Self-employed retirement plans in Huntleigh, MO. The freedom of running your own business in Huntleigh, MO is one of the great things about being self-employed. But that freedom can be accompanied by a lack of security, especially 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 individuals have retirement plans they save with, but many would be wise to explore 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 Huntleigh, MO offers significant tax advantages that can help propel you and your business forward.
Only a handful of financial advisory 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 discover more about our story here). We have a deep understanding that your business and retirement aspirations transcend mere monetary figures, and we are devoted to providing tailored solutions that fit your goals. Read on to read more about your self-employed retirement plan options in Huntleigh, MO, or call Correct Capital at 877-930-4015 or contact us online to speak to a small business financial advisor at your convenience.
Types of Self-Employed Retirement Plans
There are a few different retirement savings options available for self-employed individuals, each with its own set of benefits and considerations. A Huntleigh, 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 Huntleigh, MO are comprised of:
Traditional or Roth IRA
Plan Overview: IRAs, or Individual Retirement Accounts, are long-term savings plans that offer specific tax advantages. If you deposit to a traditional IRA, contributions are deducted from your taxable income, and investment earnings grow tax-deferred, but distributions in retirement are taxed as if it were income. On the other hand, Roth IRA contributions are made with money you've already paid taxes on, but you pay no taxes on withdrawals or earnings. In both accounts, distributions 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 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 share of of the money they make from their 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 plans. You may choose to 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 go through cycles of high revenue and low revenue. SEP IRAs don't have the costly startup or administrative fees often associated with other retirement plans.
SEPs work like traditional IRAs, where contributions are made with money you haven't paid taxes on and withdrawals 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 the lesser of:
- 25% of compensation, or
- $66,000
For self-employed people, 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 businesses with no employees or whose only employee is a spouse. Solo 401(k)s function about the same as employer-sponsored 401(k) plans, and you can make contributions as both an employer or employee with pre-tax money. This offers greater potential for savings than some other retirement savings plans, however the additional opportunities for saving are often counteracted by having less investment options available. In a solo 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 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) 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.
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 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 substantial portion for retirement and want to add significant contributions. Contributions are tax deferred and withdrawals 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 open an individual defined benefit plan, but it's typically only well-suited for those over 50 who earn well into the six figures. Typically, good candidates for defined benefit plans are:
- 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 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 calculated by an actuary who calculates for your income, age, and retirement goals. Contribution limits are adjusted annually.
How a Financial Advisor Can Help Guide Your Self-Employed Retirement Plan in Huntleigh, MO
A financial advisor in Huntleigh, MO specialized in self-employed retirement plans can be a crucial partner for self-employed individuals. They have the knowledge to help you understand the intricacies of retirement planning and develop a personalized approach that acts as a roadmap through your financial future. A financial planner will look at your financial situation, understand your risk tolerance, and help you make smart 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
- Personalize 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
- Maximize your retirement income by maximizing your social security benefits
Self-Employed Retirement Plans in Huntleigh, MO: Correct Capital's Process
Huntleigh, MO business owners who don't have the time, desire, or knowledge to handle their self-employed retirement plan themselves can become burdened with the different options available to them. At Correct Capital, our financial advisors handle the bulk of the retirement planning work for you, and endeavor 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 a short 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 for you.
- 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 finances, and your retirement goals. This allows us to put together a personalized plan based entirely on type of advising you need.
- Review Your Plan — After we put together a plan based on the information you provide, we'll meet with you and go over the details of your plan to ensure it's what you were looking for.
- Implementation and Monitoring — Once we've agreed on your plan, we'll put everything in place so you can start saving. Throughout our relationship, we'll keep you up-to-date with how things are going and monitor your plan to ensure it stays suited to your needs.
Our financial planners 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 straightforward communication and high-quality service to assist you reach your self-employed retirement goals.
Other services we offer in Huntleigh, MO include:
Call Correct Capital for Your Huntleigh, MO Self-Employed Retirement Plan
Your business isn't merely a business to you, and your Huntleigh, 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 Huntleigh, MO clients the same 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 Huntleigh, MO, call Correct Capital today at 877-930-4015 or contact us online.
