Self-employed retirement plans Kansas City, KS. The flexibility of owning your own business in Kansas City, KS is one of the greatest advantages of being self-employed. However, this independence sometimes brings with potential drawbacks, especially in terms of retirement savings, because you don't have access to employer-sponsored retirement plans. Only 13% of self-employed individuals have a workplace retirement plan, yet countless should consider understanding their retirement options. In addition to having a more secure retirement, partnering with a financial advisor in Kansas City, KS to set up your self-employed retirement plan can provide significant tax advantages that enable your business to grow and succeed.
Few Kansas City, KS investment consulting and retirement planning firms truly grasp the challenges faced by self-employed individuals quite like Correct Capital. Our company’s founder grew up with a father who was a small business owner himself (check out our story here), and Correct Capital have a rich history of supporting entrepreneurs with their retirement planning needs. We recognize that your professional and personal aspirations extend well past simple financial figures, and we work tirelessly to offer personalized solutions that reflect your objectives. Read on to discover about your self-employed retirement plan options in Kansas City, KS, or call Correct Capital at 877-930-401k or contact us online to speak with a self-employed financial advisor in Kansas City, KS today.
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Why Kansas City, KS Self-Employed Individuals Should Have a Retirement Plan
Retirement plans for self-employed individuals not only prepare you for the future, they also deliver tangible benefits today. With customizable contribution options to considerable tax savings, partnering with a financial advisor in Kansas City, KS helps you create your retirement plan to align with your unique financial situation.
Flexibility That Fits Your Income
For those with fluctuating income annually, a plan like a SEP IRA or Solo 401(k) provides the freedom to tailor how much you save:
- Customizable Contributions: Set aside more during profitable years and reduce savings when your earnings dip, so that your plan aligns with your cash flow.
- Roth Options: Choosing a Roth Solo 401(k) lets you settle taxes at the time of contribution, allowing you to withdraw your savings tax-free down the road—a smart decision if you anticipate your tax rate to be higher in the future.
Save Money on Taxes
Retirement plans for self-employed individuals provide valuable tax benefits:
- Tax-Deductible Contributions: Contributions to a Solo 401(k) lower your taxable income, helping you keep more of your earnings.
- Tax-Deferred Growth: Investments grow tax-free until withdrawal, providing your money more time to accumulate.
- State-Specific Incentives: Depending on where you live, you may be eligible for state-specific tax breaks as a self-employed individual. These regional incentives help make these plans even more advantageous.
- Retirement Savings Contributions Credit (Saver’s Credit): Qualified participants can take advantage of a credit of up to 50% of the first $2,000 contributed a retirement plan, cutting down your tax bill even more.
Protect Your Savings With Smart Investments
Building a secure retirement requires more than how much you save—it’s also determined by your investment strategy:
- Diversified Portfolios: Spreading your investments across varied stocks, bonds, and alternatives can help reduce risk while still growing your savings.
- Emergency Back-Up: Combining your retirement strategy and a dedicated business safety net helps you avoid using your retirement funds during challenging periods and incurring penalties.
Plan for the Future of Your Kansas City, KS Business
Retirement planning also helps you prepare for what’s next with your Kansas City, KS business:
- Selling Your Business: When selling your business, plans like SEP IRAs or Solo 401(k)s remain your personal assets and won’t be included in the sale. These plans offer the steady income you’ll need during retirement. It’s important to note that while selling a business often leads to a capital gain, deposits into these plans are capped at annual limits (e.g., as much as $7,000 for IRAs or as much as $70,000 for Solo 401(k)s, with catch-up contributions, depending on plan details).
- Minimizing Taxes: Strategically planning your contributions can reduce the taxes you might face when you sell your business.
- Succession Planning: For those winding down or handing over their business, your nest egg ensure financial security during the change. You may also seek advice from a financial advisor experienced in both succession and retirement strategies to reduce taxes associated with the transaction.
With the proper savings strategy, you manage your financial future, cut down your tax obligations, and establish a solid base for both your retirement and your business goals.
Why Start a Self-Employed Retirement Plan in Kansas City, KS Now?
Time is one of the most important assets in retirement planning. Beginning sooner rather than later not only allows you to build a more substantial retirement fund but also lowers the stress of catching up later in life. The following are reasons why it makes sense to begin today:
The Cost of Waiting
Putting off saving for retirement can have a substantial impact on the amount you’ll have when you retire. The primary reason is compound interest—the powerful process where your investments grow, and those returns, in turn, accumulate even more returns. The greater time span your money has to grow, the greater the effect of compounding.
