Self-employed retirement plans in Des Peres, MO. The flexibility involved with running your own business in Des Peres, MO is a wonderful advantage to working for yourself. But that freedom can come with uncertainty, particularly in when it comes to building a retirement plan, as you don't have access to any employer plans. Only a fraction of self-employed people have a workplace retirement plan, but many would be better off exploring what plans are available. In addition to a more comfortable retirement, partnering with a financial advisor to set up your self-employed retirement plan in Des Peres, MO offers favorable tax incentives that can help propel 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. Our founder's father was a small business owner himself (you can discover more about our story on our website). We have a deep understanding that your business and retirement aspirations transcend mere monetary figures, and we are dedicated to offering personalized plans that reflect where you are and where you want to go. Continue reading to learn more about your self-employed retirement plan options in Des Peres, 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 options that the self-employed can establish, each with its own set of benefits and considerations. A Des Peres, MO financial advisor can help you grasp the benefits and drawbacks of each option and select the most suitable one for your situation. Typically, your self-employed retirement plan options in Des Peres, MO include:
Traditional or Roth IRA
Plan Overview: IRAs, or Individual Retirement Arrangements, are investment accounts that allows you to set aside money for the future, with special tax considerations. In a traditional IRA, contributions are typically tax-deductible, and investment earnings grow tax-deferred, but distributions in retirement are taxed as if it were income. On the other hand, Roth IRA contributions are made with after-tax income, but qualified withdrawals in retirement, including investment gains, are tax-free. 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 an employer, traditional and Roth IRAs can be set up by anyone with an earned income.
Contribution Limits: For 2023, the maximum yearly contributions 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 their net earnings from self-employment. Given that you are self-employed, your ability to contribute is restricted to the 25% already contributed by you in your position as 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 fixed dollar sum or a percentage of annual income to employee accounts. SEP IRAs may be an excellent self-employed retirement plan for businesses that experience periods of variable income. SEP IRAs don't have the high upfront costs or administrative expenses often associated with other retirement plans.
SEPs work like traditional IRAs, where payments are made with money you haven't paid taxes on and withdrawals are taxed as income.
Eligibility: Any employer, including the self-employed, can establish 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 the self-employed individual, the amount eligible to be contributed is decided by 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 sole proprietors or those who only employ a spouse. Solo 401(k)s work in the same same way as employer-sponsored 401(k) plans, and you can make contributions as an employee and on your own behalf as the employer. This offers increased savings opportunities than some other retirement savings plans, however the possibility of greater retirement savings is often counteracted by more limited investment options. In an individual 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 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 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 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 a fixed monthly figure to self-employed individuals once they've retired. In contrast to 401(k)s or IRAs, a defined benefit plan doesn't oscillate based on investment gains, but allows self-employed individuals to have an exact dollar figure as their income in retirement. This plan is ideal for high-earning self-employed individuals who want to save a a substantial portion for retirement and want to make substantial contributions. Contributions are tax deferred and contributions 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 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 are sure of their 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 determined by an actuary who calculates for your income, age, and retirement goals. Contribution limits change every year.
The Importance of a Financial Advisor for Your Self-Employed Retirement Plan in Des Peres, MO
A financial advisor in Des Peres, MO specialized in self-employed retirement plans can be a crucial partner for self-employed individuals. They have the expertise to help you understand the complexities of retirement planning and design a personalized approach that acts as a roadmap through your financial future. A financial advisor will analyze where your finances currently are, understand 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 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 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 as you continue on the road to retirement
- Increase your retirement income by maximizing your social security benefits
Self-Employed Retirement Plans in Des Peres, MO: Correct Capital's Process
Des Peres, MO business owners who don't have the time, desire, or knowledge to handle their self-employed retirement plan themselves can become stressed when looking at their options. At Correct Capital, our financial advisors handle the bulk of the retirement planning work for you, and attempt to make meeting your retirement goals as easy 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 suitable for you and your business. This short introduction allows us to understand 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 custom plan suited specifically for your needs.
- Review Your Plan — Once we've compiled your plan, we'll meet with you and discuss your plan in detail to ensure understand how it best correlates to your needs.
- Implementation and Monitoring — Once we've enacted your plan, we'll put everything in place so you can start saving. Throughout your time working with us, we'll keep you up-to-date with how things are going and monitor your plan to ensure it stays suited to your needs.
Our financial advisors and retirement consultants are fiduciary advisors who are legally and morally obligated to do what's in your best interest. We pride ourselves in providing transparent communication and excellent service to assist you attain your self-employed retirement goals.
Other services we offer in Des Peres, 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 Des Peres, MO Self-Employed Retirement Plan
Your business isn't "just a business" to you, and your Des Peres, MO financial advisors need to provide you with more than just wise 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 give all our Des Peres, 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 Des Peres, MO, speak to a member of our team today at 314-930-401(k) or fill out our online form.
