Self-employed retirement plans Kansas City, MO. The flexibility of running your own company in Kansas City, MO is one of the best aspects of being self-employed. However, this freedom can come with certain challenges, notably in terms of planning for retirement, because you don't have the option of a workplace retirement plan. Only 13% of self-employed individuals have a workplace retirement plan, although many could benefit from looking into other possibilities. In addition to achieving a more comfortable retirement, working with a financial advisor in Kansas City, MO to set up your self-employed retirement plan offers significant tax advantages that allow you to move your business forward.
Few Kansas City, MO investment consulting and retirement planning firms truly grasp the challenges faced by self-employed individuals as well as Correct Capital. The father of our founder was a small business owner himself (read more of our story here), and Correct Capital have a rich history of supporting entrepreneurs with their retirement planning needs. We recognize that your business and retirement aspirations aren’t limited to simple financial figures, and we strive to create tailored solutions that reflect your objectives. Continue exploring to find out about your self-employed retirement plan options in Kansas City, MO, or call Correct Capital at 877-930-401k or contact us online to speak with a self-employed financial advisor in Kansas City, MO today.
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Why Kansas City, MO Self-Employed Individuals Should Have a Retirement Plan
Retirement plans for self-employed individuals help prepare you for the future, they also offer immediate benefits today. Offering flexibility in contributions to considerable tax savings, consulting a financial advisor in Kansas City, MO enables you to customize your retirement plan to align with your unique financial situation.
Flexibility That Fits Your Income
When your earnings vary over time, a plan like a SEP IRA or Solo 401(k) offers the freedom to adjust how much you save:
- Customizable Contributions: Contribute more during profitable years and reduce savings when your earnings dip, so that your plan works with your current income.
- Roth Options: Opting for a Roth Solo 401(k) lets you pay taxes on contributions now, allowing you to withdraw without tax penalties in the future—a wise move if you believe your tax rate will increase in the future.
Save Money on Taxes
Self-employed retirement plans deliver valuable tax benefits:
- Tax-Deductible Contributions: Contributions to a Solo 401(k) lower your taxable income, helping you keep more of your hard-earned money.
- Tax-Deferred Growth: You won't pay taxes on investment growth until you withdraw it, which gives your money more time to compound.
- State-Specific Incentives: In some states, you could qualify for additional tax breaks as a business owner. These local incentives can make these plans even more valuable.
- Retirement Savings Contributions Credit (Saver’s Credit): Qualified participants can take advantage of a credit of up to 50% of the first $2,000 put into a retirement plan, further reducing your tax bill even more.
Protect Your Savings With Smart Investments
Creating a stable future isn’t only about how much you save—it’s also determined by your investment strategy:
- Diversified Portfolios: Distributing your investments across a mix of asset classes like stocks and bonds serves to reduce risk while helping to grow your nest egg.
- Emergency Back-Up: Supplementing your retirement savings with a business emergency fund prevents you from tapping into your nest egg during financial hardships and incurring penalties.
Plan for the Future of Your Kansas City, MO Business
Preparing for retirement enables you to think through what’s next with your Kansas City, MO business:
- Selling Your Business: When selling your business, plans like SEP IRAs or Solo 401(k)s stay in your name and don’t transfer with the business. These savings ensure the financial stability you’ll need in the future. Keep in mind that while the sale of a business usually creates a capital gain, retirement plan contributions are capped at annual limits (e.g., a maximum of $7,000 for IRAs or up to $70,000 for Solo 401(k)s, factoring in catch-up contributions, based on plan compensation).
- Minimizing Taxes: Strategically planning your contributions can reduce the taxes you might face when you transfer your business.
- Succession Planning: For those winding down or handing over their business, your retirement savings ensure financial security as you make this shift. You can also partner with a financial advisor with expertise in succession and retirement planning to help with taxes on the sale.
With the right retirement plan, you can take control of your financial future, reduce your tax burden, and create a solid base 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 valuable assets for building your retirement fund. Starting early not only lets you accumulate a bigger financial cushion but also lowers the pressure of playing catch-up as you get older. Here’s why it is beneficial to start now:
The Cost of Waiting
Delaying your retirement savings could lead to a substantial impact on the savings you’ll have when you retire. The biggest reason is compound interest—the powerful process where your investments grow, and those returns, then, accumulate even more returns. The greater time span your money has to grow, the more significant the impact of compounding.
