Self-employed retirement plans in Eureka, MO. The flexibility involved with having your own business in Eureka, MO is a wonderful advantage to working for yourself. But increased leeway can be accompanied by limited stability, particularly in when it comes to saving for retirement, employer-sponsored plans aren't an option. Only 13% of self-employed people have retirement plans they save with, but many would be wise to look into their options. In addition to setting you up for the golden years of your dreams, working with a financial advisor to set up your self-employed retirement plan in Eureka, MO offers significant tax advantages that can help you improve your bottom line.
Not many financial advisory and retirement planning firms know what it's like to be self-employed or a small business owner than Correct Capital. In fact, we were inspired by a self-employed individual, our founder's father (you can read more about our story on our website). We know that your business and retirement goals go beyond mere monetary figures, and we are committed to providing personalized plans that fit your goals. Read on to discover more about your self-employed retirement plan options in Eureka, MO, or call Correct Capital at 877-930-4015 or fill out our online form to speak to a member of our advisory team at your convenience.
What Self-Employed Retirement Plans Are There?
There are a few different retirement savings options available for self-employed individuals, each with its own set of advantages and considerations. A Eureka, MO financial advisor can help you understand the benefits and drawbacks of each option and select that works best for you. Generally, your self-employed retirement plan options in Eureka, MO include:
Traditional or Roth IRA
Plan Overview: IRAs, or Individual Retirement Arrangements, are personal savings plans that provides individuals with tax advantages to save for retirement. If you deposit to a traditional IRA, deposits are typically tax-deductible, and investment earnings grow tax-deferred, but withdrawals in retirement are liable to income tax. On the other hand, Roth IRA payments are made with money you've already paid taxes on, but you pay no taxes on withdrawals or investment gains. In both a traditional an a Roth IRA, 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 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. 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, they must receive the same amount you do. You may choose to contribute either a predetermined fixed dollar amount or a proportion of annual income to employee accounts. SEP IRAs may be a good self-employed retirement plan for businesses that experience 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 set up 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 amount eligible to be contributed is based on 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 similarly to employer-sponsored 401(k) plans, and you can add funds as both an employer or employee with pre-tax money. This offers more savings than some other retirement savings plans, however the possibility of greater retirement savings is often counterbalanced by having less investment options available. In an individual 401(k) plan, you can make either traditional or Roth deferrals, which each enjoy the same tax benefits 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) 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.
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 an assured benefit to self-employed individuals once they've retired. As opposed to 401(k)s or IRAs, a defined benefit plan doesn't go up and down because of investment gains, but allows self-employed individuals 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 significant sum for retirement and are willing to add significant contributions. Contributions are tax deferred and contributions are taxed at your income level 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 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 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 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 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 Eureka, MO
A financial advisor in Eureka, MO specialized in self-employed retirement plans can be a valuable asset for self-employed individuals. They have the knowledge to help you understand the complexities of retirement planning and design a tailored strategy that gets you where you want to go. A financial advisor will look at your financial situation, understand your risk tolerance, and guide you in making informed 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
- Tailor the plan to your needs even further
- Adopt a written plan that follows all IRS regulations
- 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
- Increase your retirement income by maximizing your social security benefits
Self-Employed Retirement Plans in Eureka, MO: Correct Capital's Process
Eureka, 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 stressed when looking at their options. At Correct Capital, our retirement consultants handle the lion's share of your retirement planning for you, and attempt to make meeting your retirement goals as easy as we possibly can. 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 one of our advisors to know if we're the best firm to help you reach your goals. This brief introduction allows us to get a feel for your needs with no major time investment on your part.
- Gather Information — If we both decide to move forward, we'll request 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 personalized plan based entirely on type of advising you need.
- Review Your Plan — Once we've compiled your plan, we'll meet with you and go over your plan in detail to ensure it's what you were looking for.
- Implementation and Monitoring — Once we've started to move forward, we'll put everything in place so you can start saving. Throughout our relationship, we'll meet with you and adjust your plan to ensure it stays suited to your needs.
Our financial planners and retirement consultants are fiduciary advisors who are legally and morally obligated to do what's in your best interest. We are proud to provide transparent communication and excellent service to assist you reach your self-employed retirement goals.
Other services we offer in Eureka, MO include:
Call Correct Capital for Your Eureka, MO Self-Employed Retirement Plan
Your business isn't merely a business to you, and your Eureka, MO financial advisors need to offer more than merely sage 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 Eureka, MO clients our 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 Eureka, MO, call Correct Capital today at 877-930-4015 or fill out our online form.
