Self-employed retirement plans in Frontenac, MO. The flexibility involved with running your own business in Frontenac, MO is one of the great things about working for yourself. But increased leeway can be accompanied by limited stability, particularly in in regards to saving for retirement, employer-sponsored plans aren't an option. Barely more than 10% of self-employed people have retirement plans they save with, but many would be better off exploring what plans are available. In addition to a more comfortable retirement, partnering with a financial advisor to get started and maintain your self-employed retirement plan in Frontenac, MO offers tax benefits that can help propel you and your business forward.
Few financial advisory 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 goals transcend just profit, and we are committed to offering tailored solutions that fit where you are and where you want to go. Read on to learn more about your self-employed retirement plan options in Frontenac, MO, or call Correct Capital at 877-930-4015 or contact us online to speak to a member of our advisory team now.
Types of Self-Employed Retirement Plans
There are several retirement savings plans available for self-employed individuals, and which is best for you depends on your unique situation. A Frontenac, MO financial advisor can help you grasp the advantages and disadvantages of each option and select the most suitable one for your specific needs. Typically, your self-employed retirement plan options in Frontenac, MO are comprised of:
Traditional or Roth IRA
Plan Overview: IRAs, or Individual Retirement Arrangements, are investment accounts that offer specific tax advantages. In a traditional IRA, deposits are deducted from your taxable income, and any gains on investments grow tax-deferred, but withdrawals in retirement are taxed as regular income. In contrast, Roth IRA payments are made with money you've already paid taxes on, but you pay no taxes on withdrawals or earnings. 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 tied to employment, 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 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, you must contribute an equal amount to their pensions. 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 for businesses that experience cycles of high revenue and low revenue. SEP IRAs don't have the costly startup or administrative fees other retirement plans do.
SEPs work like traditional IRAs, where deposits are made with pre-tax money and distributions are taxed as income.
Eligibility: Self-employed individuals and any employer, 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 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 who only employ a spouse. Solo 401(k)s work similarly to employer-sponsored 401(k) plans, and you can add funds as an employee and on your own behalf as the employer. This offers more savings than SEPs or IRAs, however the additional opportunities for saving are often counterbalanced by more limited investment options. In a solo 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 sole proprietors and their spouses can set up and contribute to a solo 401(k).
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 provides a a fixed benefit to self-employed individuals after they've left the workforce. 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 have an exact dollar figure as their income in retirement. This plan is ideal for high-earning self-employed individuals who want to save a a significant sum 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 establish an individual defined benefit plan, but it's typically only recommended for those over 50 who earn at least $250,000 a year. Typically, good candidates for defined benefit plans are:
- Partners or owners who desire to contribute 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 want to make up for earlier years when they couldn't save as much
Contribution Limits: The contribution limit is calculated by an actuary based on your income, age, and retirement goals. Contribution limits are adjusted annually.
How a Financial Advisor Can Help Guide Your Self-Employed Retirement Plan in Frontenac, MO
A financial advisor in Frontenac, MO specialized in self-employed retirement plans can be indispensable for self-employed individuals. They have the experience to help you navigate the intricacies of retirement planning and implement a personalized approach that aligns with your goals. A financial advisor will look at where your finances currently are, adjust for your risk tolerance, and guide you in making informed 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
- Customize the plan to your needs even further
- Adopt a written plan in accordance with IRS guidelines
- 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
- Increase your retirement income by increasing your social security benefits
Self-Employed Retirement Plans in Frontenac, MO: Correct Capital's Process
Frontenac, 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 overwhelmed with the different plans available to them. At Correct Capital, our financial advisors handle the bulk of the retirement planning work on your behalf, and attempt to make achieving the golden years of your dreams as simple as we possibly can. 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 know if we're a good fit for you and your business. This short introduction lets us understand your needs with no obligation on your part.
- 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 what kind of retirement you want to have. 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 started to move forward, we'll put everything in place so your savings can start growing immediately. Throughout your time working with us, we'll meet with you and monitor 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 pride ourselves in providing clear communication and top-notch service to help you reach your self-employed retirement goals.
Other services we offer in Frontenac, 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 Frontenac, MO Self-Employed Retirement Plan
Your business isn't simply an enterprise to you, and your Frontenac, MO financial advisors need to offer more than simply sage financial advice. Correct Capital enjoys getting to know our clients and their business to deliver customized self-employed retirement plans. We give all our Frontenac, 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 Frontenac, MO, speak to a member of our team today at 877-930-4015 or contact us through our website.
