Self-employed retirement plans in Ellisville, MO. The freedom of having your own business in Ellisville, MO is a wonderful advantage to working for yourself. But more leeway can be accompanied by limited stability, particularly in terms of saving for retirement, employer-sponsored plans aren't an option. Barely more than 10% of self-employed people have retirement plans they can contribute to, but many would be wise to look into their options. In addition to a more comfortable retirement, partnering with a financial advisor to set up your self-employed retirement plan in Ellisville, MO offers favorable tax incentives that can help you improve your bottom line.
Few financial advisory and retirement planning firms will understand the needs of the self-employed and small business owners than Correct Capital. Our founder's father was a small business owner himself (you can learn more about our story on our website). We know that your business and retirement goals transcend just profit, and we are dedicated to providing customized plans that fit your goals. Read on to learn more about your self-employed retirement plan options in Ellisville, MO, or call Correct Capital at 314-930-401(k) or fill out our online form to speak to a small business financial advisor at your convenience.
Types of Self-Employed Retirement Plans
There are a few different retirement savings plans that the self-employed can set up, and which is best for you depends on your unique situation. A Ellisville, MO financial advisor can help you comprehend the benefits and drawbacks of each option and opt for that works best for you. Typically, your self-employed retirement plan options in Ellisville, MO include:
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, deposits are deducted from your taxable income, and investment earnings grow tax-deferred, but distributions in retirement are taxed as regular income. On the other hand, Roth IRA contributions are made with after-tax income, but you pay no taxes on withdrawals or earnings. In both accounts, withdrawals can be made without penalty 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 are available to 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 share 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 exceed 25%. If you have employees, you must contribute an equal amount to their plans. You can either 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 experiences cycles of high revenue and low revenue. 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 money you haven't paid taxes on and distributions 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 the lesser of:
- 25% of compensation, or
For self-employed people, the annual contribution limit is based on a specific formula.
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 whose only employee is a spouse. Solo 401(k)s function about the same as employer-sponsored 401(k) plans, and you can add funds as an employee and on your own behalf as the employer. This offers increased savings opportunities than some other retirement savings plans, however the additional opportunities for saving are often counteracted by more limited investment options. In a solo 401(k) plan, you can make either traditional or Roth deferrals, which each enjoy the same tax advantages as their IRA contribution counterparts.
Eligibility: Only self-employed individuals 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 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 a predetermined benefit to self-employed individuals upon retirement. In contrast to 401(k)s or IRAs, a defined benefit plan doesn't oscillate based on investment gains, but allows self-employed people 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 large amount for retirement and are willing to add substantial contributions. Contributions are tax deferred and contributions are taxed as income 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 not a great idea unless you're over 50 and earn well into the six figures. Those interested in defined benefit plans tend to be:
- Partners or owners who want to contribute 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 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 change every year.
Why You Need a Financial Advisor for Your Self-Employed Retirement Plan in Ellisville, MO
A financial advisor in Ellisville, MO specialized in self-employed retirement plans can be indispensable for self-employed individuals. They have the experience to help you navigate the intricacies of retirement planning and design a customized plan that acts as a roadmap through your financial future. A financial planner will look at where your finances currently are, adjust for 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
- Customize 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 support into and through retirement
- Increase your retirement income by increasing your social security benefits
Self-Employed Retirement Plans in Ellisville, MO: Correct Capital's Process
Ellisville, 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 retirement consultants handle the bulk of the retirement planning work for you, and strive to make achieving the golden years of your dreams as easy as we possibly can. We can help you establish and maintain 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 the best firm to help you reach your goals. This short introduction lets us get a feel for what you're looking for with no obligation on your part.
- Gather Information — If we seem like a good fit, we'll request information, 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 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 started to move forward, we'll put everything in place so you can start saving. Throughout your time working with us, we'll meet with you 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 pride ourselves in providing straightforward communication and excellent service to assist you achieve your self-employed retirement goals.
Other services we offer in Ellisville, MO include:
- 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
- Retirement Calculator
- Retirement Planning
Call Correct Capital for Your Ellisville, MO Self-Employed Retirement Plan
Your business isn't merely a business to you, and your Ellisville, MO financial advisors need to provide you with more than simply sound 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 Ellisville, 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 Ellisville, MO, speak to a financial advisor today at 314-930-401(k) or fill out our online form.