Self-employed retirement plans Kansas City, MO. The flexibility of being your own boss in Kansas City, MO offers many benefits of being self-employed. However, this flexibility often comes with a lack of security, notably in terms of building your retirement fund, because you don't have the option of retirement programs through an employer. Only 13% of self-employed individuals have a workplace retirement plan, although many should consider exploring their options. In addition to having a more secure retirement, partnering with a financial advisor in Kansas City, MO to establish your self-employed retirement plan offers significant tax advantages that enable you to move your business forward.
Few Kansas City, MO investment consulting and retirement planning firms truly grasp the challenges faced by entrepreneurs as well as Correct Capital. Our founder's father was a small business owner himself (read more of our story here), and Correct Capital take pride in assisting business owners in their retirement planning needs. We recognize that your goals for your business and retirement aren’t limited to simple financial figures, and we strive to provide personalized solutions aligned with your vision. Read on to discover about your self-employed retirement plan options in Kansas City, MO, or give us a call at Correct Capital at 877-930-401k or contact us online to speak with a entrepreneurial financial advisor in Kansas City, MO today.
Why Kansas City, MO Self-Employed Individuals Should Have a Retirement Plan
Retirement plans for self-employed individuals are essential for preparing you for the future, they also provide immediate benefits today. With customizable contribution options to significant tax savings, consulting a financial advisor in Kansas City, MO allows you to design your retirement plan to align with your specific needs.
Flexibility That Fits Your Income
For those with fluctuating income from year to year, a plan like a SEP IRA or Solo 401(k) offers the option to adjust how much you save:
- Customizable Contributions: Save extra during high-income years and reduce savings when your earnings dip, so your plan aligns with your current income.
- Roth Options: Opting for a Roth Solo 401(k) lets you pay taxes on contributions now, enabling you to withdraw tax-free later—a wise move if you anticipate your tax rate to be higher in the future.
Save Money on Taxes
Self-employed retirement plans deliver powerful tax benefits:
- Tax-Deductible Contributions: Contributions to a SEP IRA lower your taxable income, helping you keep more of your income.
- Tax-Deferred Growth: Investments grow tax-free until withdrawal, which gives your money more time to compound.
- State-Specific Incentives: Based on your location, you might access state-specific deductions as a self-employed individual. These state-level incentives make these plans even more valuable.
- Retirement Savings Contributions Credit (Saver’s Credit): Qualified participants 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
Planning for a safe retirement goes beyond just how much you save—it’s also linked to the way you invest:
- Diversified Portfolios: Spreading your investments across varied stocks, bonds, and other assets serves to reduce risk while helping to grow your nest egg.
- Emergency Back-Up: Supplementing your retirement savings with a dedicated business safety net ensures you don’t tapping into your nest egg during financial hardships and facing tax penalties.
Plan for the Future of Your Kansas City, MO Business
A thoughtful retirement strategy enables you to think through what’s next with your Kansas City, MO business:
- Selling Your Business: When selling your business, retirement accounts like SEP IRAs and Solo 401(k)s remain your personal assets and are not part of the sale. These plans offer the steady income you’ll need during retirement. It’s important to note that while selling your business results in a capital gain, deposits into these plans are capped at annual limits (e.g., up to $7,000 for IRAs or a maximum of $70,000 for Solo 401(k)s, factoring in catch-up contributions, based on plan compensation).
- Minimizing Taxes: Using retirement contributions wisely helps lower the taxes you might face when you sell your business.
- Succession Planning: Whether you’re transferring ownership, your retirement savings provide a stable foundation as you make this shift. You might want to seek advice from a financial advisor with expertise in succession and retirement planning to help with taxes during the sale.
With the right retirement plan, you can take control of your financial future, lower your tax bill, and build a secure foundation for both your retirement and your business goals.
Why Start a Self-Employed Retirement Plan in Kansas City, MO Now?
There’s no denying that time is one of the most important resources in retirement planning. Beginning sooner rather than later not only allows you to build a more substantial retirement fund but also reduces the financial burden of playing catch-up as you get older. The following are reasons why it is beneficial to start now:
The Cost of Waiting
Putting off saving for retirement may cause a major impact on the savings you’ll have when you stop working. The biggest reason is compound interest—the concept where your investments grow, and those returns, in turn, accumulate even more returns. The more time your money has to grow, the larger the benefit of compounding.
