Self-employed retirement plans in Dardenne Prairie, MO. The flexibility involved with running your own business in Dardenne Prairie, MO is one of the great things about working for yourself. But that freedom can come with limited stability, especially in when it comes to building a retirement plan, you don't have an employer who will set up a plan for you. Only 13% of self-employed individuals have a workplace retirement plan, but many would be wise to explore their options. In addition to a more comfortable retirement, partnering with a financial advisor to set up your self-employed retirement plan in Dardenne Prairie, MO offers tax benefits that can help free up much-needed funds for your business.
Few wealth management and retirement planning firms will understand the needs of the self-employed and small business owners as well as Correct Capital. Our founder's father was a small business owner himself (you can read more about our story here). We have a deep understanding that your business and retirement goals go beyond just profit, and we are committed to offering customized plans that reflect your goals. Continue reading to discover more about your self-employed retirement plan options in Dardenne Prairie, MO, or call Correct Capital at 877-930-4015 or contact us online to speak to a small business financial advisor today.
What Self-Employed Retirement Plans Are There?
There are many retirement savings plans available for self-employed individuals, and which is best for you depends on your unique situation. A Dardenne Prairie, MO financial advisor can help you grasp the advantages and disadvantages of each option and opt for that helps both your short- and long-term goals. Typically, your self-employed retirement plan options in Dardenne Prairie, MO include:
Traditional or Roth IRA
Plan Overview: IRAs, or Individual Retirement Accounts, are long-term savings plans that allows you to set aside money for the future, with special tax considerations. In a traditional IRA, deposits are typically tax-deductible, 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 money you've already paid taxes on, but qualified withdrawals in retirement, including earnings, are tax-free. In both accounts, distributions can be made without penalty 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, 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 net earnings 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 must contribute an equal amount to their pensions. You may choose to contribute a flat-dollar amount or a percentage of wages to employee accounts. SEP IRAs may be an excellent self-employed retirement plan if your business goes through fluctuating income periods. 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 pre-tax money and withdrawals are taxed at your income at the time of withdrawal.
Eligibility: Self-employed individuals and any employer, can set up 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 whose only employee is a spouse. Solo 401(k)s function in the same same way as employer-sponsored 401(k) plans, and you can add funds as both an employer or employee with pre-tax money. This offers greater potential for 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 advantages as their IRA contribution counterparts.
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 offers a an assured benefit to self-employed individuals upon retirement. In contrast to other types of retirement plans, 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 large amount for retirement and want 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 a business with no employees besides the 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. 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 want to do more
- Companies who have demonstrated consistent profit patterns
- Partners or owners over age 40 who desire to "catch up" or accelerate the retirement savings
Contribution Limits: The contribution limit is calculated by an actuary who calculates for your income, age, and retirement goals. Contribution limits change annually.
Why You Need a Financial Advisor for Your Self-Employed Retirement Plan in Dardenne Prairie, MO
A financial advisor in Dardenne Prairie, MO specialized in self-employed retirement plans can be indispensable for self-employed individuals. They have the knowledge to help you understand the complexities of retirement planning and develop a customized plan that aligns with your goals. A financial planner will analyze your financial situation, help you figure out your risk tolerance, and guide you in making informed decisions for yourself, both as employer and future retiree. Part of what we do for you includes:
- Help you choose 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 guidance into and through retirement
- Increase your retirement income by increasing your social security benefits
Self-Employed Retirement Plans in Dardenne Prairie, MO: Correct Capital's Process
Dardenne Prairie, MO business owners without the time, interest, or knowledge to handle their self-employed retirement plan themselves can become overwhelmed when looking at their options. At Correct Capital, our financial advisors handle the lion's share of your retirement planning for you, and attempt to make meeting your business and retirement goals as easy as we possibly can. We can help you get set up with your self-employed retirement plan in a straightforward four-step process:
- 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 brief introduction allows us to get a feel for 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 what kind of retirement you want to have. 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 discuss 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 you can start saving. Throughout your time partnering with us, 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 planners and retirement consultants are fiduciary advisors who are legally and ethically obligated to do what's in your best interest. We pride ourselves in providing transparent communication and top-notch service to help you achieve your self-employed retirement goals.
Other services we offer in Dardenne Prairie, MO include:
- Succession Planning
- Fiduciary Financial Advisor
- Company 401(k) Plans
- ESOP Advisor
- 401(k) For Small Business
Call Correct Capital for Your Dardenne Prairie, MO Self-Employed Retirement Plan
Your business isn't "just a business" to you, and your Dardenne Prairie, MO financial advisors need to provide you with more than simply sage financial advice. Correct Capital enjoys getting to know our clients and their business to deliver personalized self-employed retirement plans. We offer all our Dardenne Prairie, 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 Dardenne Prairie, MO, speak to a member of our team today at 877-930-4015 or contact us online.
