Self-employed retirement plans Kansas City, KS. The independence of running your own company in Kansas City, KS is one of the best aspects of being self-employed. However, this flexibility can come with a lack of security, notably in terms of retirement savings, because you don't have the benefit of employer-sponsored retirement plans. Only 13% of self-employed individuals have a workplace retirement plan, although many should consider exploring their options. In addition to enjoying a financially stable retirement, working with a financial advisor in Kansas City, KS to establish your self-employed retirement plan offers significant tax advantages that help your business to grow and succeed.
Few Kansas City, KS investment consulting and retirement planning firms understand the needs of small business owners as well as Correct Capital. Our company’s founder grew up with a father who was a small business owner himself (learn more about our story here), and Correct Capital have a rich history of assisting business owners in their retirement planning needs. We know that your professional and personal aspirations aren’t limited to simple financial figures, and we strive to create personalized solutions aligned with your vision. Continue exploring to find out about your self-employed retirement plan options in Kansas City, KS, or reach out to Correct Capital at 877-930-401k or contact us online to talk to a entrepreneurial financial advisor in Kansas City, KS today.
Why Kansas City, KS Self-Employed Individuals Should Have a Retirement Plan
Retirement plans for self-employed individuals help prepare you for the future, they also deliver real benefits today. From flexible contributions to significant tax savings, consulting a financial advisor in Kansas City, KS helps you design your retirement plan to align with your individual circumstances.
Flexibility That Fits Your Income
When your earnings vary over time, a plan like a SEP IRA or Solo 401(k) gives you the option to adjust how much you save:
- Customizable Contributions: Save extra during profitable years and reduce savings when income is lower, so your plan works with your current income.
- Roth Options: A Roth Solo 401(k) lets you settle taxes at the time of contribution, enabling you to withdraw your savings tax-free down the road—a wise move if you expect your tax rate is likely to rise in the future.
Save Money on Taxes
Self-employed retirement plans deliver valuable tax benefits:
- Tax-Deductible Contributions: Contributions to a SIMPLE IRA shrink your tax liability, so you can keep more of your hard-earned money.
- Tax-Deferred Growth: Your savings grow untaxed until withdrawn, giving your money more time to accumulate.
- State-Specific Incentives: In some states, you may be eligible for state-specific credits as a self-employed individual. These state-level incentives can make these plans even more advantageous.
- Retirement Savings Contributions Credit (Saver’s Credit): Eligible individuals can apply for 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 goes beyond just how much you save—it’s also linked to the way you invest:
- Diversified Portfolios: Allocating your investments across varied stocks, bonds, and other assets is a smart way to mitigate financial risk while helping to grow your nest egg.
- Emergency Back-Up: Supplementing your retirement savings with a dedicated business safety net prevents you from using your retirement funds during financial hardships and facing tax penalties.
Plan for the Future of Your Kansas City, KS Business
Preparing for retirement can assist you think through what’s next with your Kansas City, KS business:
- Selling Your Business: For those considering a sale, retirement accounts like SEP IRAs and Solo 401(k)s remain yours and don’t transfer with the business. These accounts can provide the reliable income you’ll need in the future. Remember that while the sale of a business usually creates a capital gain, deposits into these plans are subject to yearly maximums (e.g., up to $7,000 for IRAs or a maximum of $70,000 for Solo 401(k)s, with catch-up contributions, according to plan rules).
- Minimizing Taxes: Making the most of retirement savings minimizes the taxes you might face when you pass on your business.
- Succession Planning: Whether you’re transferring ownership, your retirement savings provide financial security through the transition. You can also work with a financial advisor with expertise in succession and retirement planning to reduce taxes on the sale.
With the right retirement plan, you can take control of your financial future, cut down your tax obligations, and build a secure foundation for both your retirement and your business goals.
Why Start a Self-Employed Retirement Plan in Kansas City, KS Now?
There’s no denying that time is one of the most crucial factors in retirement planning. Beginning sooner rather than later not only lets you accumulate a larger nest egg but also lowers the financial burden of saving aggressively in the future. Here’s why it pays to take action now:
The Cost of Waiting
Putting off saving for retirement can have a substantial impact on the savings you’ll have when you retire. The primary reason is compound interest—the concept where your investments earn returns, and those returns, in turn, accumulate even more returns. The more time your money has to grow, the larger the benefit of compounding.
Example: Taylor and Alex are both self-employed individuals. Their shared goal is to save $500,000 for retirement by age 65:
- Alex starts saving $5,000 annually at age 30.