Example: Taylor and Alex are both entrepreneurs. Both of them want to save $500,000 for retirement by age 65:
- Alex begins contributing $5,000 annually at age 30.
- Taylor waits until age 40 but puts away $7,500 annually to catch up.
By age 65, using a projected 7% annual return:
- Alex invests $180,000 and accumulates $691,184.39*.
- Taylor contributes $195,500 but only ends up with $474,367.78*.
How Early Contributions Grow
Small, consistent savings invested steadily can lead to impressive growth. Take a look at this scenario showing the power of consistent growth:
- Starting at age 25: Putting aside $200 per month in a retirement plan with an expected yearly growth rate of 7%, you’ll grow to approximately $497,303.29* by age 65.
- Starting at age 35: Contributing the same $200 per month would result in only $235,412.97* by age 65—a difference of over $260,000, simply due to a 10-year delay.
Starting sooner, the less you need to save each year to reach your retirement goals.
*The figures provided in this example are based on estimates calculated using NerdWallet’s Compound Interest Calculator, assuming a 7% annual return. Annual deposits were multiplied by the number of years to estimate total contributions. The scenarios provided are for illustrative purposes only and are not a promise of future results. Actual results may vary due to variables including market conditions, fees, and your unique situation. We recommend consulting a financial advisor for personalized advice.
Take Control of Your Financial Future
If you’re self-employed in Kansas City, MO, it is often the case that you put more emphasis on reinvesting in your business rather than saving for retirement. That said, beginning a plan now enables you to:
- Leverage growth that is tax-deferred or tax-free withdrawals later on.
- Take advantage of contribution flexibility that align with your cash flow.
- Build a financial cushion that provides security, no matter how your business changes.
Getting started now, the less you’ll have to worry about catching up later in life. Saving for retirement now means managing your financial future and creating for yourself the freedom to turn your attention to your goals—both for your golden years and your Kansas City, MO business.
Types of Self-Employed Retirement Plans
There are several retirement savings options available for entrepreneurs in Kansas City, MO, each with its own advantages and considerations. A financial advisor can help you learn about the pros and cons of each option and identify the one best suited for your needs. Generally speaking, your self-employed retirement plan options in Kansas City, MO include:
Traditional or Roth IRA
Plan Overview: IRAs, or Individual Retirement Accounts, are long-term savings plans that offer 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, Roth IRAs require contributions using income already taxed, but qualified withdrawals in retirement, including earnings, are not taxed. In both accounts, withdrawals come without penalties provided you are at least 59½.
Eligibility: Unlike plans linked to your job, IRAs, including traditional and Roth options are accessible for individuals with a source of income.
Contribution Limits: For 2025, annual contribution limits for IRAs are capped at $7,000, or $8,000 for those aged 50+.
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 must come from an employer, so, as a sole proprietor, you (the employee) cannot make additional contributions more than 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. It's your choice whether to contribute a flat-dollar amount or a percentage of wages to employee accounts. SEP IRAs may be ideal for businesses that experience periods of inconsistent earnings. In contrast to some alternatives, SEP IRAs don’t have costly startup or administrative fees.
SEPs operate like traditional IRAs, where you contribute pre-tax dollars 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
For self-employed individuals, the amount eligible to be contributed 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 savings option for the self-employed meant for companies that have no employees or where the only employee is a spouse. This type of plan operate much like traditional employer-managed 401(k) plans, and let you make contributions as both the employer and the employee with pre-tax money. This provides more savings versus SEPs or IRAs; however, the additional opportunities may be offset by more restricted investment choices. Using a solo 401(k), you can make either traditional or Roth deferrals, which offer the same tax benefits as their IRA contribution counterparts.
Eligibility: Only 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 are allowed to make two types of contributions:
- Deferrals as an employee of up to 100% of your self-employed earnings, 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 for those who turn 60-63 in 2025.
