Self-employed retirement plans in Ellisville, MO. The freedom of running your own business in Ellisville, MO is a wonderful advantage to working for yourself. But increased leeway can be accompanied by a lack of security, especially in in regards to saving for retirement, employer-sponsored plans aren't an option. Only 13% of self-employed people have a workplace retirement plan, but many would be wise to explore what plans are available. In addition to setting you up for the retirement of your dreams, working with a financial advisor to set up your self-employed retirement plan in Ellisville, MO offers significant tax advantages that can help propel you and your business towards success.
Few 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 here). We have a deep understanding that your business and retirement aspirations extend far beyond just profit, and we are committed to offering personalized solutions that fit your goals. Continue reading to learn more about your self-employed retirement plan options in Ellisville, MO, or call Correct Capital at 877-930-4015 or contact us online to speak to a member of our advisory team now.
What Self-Employed Retirement Plans Are There?
There are a few different retirement savings plans that the self-employed can contribute to, each with its own set of benefits and considerations. A Ellisville, MO financial advisor can help you understand the benefits and drawbacks of each option and select that helps both your short- and long-term goals. Generally, your self-employed retirement plan options in Ellisville, MO include:
Traditional or Roth IRA
Plan Overview: IRAs, or Individual Retirement Arrangements, are investment accounts that provides individuals with tax advantages to save for retirement. In a traditional IRA, contributions are typically tax-deductible, and any gains on investments grow tax-deferred, but distributions in retirement are taxed as if it were income. On the other hand, Roth IRA deposits are made with after-tax income, but you pay no taxes on withdrawals or investment gains. In both a traditional an a Roth IRA, withdrawals 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 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 the money they make from their 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 a good self-employed retirement plan if your business experiences 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 contributions are made with money you've yet to pay taxes on and withdrawals are taxed at your income at the time of distribution.
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 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 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 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 both an employer or employee with pre-tax money. This offers greater potential for savings than some other retirement savings plans, however the additional opportunities for saving are often offset by more limited investment options. In a one-participant 401(k) plan, you can make either traditional or Roth deferrals, which each feature the same tax benefits as their IRA contribution counterparts.
Eligibility: Only self-employed individuals 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) of up to 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 provides a an assured monthly figure to self-employed individuals once they've retired. 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 how much they'll get in retirement. This plan is best suited for high-earning self-employed individuals who want to save a a substantial portion 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 not a great idea unless you're over 50 and earn at least $250,000 a year. 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 have demonstrated consistent 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 must be decided by an actuary who calculates for your income, age, and retirement goals. Contribution limits are adjusted every year.
How a Financial Advisor Can Help Guide Your Self-Employed Retirement Plan in Ellisville, MO
A financial advisor in Ellisville, MO specialized in self-employed retirement plans can be a crucial partner for self-employed individuals. They have the experience to help you navigate the complexities of retirement planning and design a personalized approach that gets you where you want to go. A financial advisor will assess your financial situation, help you figure out your risk tolerance, and help you make smart 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
- Tailor the plan to your needs even further
- Adopt a written plan that follows all IRS rules
- 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 long as you work with us
- Maximize 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 burdened with the different options available to them. 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 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 know if we're a good fit for you and your business. This short introduction lets us get a feel for what you're looking for with no major time investment for you.
- Gather Information — If we seem like a good fit, we'll ask for more info, including the number of employees in your business (if applicable), your current financial situation, 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 the specifics of your plan to ensure you're comfortable with 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 keep you up-to-date with how things are going and monitor your plan so it stays consistent with your needs.
Our financial advisors and retirement consultants are fiduciary advisors who are legally and morally bound to do what's in your best interest. We pride ourselves in providing transparent communication and high-quality service to assist you reach your self-employed retirement goals.
Other services we offer in Ellisville, MO include:
- Succession Planning
- Fiduciary Financial Advisor
- Company 401(k) Plans
- ESOP Advisor
- 401(k) For Small Business
- Small Business Retirement Plans
- Tax Planning
Call Correct Capital for Your Ellisville, MO Self-Employed Retirement Plan
Your business isn't simply an enterprise to you, and your Ellisville, MO financial advisors need to provide you with more than merely sound financial advice. Correct Capital takes pride in getting to know our clients and their business to deliver personalized self-employed retirement plans. We offer all our Ellisville, 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 Ellisville, MO, call Correct Capital today at 877-930-4015 or fill out our online form.
