Self-employed retirement plans in Creve Coeur, MO. The flexibility involved with having your own business in Creve Coeur, MO is a wonderful advantage to being self-employed. But that freedom can be accompanied by a lack of security, particularly in when it comes to saving for retirement, employer-sponsored plans aren't an option. Only 13% of self-employed individuals have a workplace retirement plan, but many would be wise to look into what plans are available. 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 Creve Coeur, MO offers favorable tax incentives that can help boost you and your business towards success.
Only a handful of financial advisory and retirement planning firms will understand the needs of the self-employed and small business owners more than Correct Capital. In fact, we were inspired by a self-employed individual, our founder's father (you can read more about our story here). We know that your business and retirement goals extend far beyond just profit, and we are dedicated to providing customized solutions that reflect where you are and where you want to go. Read on to read more about your self-employed retirement plan options in Creve Coeur, MO, or call Correct Capital at 877-930-4015 or contact us online to speak to a small business financial advisor today.
Types of Self-Employed Retirement Plans
There are a few different retirement savings options available for self-employed individuals, each with its own set of benefits and considerations. A Creve Coeur, MO financial advisor can help you comprehend the pros and cons of each option and select that helps both your short- and long-term goals. Typically, your self-employed retirement plan options in Creve Coeur, MO are comprised of:
Traditional or Roth IRA
Plan Overview: IRAs, or Individual Retirement Accounts, are personal savings plans that offer specific tax advantages. If you deposit to a traditional IRA, contributions are deducted from your taxable income, and investment earnings grow tax-deferred, but distributions in retirement are liable to income tax. On the other hand, Roth IRA payments are made with after-tax income, but you pay no taxes on withdrawals or investment gains. In both a traditional an a Roth IRA, 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 an employer, 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 share of of their annual income from 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 would have to contribute the same amount for them as you do for yourself. You can either 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 experience cycles of high revenue and low revenue. SEP IRAs don't have expensive initial setup or administrative charges other retirement plans do.
SEPs work like traditional IRAs, where contributions are made with money you've yet to pay taxes on and distributions are taxed as income.
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
- $66,000
For the self-employed individual, the annual contribution limit is based on 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 add funds as an employee and on your own behalf as the employer. This offers greater potential for savings than SEPs or IRAs, however the additional opportunities for saving are often counteracted 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 business owners 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) 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.
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 after they've left the workforce. 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 have an exact dollar figure as their income 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 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 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 desire 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 have demonstrated consistent profit patterns
- Partners or owners over age 40 who desire to make up for earlier years when they couldn't save as much
Contribution Limits: The contribution limit is decided by an actuary based on your income, age, and retirement goals. Contribution limits change each year.
How a Financial Advisor Can Help Guide Your Self-Employed Retirement Plan in Creve Coeur, MO
A financial advisor in Creve Coeur, MO specialized in self-employed retirement plans can be a valuable asset for self-employed individuals. They have the know-how to help you navigate the complexities of retirement planning and design a personalized approach that acts as a roadmap through your financial future. A financial planner will analyze where your finances currently are, adjust for your risk tolerance, and help you make sound decisions about your financial future. 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 in accordance with 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 support into and through retirement
- Increase your retirement income by maximizing your social security benefits
Self-Employed Retirement Plans in Creve Coeur, MO: Correct Capital's Process
Creve Coeur, MO business owners who don't have the time, inclination, 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 for you, and attempt to make meeting your retirement goals as easy 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 the best firm to help you reach your goals. This short introduction allows us to get a feel for your needs with no major time investment for you.
- Gather Information — If we seem like a good fit, we'll request more info, including how many employees you have (if any), your current finances, 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 — 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. Throughout our relationship, we'll keep you up-to-date with how things are going and monitor your plan so it stays consistent with your needs.
Our financial planners and retirement consultants are fiduciary advisors who are legally and ethically bound to do what's in your best interest. We are proud to provide clear communication and high-quality service to assist you achieve your self-employed retirement goals.
Other services we offer in Creve Coeur, 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 Creve Coeur, MO Self-Employed Retirement Plan
Your business isn't "just a business" to you, and your Creve Coeur, MO financial advisors need to provide you with more than simply sound financial advice. Correct Capital takes pride in getting to know our clients and what makes them and their business tick to deliver personalized self-employed retirement plans. We offer all our Creve Coeur, 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 Creve Coeur, MO, speak to a member of our team today at 877-930-4015 or fill out our online form.
