
Traditional or Roth IRA
Plan Overview: IRAs, or Individual Retirement Arrangements, 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 withdrawals in retirement are taxed as regular income. In contrast, Roth IRA payments are made with money you've already paid taxes on, but qualified distributions in retirement, including earnings, are tax-free. In both accounts, withdrawals are penalty-free as long as you are at least 59½.
Eligibility: While many retirement plans, such as 401(k)s, are set up through employment, 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. 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, 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 an excellent 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 often associated with other retirement plans.
SEPs work like traditional IRAs, where contributions are made with money you haven't paid taxes on and withdrawals are taxed at your income at the time of distribution.
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 the lesser of:
- 25% of compensation, or
For the self-employed individual, the annual contribution limit 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 sole proprietors or those who only employ a spouse. Solo 401(k)s function similarly to employer-sponsored 401(k) plans, and you can make contributions as an employee and on your own behalf as the employer. This offers greater potential for savings than SEPs or IRAs, 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 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) 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 benefit to self-employed individuals after they've left the workforce. As opposed to 401(k)s or IRAs, a defined benefit plan doesn't go up and down based on investment gains, but allows self-employed people 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 large amount for retirement and are willing to add substantial contributions. Contributions are tax deferred and withdrawals are taxed at your income level 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. Those interested in defined benefit plans tend to be:
- 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 is decided by an actuary who calculates for your income, age, and retirement goals. Contribution limits are adjusted annually.
How a Financial Advisor Can Help Guide Your Self-Employed Retirement Plan in Crestwood, MO
A financial advisor in Crestwood, MO specialized in self-employed retirement plans can be a valuable asset for self-employed individuals. They have the expertise to help you understand the intricacies of retirement planning and implement a personalized approach that acts as a roadmap through your financial future. A financial advisor will analyze your financial situation, understand your risk tolerance, and guide you in making informed decisions for yourself, both as a business owner and future retiree. 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 that follows all IRS regulations
- 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 as long as you work with us
- Increase your retirement income by increasing your social security benefits
Self-Employed Retirement Plans in Crestwood, MO: Correct Capital's Process
Crestwood, MO business owners who don't have the time, inclination, or knowledge to handle their self-employed retirement plan themselves can become stressed with the different options available to them. At Correct Capital, our financial advisors handle the lion's share of your retirement planning for you, and attempt to make achieving the golden years of your dreams as simple as possible for you. We can help you get set up with your self-employed retirement plan in four simple steps:
- Schedule a Call — We only need a brief 20-minute call for a member of our advisor team to know if we're the best firm to help you reach your goals. This short introduction allows us to understand your needs with no major time investment for you.
- Gather Information — If we both decide to move forward, 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 live. This allows us to put together a personalized plan suited specifically for your needs.
- Review Your Plan — Once we've compiled your plan, we'll meet with you and go over the specifics of your plan 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 your savings can start growing immediately. Throughout our relationship, we'll meet with you and monitor your plan so it stays consistent with your needs.
Our financial advisors and retirement consultants are fiduciary advisors who are legally and morally obligated to do what's best for you and only you. We pride ourselves in providing transparent communication and top-notch service to assist you achieve your self-employed retirement goals.
Other services we offer in Crestwood, 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 Crestwood, MO Self-Employed Retirement Plan
Your business isn't simply an enterprise to you, and your Crestwood, MO financial advisors need to provide you with more than simply 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 offer all our Crestwood, MO clients our 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 Crestwood, MO, speak to a financial advisor today at 314-930-401(k) or fill out our online form.