Self-employed retirement plans in Fenton, MO. The freedom of having your own business in Fenton, MO is a wonderful advantage to being self-employed. But that freedom can be accompanied by limited stability, particularly in when it comes to saving for retirement, as you don't have access to any employer plans. Barely more than 10% 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 retirement of your dreams, working with a financial advisor to set up your self-employed retirement plan in Fenton, MO offers favorable tax incentives that can help you improve your bottom line.
Not many wealth management and retirement planning firms will understand the needs of the self-employed and small business owners than Correct Capital. In fact, we were inspired by a small business owner, our founder's father (you can read more about our story here). We have a deep understanding that your business and retirement aspirations transcend figures and numbers, and we are devoted to offering personalized solutions that fit where you are and where you want to go. Read on to discover more about your self-employed retirement plan options in Fenton, MO, or call Correct Capital at 877-930-4015 or fill out our online form to speak to a member of our advisory team now.
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Types of Self-Employed Retirement Plans
There are many retirement savings options that the self-employed can contribute to, each with its own set of benefits and considerations. A Fenton, MO financial advisor can help you comprehend the pros and cons of each option and select that helps both your short- and long-term goals. Typically, your self-employed retirement plan options in Fenton, MO are comprised of:
Traditional or Roth IRA
Plan Overview: IRAs, or Individual Retirement Accounts, are personal savings plans that offer specific tax advantages. In a traditional IRA, contributions are typically tax-deductible, and any gains on investments grow tax-deferred, but withdrawals in retirement are liable to income tax. In contrast, Roth IRA contributions are made with after-tax income, but qualified withdrawals in retirement, including earnings, are tax-free. In both accounts, withdrawals are penalty-free if you are at least 59½.
Eligibility: While many retirement plans, such as 401(k)s, are set up through an employer, traditional and Roth IRAs can be set up by anyone with an earned income.
Contribution Limits: For 2023, annual contribution limits 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 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, they must receive the same amount you do. You can either contribute either a predetermined fixed dollar amount or a proportion of annual income to employee accounts. SEP IRAs may be an excellent self-employed retirement plan if your business experiences periods of variable income. SEP IRAs don't have the high upfront costs or administrative expenses other retirement plans do.
SEPs work like traditional IRAs, where contributions are made with money you haven't paid taxes on and withdrawals 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 whichever is the least out of:
- 25% of compensation, or
- $66,000
For the self-employed individual, the maximum amount you can contribute in a given year is based on 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 whose only employee is a spouse. Solo 401(k)s function in the same same way 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 possibility of greater retirement savings is often offset by having less investment options available. In an individual 401(k) plan, you can make either traditional deferrals (with pre-tax money) or Roth deferrals (with after-tax money).
Eligibility: Only business owners 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 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 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.
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 once they've retired. In contrast to other types of retirement plans, a defined benefit plan doesn't fluctuate based on investment gains, but allows self-employed individuals to know exactly what they'll receive in retirement. This plan is ideal for high-earning self-employed individuals who want to save a a substantial portion for retirement and want to make significant contributions. Contributions are tax deferred and contributions are taxed as income 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 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 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 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 are adjusted each year.
How a Financial Advisor Can Help Guide 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 experience to help you navigate the complexities of retirement planning and create a customized plan that acts as a roadmap through your financial future. A financial planner will evaluate where your finances currently are, adjust for your risk tolerance, and help you make sound 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 in accordance with 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 support as long as you work with us
- Increase 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 have the time, interest, or knowledge to handle their self-employed retirement plan themselves can become stressed 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 attempt to make achieving your retirement goals as simple as possible for you. We can help you establish and maintain your self-employed retirement plan in four simple steps:
- Schedule a Call — We only need a short 20-minute call for one of our advisors to understand if we're suitable for you and your business. This brief 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 information, including how many employees you have (if any), your current finances, and your retirement goals. This allows us to put together a personalized 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 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. As long as we work together, we'll meet with you and monitor 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 in your best interest. We pride ourselves in providing straightforward communication and excellent service to assist you reach your self-employed retirement goals.
Other services we offer in Fenton, MO include:
Call Correct Capital for Your Fenton, MO Self-Employed Retirement Plan
Your business isn't merely a business to you, and your Fenton, MO financial advisors need to provide you with more than just wise financial advice. Correct Capital enjoys getting to know our clients and what makes them and their business tick to deliver personalized self-employed retirement plans. We offer all our Fenton, 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 Fenton, MO, call Correct Capital today at 877-930-4015 or fill out our online form.