Example: Taylor and Alex are both entrepreneurs. Both of them want to save $500,000 for retirement by age 65:
- Alex starts saving $5,000 annually at age 30.
- Taylor delays savings until age 40 but contributes $7,500 annually to make up for lost time.
By age 65, with an assumption of 7% annual return:
- Alex contributes $180,000 and ends up with $691,184.39*.
- Taylor contributes $195,500 but achieves a total of only $474,367.78*.
How Early Contributions Grow
Regular, modest investments contributed over time may result in substantial growth. Take a look at this scenario showing the power of compound interest:
- Starting at age 25: By investing $200 per month in a retirement plan with an average annual return of 7%, you’ll end up with $497,303.29* by age 65.
- Starting at age 35: Investing the same $200 per month leaves you with only $235,412.97* by age 65—a difference of over $260,000, just from a 10-year delay.
Starting sooner, the less effort required each year to reach your retirement goals.
*These calculations are based on estimates generated with NerdWallet’s Compound Interest Calculator, based on a 7% annual return. These calculations involved multiplying yearly deposits by the years contributed. This information is intended as illustrative examples and do not guarantee future performance. Outcomes may change depending on factors such as market conditions, fees, and personal factors. Be sure to speak with a financial advisor for guidance tailored to your needs.
Take Control of Your Financial Future
As a self-employed person in Kansas City, KS, it can be tempting to prioritize reinvesting in your business rather than saving for retirement. That said, starting a plan now enables you to:
- Benefit from tax-deferred growth or tax-free withdrawals later on.
- Take advantage of contribution flexibility that change with your income.
- Establish a financial cushion that ensures stability, no matter how your business changes.
The sooner you start, the less you’ll be required to worry about playing catch-up later in life. Building your retirement savings today means taking control of your financial future and giving yourself the freedom to concentrate on your dreams—both for your future retirement and your Kansas City, KS business.
Types of Self-Employed Retirement Plans
Multiple retirement savings options open for those working for themselves in Kansas City, KS, each providing its own advantages and considerations. A financial advisor can help you evaluate the advantages and disadvantages of each option and identify the one best suited for your needs. Generally speaking, your self-employed retirement plan options in Kansas City, KS are:
Traditional or Roth IRA
Plan Overview: Individual Retirement Accounts (IRAs), as explained here, represent retirement savings vehicles that offer distinct tax benefits. In a conventional IRA, you can usually deduct your contributions from taxable income, and earnings grow without immediate taxation, but retirement distributions are taxed as income. In contrast, Roth IRA contributions from post-tax earnings, but qualified withdrawals in retirement, including earnings, are tax-free. In both types of accounts, withdrawals are penalty-free provided you are at least 59½.
Eligibility: Unlike plans linked to your job, traditional and Roth IRAs are accessible for individuals with a source of income.
Contribution Limits: For 2025, annual contribution limits for IRAs are set at $7,000, or $8,000 if you're 50 or older.
Simplified Employee Pension Plan (SEP IRA)
Plan Overview: The Simplified Employee Pension IRA is a retirement plan that enables self-employed individuals to contribute a percentage of their net earnings. Contributions can only be made by an employer, so, as a independent business owner, you (the employee) cannot make additional contributions beyond the 25% you (the employer) allocate. If you have employees, you are obligated to contribute the same amount for them as you do for yourself. It's your choice whether to contribute a flat-dollar amount or a percentage of wages to employee accounts. A SEP IRA is a good option for entrepreneurs facing fluctuating revenue streams. In contrast to some alternatives, SEP IRAs don’t have costly startup or administrative fees.
SEPs work like traditional IRAs, where you contribute pre-tax dollars and retirement distributions are taxable.
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
- $70,000 for 2025
For self-employed individuals, the allowable contribution is based on a special calculation.
Solo 401(k)
Plan Overview: The Solo 401(k), commonly known as an Individual 401(k) or one-participant 401(k) plan, is a self-employed retirement plan meant for businesses with no employees or when the sole employee is your spouse. This type of plan function similarly to traditional employer-managed 401(k) plans, and let you make contributions as both an employee or an employer with pre-tax money. This provides more savings than SEPs or IRAs; however, the additional opportunities can be balanced by more limited investment options. Using a solo 401(k), you can make either traditional or Roth deferrals, which share the same tax benefits as their IRA contribution counterparts.
Eligibility: Solo 401(k)s are available solely to business owners and their spouses are eligible to open and contribute to a solo 401(k).
Contribution Limits: As a self-employed individual with a solo 401(k) plan, you have the ability to make two types of contributions:
- Employee contributions of up to 100% of your earned income from self-employment, subject to the annual contribution limit. For 2025, the limits will be $23,500, or $31,000 if you're over 50, or $34,750 if you attain age 60-63 in 2025.
