Self-employed retirement plans in Imperial, MO. The flexibility involved with running your own business in Imperial, MO is a wonderful advantage to working for yourself. But increased leeway can be accompanied by uncertainty, particularly in in regards to saving for retirement, employer-sponsored plans aren't an option. Barely more than 10% of self-employed people have a workplace retirement plan, but many would be wise to explore 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 Imperial, MO offers favorable tax incentives that can help propel you and your business towards success.
Few financial advisory and retirement planning firms will understand the needs of the self-employed and small business owners than Correct Capital. Our founder's father was a small business owner himself (you can discover more about our story here). We have a deep understanding that your business and retirement goals go beyond just profit, and we are dedicated to providing tailored solutions that fit your goals. Read on to learn more about your self-employed retirement plan options in Imperial, MO, or call Correct Capital at 877-930-4015 or fill out our online form to speak to a member of our advisory team at your convenience.
Types of Self-Employed Retirement Plans
There are many retirement savings options available for self-employed individuals, each with its own set of benefits and considerations. A Imperial, MO financial advisor can help you comprehend the benefits and drawbacks of each option and select the most suitable one for your specific needs. Typically, your self-employed retirement plan options in Imperial, MO are comprised of:
Traditional or Roth IRA
Plan Overview: IRAs, or Individual Retirement Arrangements, are long-term savings plans that allows you to set aside money for the future, with special tax considerations. 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 deposits are made with after-tax income, but qualified distributions in retirement, including investment gains, 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 an employer, traditional and Roth IRAs can be set up by 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. Given that you are self-employed, your ability to contribute is restricted to the 25% already contributed by you in your position as the employer. If you have employees, you would have to contribute the same amount for them as you do for yourself. You can either contribute either a predetermined fixed dollar amount or a proportion of annual income to employee accounts. SEP IRAs may be a good self-employed retirement plan if your business goes 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 deposits are made with pre-tax money and distributions are taxed as income.
Eligibility: Any employer, including the self-employed, can set up 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 self-employed people, the maximum amount you can contribute in a given year is based on 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 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 more savings than some other retirement savings plans, however the possibility of greater retirement savings is 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 sole proprietors 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 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.
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 offers a an assured monthly figure to self-employed individuals upon retirement. As opposed to other types of retirement plans, a defined benefit plan doesn't oscillate based on investment returns, but allows self-employed people 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 large amount for retirement and want to make substantial 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 open an individual defined benefit plan, but it's typically only well-suited for those over 50 who earn at least $250,000 a year. 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 want to "catch up" or accelerate the retirement savings
Contribution Limits: The contribution limit must be determined by an actuary who calculates for your income, age, and retirement goals. Contribution limits change every year.
How a Financial Advisor Can Help Guide Your Self-Employed Retirement Plan in Imperial, MO
A financial advisor in Imperial, MO specialized in self-employed retirement plans can be indispensable for self-employed individuals. They have the know-how to help you understand the complexities of retirement planning and create a customized plan that acts as a roadmap through your financial future. A financial planner will analyze where your finances currently are, help you figure out your risk tolerance, and help you make smart decisions for yourself, both as employer 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 rules
- 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 guidance into and through retirement
- Increase your retirement income by increasing your social security benefits
Self-Employed Retirement Plans in Imperial, MO: Correct Capital's Process
Imperial, 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 options available to them. At Correct Capital, our financial advisors handle the bulk of the retirement planning work for you, and attempt to make achieving your retirement goals as simple 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 — It only takes a brief 20-minute call for a member of our advisor team to know if we're a good fit for you and your business. This short introduction lets us 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 information, including the number of employees in your business (if applicable), your current finances, and what kind of retirement you want to have. 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 the specifics of your plan to ensure you understand it.
- Implementation and Monitoring — Once we've agreed on your plan, we'll put everything in place so your savings can start growing immediately. Throughout our relationship, we'll keep you up-to-date with how things are going and adjust your plan to ensure it stays suited to your needs.
Our financial planners and retirement consultants are fiduciary advisors who are legally and morally bound to do what's best for you and only you. We pride ourselves in providing straightforward communication and top-notch service to assist you attain your self-employed retirement goals.
Other services we offer in Imperial, 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 Imperial, MO Self-Employed Retirement Plan
Your business isn't merely a business to you, and your Imperial, MO financial advisors need to provide you with more than just sound financial advice. Correct Capital takes pride in getting to know our clients and what makes them and their business tick to deliver personalized self-employed retirement plans. We give all our Imperial, 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 Imperial, MO, speak to a member of our team today at 877-930-4015 or fill out our online form.
