Self-employed retirement plans in Creve Coeur, MO. The flexibility involved with running your own business in Creve Coeur, MO is one of the great things about being self-employed. But that freedom can come with uncertainty, especially in when it comes to building a retirement plan, employer-sponsored plans aren't an option. Barely more than 10% of self-employed individuals have retirement plans they save with, but many would be better off exploring their options. In addition to setting you up for the golden years of your dreams, partnering with a financial advisor to get started and maintain your self-employed retirement plan in Creve Coeur, MO offers favorable tax incentives that can help propel you and your business forward.
Not many 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 on our website). We have a deep understanding that your business and retirement goals extend far beyond just profit, and we are committed to offering tailored solutions that reflect where you are and where you want to go. Continue reading to learn more about your self-employed retirement plan options in Creve Coeur, MO, or call Correct Capital at 877-930-4015 or fill out our online form to speak to a small business financial advisor at your convenience.
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What Self-Employed Retirement Plans Are There?
There are a few different retirement savings options available for self-employed individuals, and which is best for you depends on your unique situation. A Creve Coeur, MO financial advisor can help you comprehend the advantages and disadvantages of each option and select that works best for you. 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 long-term savings plans that provides individuals with tax advantages to save for retirement. In a traditional IRA, contributions 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 payments are made with after-tax income, but you pay no taxes on withdrawals or earnings. In both a traditional an a Roth IRA, withdrawals can be made without extra fees if you are at least 59½.
Eligibility: While many retirement plans, such as 401(k)s, are set up through 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 annual income 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 would have to contribute the same amount for them as you do for yourself. You can either contribute either a predetermined fixed dollar amount or a proportion of annual income to employee accounts. SEP IRAs may be a suitable 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 payments 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 maximum amount you can contribute in a given year is decided by a specific formula.
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 function 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 deferrals (with pre-tax money) or Roth deferrals (with after-tax money).
Eligibility: Only business owners and their spouses have access to one-participant 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 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.
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 provides a a fixed 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 oscillate based on investment gains, 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 significant sum for retirement and want to add substantial 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 only recommended for those over 50 who 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 do more
- Companies who are sure of their profit patterns
- Partners or owners over age 40 who desire to make up for earlier years when they didn't save as much
Contribution Limits: The contribution limit is calculated 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 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 understand the complexities of retirement planning and develop a personalized approach that aligns with your goals. A financial planner will look at where your finances currently are, help you figure out your risk tolerance, and guide you in making informed 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
- Personalize the plan to your needs even further
- Adopt a written plan that follows all IRS rules
- 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 guidance as long as you work with us
- Maximize your retirement income by increasing your social security benefits
Self-Employed Retirement Plans in Creve Coeur, MO: Correct Capital's Process
Creve Coeur, MO business owners without the time, inclination, or knowledge to handle their self-employed retirement plan themselves can become overwhelmed 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 attempt to make meeting 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 20 minutes for one of our advisors to know if we're a good fit for you and your business. This brief introduction lets us get a feel for what you're looking for with no obligation for you.
- Gather Information — If we seem like a good fit, we'll request 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 — 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 it's what you were looking for.
- 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 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 moral obligation to do what's in your best interest. We pride ourselves in providing straightforward communication and top-notch service to help you reach your self-employed retirement goals.
Other services we offer in Creve Coeur, MO include:
Call Correct Capital for Your Creve Coeur, MO Self-Employed Retirement Plan
Your business isn't simply an enterprise to you, and your Creve Coeur, MO financial advisors need to offer more than merely 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 Creve Coeur, MO clients the same 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 Creve Coeur, MO, call Correct Capital today at 877-930-4015 or contact us through our website.