Example: Alex and Taylor are both self-employed professionals. They each aim to save $500,000 for retirement by age 65:
- Alex initiates savings of $5,000 annually at age 30.
- Taylor postpones starting contributions to age 40 but contributes $7,500 annually to make up for lost time.
By age 65, using a projected 7% annual return:
- Alex puts in $180,000 and achieves a total of $691,184.39*.
- Taylor puts in $195,500 but achieves a total of only $474,367.78*.
How Early Contributions Grow
Small, consistent savings made consistently can lead to significant growth. Consider this example showing the effect of consistent growth:
- 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 difference of over $260,000, all because of a 10-year delay.
Starting sooner, the lower your annual savings needs each year to achieve your retirement goals.
*The figures provided in this example are based on estimates derived from NerdWallet’s Compound Interest Calculator, based on a 7% annual return. Annual deposits were multiplied by the number of years to estimate total contributions. This information is for illustrative purposes only and do not guarantee future performance. Outcomes may change depending on variables including market conditions, fees, and individual circumstances. We recommend consulting a financial advisor for personalized advice.
Take Control of Your Financial Future
As a self-employed person in Kansas City, MO, it might seem easier to prioritize reinvesting in your business over saving for retirement. However, starting a plan now gives you the chance to:
- Take advantage of growth that is tax-deferred or penalty-free withdrawals down the road.
- Take advantage of adjustable savings that align with your earnings.
- Create a safety net that ensures stability, no matter how your business changes.
Getting started now, the less you’ll need to worry about catching up later in life. Taking steps toward your retirement goals today means gaining control over your financial future and giving yourself the freedom to turn your attention to your goals—both for your retirement years and your Kansas City, MO business.
Types of Self-Employed Retirement Plans
A variety of retirement savings options open for self-employed individuals in Kansas City, MO, each offering its own advantages and considerations. A financial advisor is available to help you learn about the advantages and disadvantages of each plan and identify the one best suited for your unique situation. Generally speaking, your self-employed retirement plan options in Kansas City, MO consist of:
Traditional or Roth IRA
Plan Overview: Individual Retirement Accounts (IRAs), as explained here, represent long-term savings plans that include key tax perks. In a standard IRA, the money you contribute is often tax-deductible, and earnings grow without immediate taxation, but retirement distributions are taxed as income. In contrast, with Roth IRAs, you contribute are made with after-tax income, but qualified withdrawals in retirement, including earnings, are exempt from taxes. In both accounts, withdrawals don’t incur penalties provided you are at least 59½.
Eligibility: While many retirement plans, such as 401(k)s, are tied to employment, both traditional and Roth IRAs are open to those with a source of income.
Contribution Limits: For 2025, annual contribution limits for IRAs remain $7,000, or $8,000 if you're 50 or older.
Simplified Employee Pension Plan (SEP IRA)
Plan Overview: The Simplified Employee Pension IRA serves as a retirement savings option that permits those who are self-employed to save a percentage of their net business profits. Contributions must come from an employer, so, as a sole proprietor, you (the employee) cannot make additional contributions above the 25% you (the employer) have designated. If you have employees, you are obligated to contribute the same amount for them as you do for yourself. You may choose to contribute a fixed dollar figure or a percentage of wages to employee accounts. This type of plan works well for companies with periods of inconsistent earnings. In contrast to some alternatives, SEP IRAs lack expensive setup or ongoing fees.
SEPs work like conventional IRAs, where contributions are made with pre-tax money and withdrawals 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 capped at the lower 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: Solo 401(k)s, commonly known as an Individual 401(k) or one-participant 401(k) plan, is a retirement savings plan designed for companies that have no employees or when the sole employee is your spouse. Solo 401(k)s are similar to standard 401(k) plans, and let you make contributions as both an employer and an employee with pre-tax money. This offers more savings compared to SEPs or IRAs; however, the increased savings potential can be balanced by more constrained investment avenues. Using a solo 401(k), you can make either traditional or Roth deferrals, which have the same tax benefits as their IRA contribution counterparts.
Eligibility: Only business owners and their spouses can set up and contribute to a solo 401(k).
