Self-employed retirement plans in Fenton, MO. The freedom of running your own business in Fenton, MO is a wonderful advantage to being self-employed. But more leeway can be accompanied by a lack of security, especially in when it comes to building a retirement plan, as you don't have access to any employer plans. 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 a more comfortable retirement, working with a financial advisor to get started and maintain your self-employed retirement plan in Fenton, MO offers favorable tax incentives that can help you improve your bottom line.
Few wealth management and retirement planning firms know what it's like to be self-employed or a small business owner as well as Correct Capital. Our founder's father was a small business owner himself (you can discover more about our story here). We know that your business and retirement aspirations go beyond figures and numbers, and we are dedicated to providing customized solutions that fit your goals. Continue reading to discover more about your self-employed retirement plan options in Fenton, 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 a few different retirement savings plans that the self-employed can contribute to, each with its own set of advantages and considerations. A Fenton, MO financial advisor can help you understand the benefits and drawbacks of each option and opt for that helps both your short- and long-term goals. Typically, your self-employed retirement plan options in Fenton, MO include:
Traditional or Roth IRA
Plan Overview: IRAs, or Individual Retirement Accounts, are long-term savings plans that allows you to set aside money for the future, with special tax considerations. If you deposit to a traditional IRA, contributions are deducted from your taxable income, and any gains on investments grow tax-deferred, but withdrawals in retirement are taxed as if it were income. In contrast, Roth IRA payments are made with money you've already paid taxes on, but qualified distributions in retirement, including investment gains, are tax-free. In both a traditional an a Roth IRA, distributions can be made without penalty as long as you are at least 59½.
Eligibility: While many retirement plans, such as 401(k)s, are tied to 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 portion of of the money they make from their self-employment. Since you are self-employed, you (the employee) have a contribution limit of no more than the 25% already contributed by you (the employer). If you have employees, you would have to contribute the same amount for them as you do for yourself. You may choose to contribute either a predetermined fixed dollar amount or a proportion of wages 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 costly startup or administrative fees often associated with other retirement plans.
SEPs work like traditional IRAs, where payments are made with money you've yet to pay taxes on and distributions are taxed at your income at the time of withdrawal.
Eligibility: Any employer, including the self-employed, can set up a SEP.
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 specific formula.
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 function in the same same way as employer-sponsored 401(k) plans, and you can add funds as an employee and on your own behalf as the employer. 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 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 individual 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) 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 provides a an assured monthly figure to self-employed individuals after they've left the workforce. As opposed to 401(k)s or IRAs, a defined benefit plan doesn't fluctuate 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 substantial portion for retirement and are willing to add significant 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 at least $250,000 a year. Typically, good candidates for defined benefit plans are:
- 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 contribute 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 must be determined 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 Fenton, MO
A financial advisor in Fenton, MO specialized in self-employed retirement plans can be a crucial partner for self-employed individuals. They have the know-how to help you understand the complexities of retirement planning and develop a tailored strategy that aligns with your goals. A financial planner will look at your financial situation, help you figure out your risk tolerance, and help you make smart decisions for yourself, both as a business owner and future retiree. Part of what we do for you includes:
- Help you pick 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 support as long as you work with us
- Maximize your retirement income by maximizing your social security benefits
Self-Employed Retirement Plans in Fenton, MO: Correct Capital's Process
Fenton, 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 burdened with the different options available to them. At Correct Capital, our retirement consultants handle the lion's share of your retirement planning on your behalf, and endeavor to make meeting your business and retirement aspirations as easy as possible for you. 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 a brief 20-minute call for one of our advisors to know if we're suitable for you and your business. This brief introduction allows us to understand what you're looking for with no major time investment on your part.
- Gather Information — If we both decide to move forward, we'll ask for more info, 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 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 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 your time partnering with us, we'll meet with you and adjust your plan so it stays consistent with your needs.
Our financial advisors and retirement consultants are fiduciary advisors who have a legal and moral obligation to do what's best for you and only you. We pride ourselves in providing clear communication and high-quality service to help you attain your self-employed retirement goals.
Other services we offer in Fenton, 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 Fenton, MO Self-Employed Retirement Plan
Your business isn't simply an enterprise to you, and your Fenton, MO financial advisors need to offer more than simply sage financial advice. Correct Capital takes pride in getting to know our clients and their business to deliver personalized self-employed retirement plans. We give all our Fenton, 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 Fenton, MO, speak to a financial advisor today at 314-930-401(k) or contact us online.