- Taylor postpones starting contributions to age 40 but saves $7,500 annually to catch up.
By age 65, using a projected 7% annual return:
- Alex contributes $180,000 and achieves a total of $691,184.39*.
- Taylor contributes $195,500 but only ends up with $474,367.78*.
How Early Contributions Grow
Even modest contributions invested steadily may result in significant growth. Here’s a simple scenario showing the impact of compounding:
- Starting at age 25: Putting aside $200 per month in a retirement plan with an projected return of 7%, you’ll grow to approximately $497,303.29* by age 65.
- Starting at age 35: Investing the same $200 per month yields only $235,412.97* by age 65—a gap of over $260,000, simply due to a 10-year delay.
The earlier you begin, the less effort required each year to achieve your retirement goals.
*The figures provided in this example are estimates generated with NerdWallet’s Compound Interest Calculator, based on a 7% annual return. The contributions were calculated by multiplying the annual deposit amount by the total number of years contributions were made. These examples are for illustrative purposes only and cannot predict actual future outcomes. Your individual results may differ depending on variables including market conditions, fees, and personal factors. We recommend consulting a financial advisor for personalized advice.
Take Control of Your Financial Future
For self-employed individuals in Kansas City, KS, it can be tempting to prioritize reinvesting in your business over saving for retirement. That said, initiating a plan now gives you the chance to:
- Leverage tax-deferred growth or withdrawals without taxes later on.
- Benefit from adjustable savings that align with your earnings.
- Create a long-term safety measure that ensures stability, no matter how your business changes.
The sooner you start, the less you’ll be required to worry about catching up later in life. Building your retirement savings today means gaining control over your financial future and allowing yourself the freedom to turn your attention to your goals—both for your retirement years and your Kansas City, KS business.
Types of Self-Employed Retirement Plans
There are several retirement savings options designed for entrepreneurs in Kansas City, KS, each with its own advantages and considerations. A financial advisor is available to help you evaluate the benefits and drawbacks of each option and choose the one most suitable for your circumstances. Typically, your self-employed retirement plan options in Kansas City, KS are:
Traditional or Roth IRA
Plan Overview: IRAs, or Individual Retirement Accounts, are financial tools for retirement that include distinct tax benefits. In a standard IRA, the money you contribute is often tax-deductible, and returns grow free of current taxes, but retirement distributions are taxable. In contrast, Roth IRAs require contributions are made with after-tax income, but retirement withdrawals that qualify, including earnings, are not taxed. In both types of accounts, withdrawals come without penalties provided you are at least 59½.
Eligibility: While many retirement plans, such as 401(k)s, are tied to employment, IRAs, including traditional and Roth options are open to those with an earned income.
Contribution Limits: For 2025, annual contribution limits for IRAs remain $7,000, or $8,000 if you qualify for catch-up contributions.
Simplified Employee Pension Plan (SEP IRA)
Plan Overview: The Simplified Employee Pension IRA is a retirement plan that allows entrepreneurs to save a percentage of their net business profits. Contributions are strictly employer contributions an employer, so, as a sole proprietor, you (the employee) would not be able to contribute beyond the 25% you (the employer) have designated. If you have employees, it's required to contribute the same amount for them as you do for yourself. You may choose to contribute a flat-dollar amount or a percentage of wages to employee accounts. This type of plan may be ideal for companies with cycles of high revenue and low revenue. Compared to other retirement options, SEP IRAs are free of expensive setup or ongoing fees.
SEPs function like conventional IRAs, where the contributions are tax-deferred and withdrawals are taxed as income.
Eligibility: Any employer, including the self-employed can set up a SEP.
Contribution Limits: Contribution limits for employees in a SEP IRA are the lesser of:
- 25% of compensation, or
- $70,000 for 2025
As a self-employed person, the allowable contribution is based on a special calculation.
Solo 401(k)
Plan Overview: The Solo 401(k), sometimes referred to as an Individual 401(k) or one-participant 401(k) plan, is a retirement savings plan intended for businesses with no employees or where the only employee is a spouse. Solo 401(k)s are similar to traditional employer-managed 401(k) plans, and allow you to contribute as both the employer and the employee with pre-tax money. This provides more savings compared to SEPs or IRAs; however, the additional opportunities often come with more constrained investment avenues. With this type of plan, you can make either traditional or Roth deferrals, which have 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: If you are self-employed with a solo 401(k) plan, you can make two types of contributions:
- Elective deferrals (as an employee) of up to 100% of your self-employment income, capped at the annual contribution limit. The contribution limits for 2025 include $23,500, or $31,000 if you are 50 or older, or $34,750 for those who turn 60-63 in 2025.