Contribution Limits: As a self-employed individual with a solo 401(k) plan, you can make two types of contributions:
- Deferrals as an employee of up to 100% of your self-employment income, up to the annual contribution limit. The contribution limits for 2025 include $23,500, or $31,000 if you are 50 or older, or $34,750 if you attain age 60-63 in 2025.
- Profit-sharing contributions (as an employer) cannot exceed 25% of your adjusted self-employment income, which is defined as net profit minus 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 guarantees a fixed, predetermined benefit to entrepreneurs upon retirement. In contrast to the plans discussed earlier, investment returns don’t affect the payout, but enables participants to determine exactly how much they'll get in retirement. This option is best suited for high-earning entrepreneurs who want to save a substantial amount for retirement and are willing to make larger deposits. Contributions grow tax-free until withdrawal, and withdrawals are taxable as income upon retirement.
Eligibility: Self-employed professionals operating a solo business or with less than five employees can open an individual defined benefit plan, but it's generally advised for individuals aged 50+ who generate a minimum of $250,000 yearly. In most cases, good candidates for defined benefit plans are:
- Entrepreneurs who aim to deposit more than $70,000 (or $77,500 if over age 50)
- Companies already contributing 3-4% but are open to increasing contributions
- Businesses that have demonstrated consistent profit patterns
- Partners or owners over age 40 who wish to accelerate savings or increase their retirement contributions rapidly
Contribution Limits: The cap on contributions requires calculation from an actuary determined by your income, age, and retirement goals. Allowable contributions are adjusted each year.
The Importance of a Financial Advisor in Kansas City, MO for Your Self-Employed Retirement Plan
Working with a financial advisor in Kansas City, MO experienced with retirement plans for the self-employed serves as an important asset for entrepreneurs. They have the expertise to help understand the intricacies of saving for retirement and develop a tailored strategy that reflects your aspirations. Your advisor in Kansas City, MO will evaluate your financial situation, determine how much risk you’re comfortable with, and help you in choosing wisely about saving and investing for retirement. Included in what we do for you features:
- Guide you in choosing a plan that suits your unique requirements
- Tailor the plan to your needs even further
- Adopt a written plan as required by IRS rules
- Organize a trust plan to manage your assets
- Ensure you comprehend the plan's terms
- Monitor and adjust 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 making the most of your social security
Self-Employed Retirement Plans in Kansas City, MO: Correct Capital's Process
Entrepreneurs in Kansas City, MO who lack the time, interest, or knowledge to handle their self-employed retirement plan on their own often feel overwhelmed by their available plans. At Correct Capital, our Kansas City, MO financial advisors manage the bulk of your retirement planning for you, to help make meeting your future savings targets as straightforward as possible for you. We will guide you in creating your self-employed retirement plan in just four steps:
- Schedule a Call: A quick 20-minute call is all it takes, a member of our advisor team will assess if our services align for you and your business. This short conversation allows us to get a sense of your goals with no pressure or major time investment on your part.
- Gather Information: If we both decide to move forward, we'll ask for information, including your employee count, your present financial standing, and your future objectives. This enables us to craft a personalized strategy designed just for you.
- Review Your Plan: Once we've developed a plan from the information you provide, we'll meet with you and review your plan in detail to help you fully grasp it and explain its fit to your circumstances.
- Implementation and Monitoring: When we finalize on your plan, we'll implement the necessary steps so you can start saving. Over the course of our partnership, we'll check in and track your progress to make sure it remains aligned with your goals.
Our Kansas City, MO financial advisors and retirement plan consultants act as fiduciary advisors, who are obligated to they are legally and ethically bound to prioritize your needs above all else.
Other financial advisory services we offer in Kansas City, MO include:
- Family Wealth Planning
- Financial Planning for Business Owners
- Comprehensive Financial Planning
- Retirement Income Planning
- Investment Planning
- Retirement Financial Planning
- Independent Financial Advisor
- Roth Conversion
- Investment Management
- 401(k) Audit
Call Correct Capital for Your Self-Employed Retirement Plan in Kansas City, MO
Your business isn't "just a business" to you, and your Kansas City, MO 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 deliver customized self-employed retirement plans. All our clients in Kansas City, MO benefit from our I.O.U. promise: all guidance we provide will be independent, objective, and unbiased. To get started on your self-employment retirement plan, contact Correct Capital now at 877-930-401k or contact us online.