- Contributions as an employer (as an employer) are limited to 25% of your net self-employment income, which is calculated as net profits less half of your self-employment tax and the elective deferrals you made.
Your combined contributions must not surpass $70,000, or $77,500 for individuals aged 50+ (for 2025), $81,250 if you attain age 60-63 in 2025.
Individual Defined Benefit Plan
Plan Overview: Defined benefit plans is a retirement option that provides a fixed, predetermined benefit to self-employed individuals upon retirement. Unlike defined contribution plans mentioned above, investment returns don’t affect the payout, but allows self-employed individuals to know exactly how much they'll get in retirement. This plan is recommended for wealthier self-employed individuals who are focused on saving a significant sum for retirement and are prepared to contribute larger deposits. Contributions offer tax-deferred growth, and withdrawals are taxable as income in retirement.
Eligibility: Self-employed professionals running an owner-only business or with less than five employees are eligible to open an individual defined benefit plan, but it's generally recommended for individuals aged 50+ who earn at least $250,000 a year. Generally, good candidates for defined benefit plans are:
- Partners or owners who want to invest more than $70,000 (or $77,500 if over age 50)
- Organizations that already put in 3-4% and are willing to do more
- Organizations showing consistent profit patterns
- Entrepreneurs over age 40 who desire to "catch up" or boost savings within a short timeframe
Contribution Limits: The cap on contributions requires calculation from an actuary based on your income, age, and retirement goals. Allowable contributions change annually.
The Importance of a Financial Advisor in Kansas City, KS for Your Self-Employed Retirement Plan
Working with a financial advisor in Kansas City, KS specialized in self-employed retirement plans can be an important asset for those working for themselves. They bring the skills needed to understand the intricacies of saving for retirement and develop a tailored strategy that aligns with your goals. A financial advisor in Kansas City, KS will review your finances, understand your risk tolerance, and guide you in choosing wisely about saving and investing for retirement. A key part of what we do for you includes:
- Assist in selecting a plan that best fits your needs and goals
- Customize the plan to your specific situation even further
- Formalize a plan in writing as required by IRS rules
- Set up an asset trust plan
- Ensure you comprehend the plan's terms
- Review and modify your plan to keep it aligned with your goals
- Provide ongoing education and advice throughout your retirement planning process
- Maximize what you receive in retirement by maximizing your social security benefits
Self-Employed Retirement Plans in Kansas City, KS: Correct Capital's Process
Self-employed individuals in Kansas City, KS who don’t have the time or expertise to oversee their self-employed retirement plan on their own often feel overwhelmed by their choices. At Correct Capital, our Kansas City, KS financial advisors handle the lion's share of your savings plan setup for you, working to make meeting your retirement goals as easy as possible for you. We can help you get set up your self-employed retirement plan in a quick, four-step process:
- Schedule a Call: In just 20 minutes, a member of our advisor team can help understand if we're a good fit for you and your business. This brief introduction lets us understand what you're looking for with no pressure or extensive time commitment on your part.
- Gather Information: Should we agree to proceed, we'll ask for information, including whether you have employees, your current financial situation, and your future objectives. This allows us to put together a tailored approach suited specifically for your needs.
- Review Your Plan: Once we've developed a plan using the information you provide, we'll meet with you and review your plan thoroughly to ensure you understand it and show how it aligns with your goals.
- Implementation and Monitoring: After we agree on your plan, we'll put everything in place so you can initiate your savings journey. As time goes on, we'll meet with you and review your strategy to keep it tailored to your evolving circumstances.
Our Kansas City, KS financial advisors and retirement plan consultants are fiduciary advisors, who are obligated to they are required by law and ethical standards to prioritize your needs above all else.
Other financial advisory services we offer in Kansas City, KS include:
- 401(k) Audit
- High-Net-Worth Wealth Management
- Retirement Planner
- Financial Planning
- Retirement Plan Consultants
- Fiduciary Financial Advisor
Call Correct Capital for Your Self-Employed Retirement Plan in Kansas City, KS
Your business isn't "just a business" to you, and your Kansas City, KS financial advisors should provide more than basic financial recommendations. With Correct Capital, we focus on building a relationship with our clients and their businesses to create customized self-employed retirement plans. To every client in Kansas City, KS, we provide our I.O.U. promise: everything we recommend will be independent, objective, and unbiased. To get started on your self-employment retirement plan, reach out to Correct Capital at 877-930-401k or contact us online.
