Self-employed retirement plans in Huntleigh, MO. The freedom of having your own business in Huntleigh, MO is a wonderful advantage to being self-employed. But that freedom can be accompanied by limited stability, particularly in in regards to building a retirement plan, employer-sponsored plans aren't an option. Only a fraction of self-employed individuals have a workplace retirement plan, but many would be better off exploring what plans are available. 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 Huntleigh, MO offers tax benefits that can help free up much-needed funds for your business.
Only a handful of financial advisory and retirement planning firms will understand the needs of the self-employed and small business owners as well as Correct Capital. Our founder's father was a small business owner himself (you can learn more about our story here). We know that your business and retirement goals transcend just profit, and we are devoted to providing tailored plans that fit your goals. Continue reading to discover more about your self-employed retirement plan options in Huntleigh, 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.
What Self-Employed Retirement Plans Are There?
There are a few different retirement savings options available for self-employed individuals, and which is best for you depends on your unique situation. A Huntleigh, MO financial advisor can help you understand the advantages and disadvantages 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 Arrangements, are personal savings plans that provides individuals with tax advantages to save for retirement. In a traditional IRA, contributions are deducted from your taxable income, 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 after-tax income, but qualified withdrawals in retirement, including earnings, are tax-free. In both accounts, 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 set up through 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 their net earnings from self-employment. As a self-employed individual, your contributions are limited to the amount already contributed by you (the employer), which cannot be more than 25%. If you have employees, they must receive the same amount you do. You can either contribute a flat-dollar amount or a percentage of annual income to employee accounts. SEP IRAs may be an excellent self-employed retirement plan if your business goes through cycles of high revenue and low revenue. SEP IRAs don't have the high upfront costs or administrative expenses 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: Self-employed individuals and any employer, 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
For the self-employed individual, the amount eligible to be contributed is decided by a specific formula.
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 in the same same way as employer-sponsored 401(k) plans, and you can make contributions as both an employer or employee with pre-tax money. This offers more savings than SEPs or IRAs, however the additional opportunities for saving are often counterbalanced by having less investment options available. In a one-participant 401(k) plan, you can make either traditional deferrals (with pre-tax money) or Roth deferrals (with after-tax money).
Eligibility: Only self-employed individuals 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) of 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 upon retirement. As opposed to other types of retirement plans, a defined benefit plan doesn't oscillate because of investment returns, but allows self-employed people 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 add substantial 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. 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 willing to contribute more
- Companies who are sure of their profit patterns
- Partners or owners over age 40 who desire to "catch up" or accelerate the retirement savings
Contribution Limits: The contribution limit is determined by an actuary who calculates for your income, age, and retirement goals. Contribution limits change each year.
Why You Need a Financial Advisor for Your Self-Employed Retirement Plan in Huntleigh, MO
A financial advisor in Huntleigh, MO specialized in self-employed retirement plans can be an invaluable resource for self-employed individuals. They have the expertise to help you navigate the intricacies of retirement planning and implement a customized plan that aligns with your goals. A financial advisor will look at where your finances currently are, help you figure out 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 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 into and through retirement
- Increase 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 retirement consultants handle the lion's share of your retirement planning on your behalf, and strive to make achieving the golden years of your dreams as simple 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 20 minutes for a member of our advisor team to know if we're the best firm to help you reach your goals. This brief introduction lets us understand your needs with no major time investment on your part.
- Gather Information — If we both decide to move forward, we'll request more info, including how many employees you have (if any), your current financial situation, and what kind of retirement you want to live. This allows us to put together a custom plan based entirely on type of advising you need.
- Review Your Plan — Once we've compiled your plan, we'll meet with you and discuss your plan in detail to ensure you understand it.
- Implementation and Monitoring — Once we've enacted 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 adjust your plan so it stays consistent with your needs.
Our financial advisors and retirement consultants are fiduciary advisors who have a legal and ethical obligation to do what's best for you and only you. We are proud to provide transparent communication and top-notch service to assist you achieve your self-employed retirement goals.
Other services we offer in Huntleigh, MO include:
- 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
- Retirement Calculator
- Retirement Planning
Call Correct Capital for Your Huntleigh, MO Self-Employed Retirement Plan
Your business isn't "just a business" to you, and your Huntleigh, MO financial advisors need to provide you with more than simply wise financial advice. Correct Capital takes pride in getting to know our clients and their business to deliver customized self-employed retirement plans. We give 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 314-930-401(k) or contact us online.