Self-employed retirement plans in Jefferson County, MO. The freedom of having your own business in Jefferson County, MO is one of the great things about being self-employed. But increased leeway can come with uncertainty, especially in in regards to saving for retirement, employer-sponsored plans aren't an option. Barely more than 10% of self-employed individuals have a workplace retirement plan, but many would be better off exploring 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 Jefferson County, MO offers favorable tax incentives that can help free up much-needed funds for your business.
Not many wealth management and retirement planning firms will understand the needs of the self-employed and small business owners more than Correct Capital. In fact, we were inspired by a self-employed individual, our founder's father (you can read more about our story on our website). We know that your business and retirement aspirations transcend spreadsheets and percentages, and we are dedicated to providing personalized solutions that fit where you are and where you want to go. Continue reading to learn more about your self-employed retirement plan options in Jefferson County, MO, or call Correct Capital at 314-930-401(k) or contact us online to speak to a member of our advisory team today.
What Self-Employed Retirement Plans Are There?
There are a few different retirement savings plans that the self-employed can set up, and which is best for you depends on your unique situation. A Jefferson County, MO financial advisor can help you grasp the advantages and disadvantages of each option and select that works best for you. Generally, your self-employed retirement plan options in Jefferson County, 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, deposits 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 qualified withdrawals in retirement, including investment gains, are tax-free. In both a traditional an a Roth IRA, withdrawals can be made without penalty as long as 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, 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 percentage of of the money they make from their self-employment. Since you are self-employed, you (the employee) have a contribution limit of no more than the 25% already contributed by you (the employer). If you have employees, they must receive the same amount you do. You may choose to contribute either a predetermined fixed dollar amount or a proportion of wages to employee accounts. SEP IRAs may be an excellent self-employed retirement plan if your business experiences fluctuating income periods. 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 distributions are taxed as income.
Eligibility: Any employer, including the self-employed, can establish a SEP.
Contribution Limits: Contribution limits for employees in a SEP IRA are the lesser of:
- 25% of compensation, or
For self-employed people, the maximum amount you can contribute in a given year is based on 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 businesses with no employees or who only employ a spouse. Solo 401(k)s function in the same same way as employer-sponsored 401(k) plans, and you can add funds as an employee and on your own behalf as the employer. This offers increased savings opportunities than SEPs or IRAs, however the possibility of greater retirement savings is often offset by more limited investment options. In an individual 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 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 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 a fixed monthly figure to self-employed individuals once they've retired. In contrast to 401(k)s or IRAs, a defined benefit plan doesn't oscillate because of investment returns, but allows self-employed individuals 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 are willing to add substantial contributions. Contributions are tax deferred and contributions are taxed at your income level 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 not a great idea unless you're over 50 and 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 willing to contribute more
- Companies who are sure of their 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 determined by an actuary based on your income, age, and retirement goals. Contribution limits are adjusted every year.
Why You Need a Financial Advisor for Your Self-Employed Retirement Plan in Jefferson County, MO
A financial advisor in Jefferson County, MO specialized in self-employed retirement plans can be a crucial partner for self-employed individuals. They have the expertise to help you understand the complexities of retirement planning and create a tailored strategy 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 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
- 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
- Maximize your retirement income by increasing your social security benefits
Self-Employed Retirement Plans in Jefferson County, MO: Correct Capital's Process
Jefferson County, 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 when looking at their options. At Correct Capital, our financial advisors handle the lion's share of your retirement planning for you, and attempt to make meeting your business and retirement aspirations as easy as we possibly can. We can help you get set up with your self-employed retirement plan in four simple steps:
- Schedule a Call — It only takes 20 minutes for a member of our advisor team to know if we're a good fit for you and your business. This brief introduction allows us to understand your needs with no major time investment for you.
- Gather Information — If we seem like a good fit, we'll request more info, including how many employees you have (if any), your current financial situation, and your retirement goals. 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 go over the specifics of your plan to ensure understand how it best correlates to your needs.
- 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 are proud to provide straightforward communication and excellent service to assist you achieve your self-employed retirement goals.
Other services we offer in Jefferson County, 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 Jefferson County, MO Self-Employed Retirement Plan
Your business isn't merely a business to you, and your Jefferson County, MO financial advisors need to provide you with more than merely sage 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 Jefferson County, 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 Jefferson County, MO, call Correct Capital today at 314-930-401(k) or contact us through our website.