Self-employed retirement plans in Eureka, MO. The flexibility involved with having your own business in Eureka, MO is one of the great things about working for yourself. But that freedom can be accompanied by limited stability, particularly in when it comes to saving for retirement, employer-sponsored plans aren't an option. Only a fraction of self-employed people have a workplace retirement plan, but many would be wise to look into what plans are available. In addition to a more comfortable retirement, working with a financial advisor to get started and maintain your self-employed retirement plan in Eureka, MO offers favorable tax incentives that can help free up much-needed funds for your business.
Not many 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 learn more about our story on our website). We have a deep understanding that your business and retirement goals go beyond figures and numbers, and we are devoted to providing customized solutions that fit where you are and where you want to go. Read on to read more about your self-employed retirement plan options in Eureka, MO, or call Correct Capital at 314-930-401(k) or fill out our online form to speak to a small business financial advisor today.
Types of Self-Employed Retirement Plans
There are a few different retirement savings plans that the self-employed can establish, and which is best for you depends on your unique situation. A Eureka, MO financial advisor can help you grasp the pros and cons of each option and select that helps both your short- and long-term goals. Generally, your self-employed retirement plan options in Eureka, MO include:
Traditional or Roth IRA
Plan Overview: IRAs, or Individual Retirement Accounts, are investment accounts 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 withdrawals in retirement are subject to income tax. In contrast, Roth IRA deposits are made with after-tax income, but qualified distributions in retirement, including earnings, are tax-free. In both a traditional an a Roth IRA, withdrawals can be made without extra fees 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 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 percentage of of their annual income 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 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 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 distributions are taxed at your income at the time of distribution.
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
For self-employed people, the annual contribution limit is decided by a unique calculation.
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 function about the same 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 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 self-employed individuals and their spouses have access to solo 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 benefit to self-employed individuals after they've left the workforce. In contrast to the defined contribution plans mentioned above, 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 best suited for high-earning self-employed individuals who want to save a a large amount for retirement and want to add significant contributions. Contributions are tax deferred and contributions are taxed as income in retirement.
Eligibility: Any self-employed individual who runs a business with no employees besides the owner or has less than five employees can open 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. 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 willing to contribute 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 is decided by an actuary who calculates for your income, age, and retirement goals. Contribution limits are adjusted annually.
Why You Need a Financial Advisor for Your Self-Employed Retirement Plan in Eureka, MO
A financial advisor in Eureka, MO specialized in self-employed retirement plans can be indispensable for self-employed individuals. They have the know-how to help you navigate the complexities of retirement planning and design a customized plan that aligns with your goals. A financial planner will evaluate your financial situation, adjust for your risk tolerance, and guide you in making informed decisions about your financial future. 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 support as you continue on the road to retirement
- Maximize your retirement income by maximizing your social security benefits
Self-Employed Retirement Plans in Eureka, MO: Correct Capital's Process
Eureka, MO business owners without the time, desire, or knowledge to handle their self-employed retirement plan themselves can become overwhelmed when looking at their options. At Correct Capital, our retirement consultants handle the lion's share of your retirement planning for you, and strive to make achieving your retirement goals as easy as possible for you. We can help you establish and maintain 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 the best firm to help you reach your goals. This short introduction allows us to 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 request more info, including the number of employees in your business (if applicable), your current finances, 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 — After we put together a plan based on the information you provide, we'll meet with you and discuss the specifics of your plan to ensure you understand it.
- Implementation and Monitoring — Once we've agreed on your plan, we'll put everything in place so your savings can start growing immediately. Throughout our relationship, we'll meet with you and adjust your plan to ensure it stays suited to your needs.
Our financial advisors and retirement consultants are fiduciary advisors who have a legal and ethical obligation to do what's in your best interest. We pride ourselves in providing clear communication and excellent service to help you achieve your self-employed retirement goals.
Other services we offer in Eureka, 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
- Retirement Calculator
Call Correct Capital for Your Eureka, MO Self-Employed Retirement Plan
Your business isn't "just a business" to you, and your Eureka, MO financial advisors need to provide you with more than simply sound financial advice. Correct Capital enjoys getting to know our clients and their business to deliver customized self-employed retirement plans. We give all our Eureka, 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 Eureka, MO, call Correct Capital today at 314-930-401(k) or contact us through our website.