- Employer profit-sharing contributions (as an employer) cannot exceed 25% of your net self-employment income, which is defined as net profit minus half of your self-employment tax and the deferrals you made.
Total contributions are capped at $70,000, or $77,500 if you're over age 50 (in 2025), $81,250 for those aged 60-63 in 2025.
Individual Defined Benefit Plan
Plan Overview: A defined benefit plan represents a type of retirement plan that guarantees a pre-established payout to business owners upon retirement. Unlike defined contribution plans mentioned above, investment returns don’t affect the payout, but allows self-employed individuals to know what they'll receive in retirement. This strategy is ideal for higher-income self-employed individuals who are focused on saving a large amount for retirement and can commit to making substantial contributions. Contributions grow tax-free until withdrawal, and withdrawals are taxed as income in retirement.
Eligibility: Self-employed professionals managing a one-person company or with less than five employees may establish an individual defined benefit plan, but it's typically recommended for people above age 50 who make $250,000 or more annually. Typically, good candidates for defined benefit plans are:
- Business owners or partners who desire to contribute more than $70,000 (or $77,500 for those aged 50+)
- Companies already contributing 3-4% and are willing to do more
- Organizations with proven consistent profit patterns
- Partners or owners over age 40 who wish to accelerate savings or increase their retirement contributions rapidly
Contribution Limits: The maximum allowable contribution requires calculation from an actuary using your financial situation, age, and savings targets. Contribution limits are updated yearly.
The Importance of a Financial Advisor in Kansas City, KS for Your Self-Employed Retirement Plan
Partnering with an advisor in Kansas City, KS specialized in self-employed retirement plans is an essential partner for those working for themselves. They have the expertise to help navigate the complexities of retirement planning and craft a tailored strategy that aligns with your goals. An expert in your area will assess where you stand financially, identify your risk preferences, and guide you in making informed decisions about saving and investing for retirement. Part of what we do for you features:
- Assist in selecting a plan that aligns with your objectives and circumstances
- Customize the plan to fit you personally even further
- Formalize a plan in writing that complies with IRS regulations
- Organize a trust plan to manage your assets
- Make sure you understand the plan's terms
- Track and fine-tune your plan to keep it aligned with your goals
- Offer continued financial education and guidance as you continue on the road to retirement
- Increase your retirement income by maximizing your social security benefits
Self-Employed Retirement Plans in Kansas City, KS: Correct Capital's Process
Kansas City, KS business owners who lack the time, interest, or knowledge to oversee their own retirement planning on their own may end up overwhelmed as they look at their available plans. At Correct Capital, our Kansas City, KS financial advisors manage the bulk of your retirement strategy for you, and strive to ensure meeting your future savings targets as hassle-free as possible for you. We will guide you in creating your self-employed retirement plan in just four steps:
- Schedule a Call: In just 20 minutes, a member of our advisor team can help understand if we're suited to your needs for you and your business. This short conversation lets us learn about your needs with no obligation or extensive time commitment on your part.
- Gather Information: Once we mutually decide to continue, we'll ask for information, including whether you have employees, your present financial standing, and your retirement goals. This helps us create a custom plan that aligns with your goals.
- Review Your Plan: Once we've developed a plan using the information you provide, we'll sit down with you and discuss your plan in detail to help you fully grasp it and show how it aligns with your goals.
- Implementation and Monitoring: When we finalize on your plan, we'll implement the necessary steps so you can begin contributing. Over the course of our partnership, we'll have regular meetings and track your progress to keep it tailored to your evolving circumstances.
Our Kansas City, KS financial advisors and retirement plan consultants serve as fiduciary advisors, meaning they are required by law and ethical standards to act in your best interest.
Other financial advisory services we offer in Kansas City, KS include:
- Investment Management
- 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
You don't see your business as "just a business", and your Kansas City, KS financial advisors should provide more than simply sound financial advice. With Correct Capital, we take the time to get to know our clients and their businesses to deliver personalized self-employed retirement plans. To every client in Kansas City, KS, we provide our I.O.U. promise: all guidance we provide will be independent, objective, and unbiased. To begin on your self-employment retirement plan, contact Correct Capital now at 877-930-401k or contact us online.