- Employer profit-sharing contributions (as an employer) must not surpass 25% of your net earnings from self-employment, which is defined as net profit minus half of your self-employment tax and the employee contributions you made.
The total contribution cannot exceed $70,000, or $77,500 for those aged 50 and older (for 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 set amount to entrepreneurs upon retirement. As opposed to defined contribution plans, this plan is not influenced by market performance, but lets individuals clearly understand exactly how much they'll get in retirement. This plan is recommended for high-earning entrepreneurs who are focused on saving a significant sum for retirement and can commit to making substantial contributions. Contributions are tax deferred, and withdrawals are taxable as income during retirement.
Eligibility: Any self-employed individual managing a one-person company or with a small staff of under five are eligible to open an individual defined benefit plan, but it's most commonly recommended for individuals aged 50+ who generate a minimum of $250,000 yearly. Generally, good candidates for defined benefit plans include:
- Business owners or partners who aim to deposit more than $70,000 (or $77,500 for individuals 50 and older)
- Companies already contributing 3-4% but are open to increasing contributions
- Businesses with proven consistent profit patterns
- Partners or owners over age 40 who wish to accelerate savings or accelerate the retirement savings
Contribution Limits: The maximum allowable contribution is calculated by an actuary determined by your income, age, and retirement goals. Contribution limits are updated yearly.
The Importance of a Financial Advisor in Kansas City, MO for Your Self-Employed Retirement Plan
A financial advisor in Kansas City, MO experienced with retirement plans for the self-employed serves as an invaluable resource for entrepreneurs. They offer the knowledge to assist guide you through the challenges of retirement planning and craft a customized plan that reflects your aspirations. A financial advisor in Kansas City, MO will evaluate your financial situation, determine how much risk you’re comfortable with, and guide you in choosing wisely about saving and investing for retirement. Included in what we do for you features:
- Assist in selecting a plan that aligns with your objectives and circumstances
- Tailor the plan to fit you personally even further
- Formalize a plan in writing in accordance with IRS guidelines
- Organize a trust plan to manage your assets
- Ensure you comprehend the plan's terms
- Monitor and adjust your plan as needed
- Offer continued financial education and guidance to help you navigate your retirement journey
- Increase your retirement income by maximizing your social security benefits
Self-Employed Retirement Plans in Kansas City, MO: Correct Capital's Process
Self-employed individuals in Kansas City, MO who don’t have the time or expertise to oversee their own retirement planning on their own may end up overwhelmed as they look at their available plans. Through our team at Correct Capital, our Kansas City, MO financial advisors manage the lion's share of your retirement strategy for you, working to make meeting your retirement goals as easy as possible for you. We will guide you in creating your self-employed retirement plan in a quick, four-step process:
- Schedule a Call: In just 20 minutes, a member of our advisor team will assess if we're suited to your needs for you and your business. This initial call allows us to learn about your needs with no pressure or extensive time commitment on your part.
- Gather Information: Once we mutually decide to continue, we'll gather information, including whether you have employees, your present financial standing, and your future objectives. This enables us to craft a tailored approach suited specifically for your needs.
- Review Your Plan: When we finalize a plan from the information you provide, we'll schedule a meeting and review your plan thoroughly to ensure you understand it and show how it aligns with your goals.
- Implementation and Monitoring: Once we've agreed on your plan, we'll set everything up so you can start saving. Throughout our relationship, we'll have regular meetings and track your progress to ensure it stays suited to your needs.
Our Kansas City, MO financial advisors and retirement plan consultants act as fiduciary advisors, who are obligated to they are committed by law and ethics to prioritize your needs above all else.
Other financial advisory services we offer in Kansas City, MO 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, MO
To you, your business is more than "just a business", and your Kansas City, MO financial advisors must deliver more than simply sound financial advice. Correct Capital takes pride in, we focus on building a relationship with our clients and their businesses to provide tailored self-employed retirement plans. All our clients in Kansas City, MO benefit from our I.O.U. promise: all of the advice you get from us will be independent, objective, and unbiased. To begin on your self-employment retirement plan, reach out to Correct Capital at 877-930-401k or contact us online.
