Self-employed retirement plans in Dardenne Prairie, MO. The flexibility involved with running your own business in Dardenne Prairie, MO is a fantastic aspect of 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. Barely more than 10% of self-employed people have a workplace retirement plan, but many would be wise to explore 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 Dardenne Prairie, MO offers significant tax advantages that can help free up much-needed funds for your business.
Few wealth management and retirement planning firms know what it's like to be self-employed or a small business owner than 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 goals go beyond spreadsheets and percentages, and we are dedicated to providing customized plans that reflect where you are and where you want to go. Read on to read more about your self-employed retirement plan options in Dardenne Prairie, MO, or call Correct Capital at 314-930-401(k) or contact us online to speak to a small business financial advisor now.
What Self-Employed Retirement Plans Are There?
There are many retirement savings options 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 understand the pros and cons of each option and select that works best for you. Generally, your self-employed retirement plan options in Dardenne Prairie, MO are comprised of:
Traditional or Roth IRA
Plan Overview: IRAs, or Individual Retirement Accounts, 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 distributions in retirement are liable to income tax. On the other hand, Roth IRA contributions are made with after-tax income, but you pay no taxes on withdrawals or investment gains. In both a traditional an a Roth IRA, distributions 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. As a self-employed individual, your contributions are limited to the amount already contributed by you (the employer), which cannot be more than 25%. 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 fluctuating income periods. SEP IRAs don't have expensive initial setup or administrative charges often associated with other retirement plans.
SEPs work like traditional IRAs, where deposits are made with pre-tax money and withdrawals are taxed at your income at the time of distribution.
Eligibility: Self-employed individuals and any employer, can establish a SEP.
Contribution Limits: Contribution limits for employees in a SEP IRA are the lesser of:
- 25% of compensation, or
- $66,000
For self-employed people, 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 businesses with no employees or whose only employee is a spouse. Solo 401(k)s work 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 increased savings opportunities than some other retirement savings plans, however the additional opportunities for saving are often counterbalanced by more limited investment options. 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 sole proprietors 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 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 offers a an assured monthly figure to self-employed individuals once they've retired. As opposed to 401(k)s or IRAs, 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 best suited for high-earning self-employed individuals who want to save a a large amount for retirement and are willing to make 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 establish an individual defined benefit plan, but it's typically only well-suited for those over 50 who earn at least $250,000 a year. 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 contribute more
- Companies who have demonstrated consistent profit patterns
- Partners or owners over age 40 who want to make up for earlier years when they didn't save as much
Contribution Limits: The contribution limit must be determined by an actuary based on your income, age, and retirement goals. Contribution limits are adjusted 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 a valuable asset for self-employed individuals. They have the experience to help you navigate the complexities of retirement planning and create a personalized approach that gets you where you want to go. A financial advisor will evaluate your financial situation, understand your risk tolerance, and help you make sound decisions for yourself, both as a business owner and future retiree. 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 that follows all IRS guidelines
- 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 maximizing your social security benefits
Self-Employed Retirement Plans in Dardenne Prairie, MO: Correct Capital's Process
Dardenne Prairie, 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 overwhelmed when looking at their options. At Correct Capital, our retirement consultants handle the bulk of the retirement planning work for you, and endeavor to make meeting your retirement goals as simple as possible for you. We can help you get set up with your self-employed retirement plan in a straightforward four-step process:
- Schedule a Call — It only takes 20 minutes for a member of our advisor team to understand if we're suitable for you and your business. This short introduction lets us get a feel for what you're looking for with no obligation for you.
- Gather Information — If we both decide to move forward, we'll ask for information, including the number of employees in your business (if applicable), your current financial situation, and what kind of retirement you want to live. 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 the details 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 you can start saving. 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 have a legal and moral obligation to do what's in your best interest. We are proud to provide clear 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
- Small Business Retirement Plans
- Tax Planning
- Social Security Consultants Near Me
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 merely sage financial advice. Correct Capital takes pride in getting to know our clients and their business to deliver customized 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, call Correct Capital today at 314-930-401(k) or contact us online.
