Self-employed retirement plans in Kirkwood, MO. The flexibility involved with having your own business in Kirkwood, MO is one of the great things about working for yourself. But that freedom can be accompanied by limited stability, especially in in regards to building a retirement plan, employer-sponsored plans aren't an option. Barely more than 10% of self-employed people have retirement plans they save with, but many would be better off exploring their options. In addition to setting you up for the retirement of your dreams, partnering with a financial advisor to set up your self-employed retirement plan in Kirkwood, MO offers favorable tax incentives that can help you improve your bottom line.
Few financial advisory and retirement planning firms know what it's like to be self-employed or a small business owner more than Correct Capital. In fact, we were inspired by a small business owner, our founder's father (you can learn more about our story here). We have a deep understanding that your business and retirement goals go beyond figures and numbers, and we are committed to offering customized plans that reflect your goals. Read on to read more about your self-employed retirement plan options in Kirkwood, MO, or call Correct Capital at 314-930-401(k) or contact us online to speak to a small business financial advisor at your convenience.
What Self-Employed Retirement Plans Are There?
There are several retirement savings plans that the self-employed can set up, and which is best for you depends on your unique situation. A Kirkwood, MO financial advisor can help you grasp the advantages and disadvantages of each option and select the most suitable one for your circumstances. Generally, your self-employed retirement plan options in Kirkwood, MO include:
Traditional or Roth IRA
Plan Overview: IRAs, or Individual Retirement Accounts, are investment accounts that provides individuals with tax advantages to save for retirement. In a traditional IRA, contributions are deducted from your taxable income, and any gains on investments grow tax-deferred, but withdrawals in retirement are liable to income tax. In contrast, Roth IRA deposits are made with after-tax income, but qualified distributions in retirement, including investment gains, are tax-free. In both accounts, 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 set up through an employer, traditional and Roth IRAs can be set up by anyone with an earned income.
Contribution Limits: For 2023, the maximum yearly contributions 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 share of of their annual income from self-employment. As a self-employed individual, your contributions are limited to the amount already contributed by you (the employer), which cannot be more than 25%. If you have employees, you must contribute an equal amount to their pensions. You can either contribute a flat-dollar amount or a percentage of wages to employee accounts. SEP IRAs may be a good self-employed retirement plan for businesses that go through fluctuating income periods. SEP IRAs don't have the costly startup or administrative fees often associated with other retirement plans.
SEPs work like traditional IRAs, where contributions are made with pre-tax money and distributions are taxed as income.
Eligibility: Any employer, including the self-employed, can establish a simplified employee pension plan.
Contribution Limits: Contribution limits for employees in a SEP IRA are whichever is the least out of:
- 25% of compensation, or
For the self-employed individual, the amount eligible to be contributed is based on a unique calculation.
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 whose only employee is a spouse. Solo 401(k)s function similarly to employer-sponsored 401(k) plans, and you can make contributions as both an employer or employee with pre-tax money. This offers greater potential for savings than some other retirement savings plans, however the possibility of greater retirement savings is often offset by having less investment options available. In an individual 401(k) plan, you can make either traditional or Roth deferrals, which each enjoy the same tax benefits as their IRA contribution counterparts.
Eligibility: Only sole proprietors and their spouses can establish 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:
- 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) which cannot exceed up to 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.
On an annual basis, contributions 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 provides a a fixed monthly figure to self-employed individuals after they've left the workforce. In contrast to other types of retirement plans, a defined benefit plan doesn't go up and down because of investment gains, but allows self-employed individuals to have an exact dollar figure as their income in retirement. This plan is ideal for high-earning self-employed individuals who want to save a a large amount for retirement and want to make significant contributions. Contributions are tax deferred and contributions are taxed as income in retirement.
Eligibility: Any self-employed individual who runs a business with no employees besides the owner or has less than five employees can establish an individual defined benefit plan, but it's typically not a great idea unless you're over 50 and earn well into the six figures. Those interested in defined benefit plans tend to be:
- Partners or owners who desire to save more than $66,000 (or $73,500 over age 50)
- Companies already contributing 3-4% who are want to contribute more
- Companies who have demonstrated consistent profit patterns
- Partners or owners over age 40 who want to make up for earlier years when they didn't save as much
Contribution Limits: The contribution limit is decided by an actuary who calculates for your income, age, and retirement goals. Contribution limits change annually.
The Importance of a Financial Advisor for Your Self-Employed Retirement Plan in Kirkwood, MO
A financial advisor in Kirkwood, MO specialized in self-employed retirement plans can be indispensable for self-employed individuals. They have the knowledge to help you navigate the intricacies of retirement planning and implement a personalized approach that gets you where you want to go. A financial planner will evaluate where your finances currently are, help you figure out your risk tolerance, and help you make sound decisions about your financial future. Part of what we do for you includes:
- Help you pick a plan that best fits your needs and goals
- Customize 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
- Increase your retirement income by increasing your social security benefits
Self-Employed Retirement Plans in Kirkwood, MO: Correct Capital's Process
Kirkwood, 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 with the different plans available to them. At Correct Capital, our financial advisors handle the lion's share of your retirement planning for you, and endeavor to make meeting your business and retirement goals as simple as we possibly can. We can help you establish and maintain your self-employed retirement plan in a straightforward four-step process:
- Schedule a Call — It only takes 20 minutes for a member of our advisor team to understand if we're suitable for you and your business. This brief introduction lets us understand what you're looking for with no major time investment on your part.
- Gather Information — If we seem like a good fit, we'll request information, including the number of employees in your business (if applicable), your current finances, and your retirement goals. This allows us to put together a custom plan based entirely on type of advising you need.
- Review Your Plan — After we put together a plan based on the information you provide, we'll meet with you and discuss the details of your plan to ensure it's what you were looking for.
- Implementation and Monitoring — Once we've enacted your plan, we'll put everything in place so you can start saving. Throughout our relationship, we'll keep you up-to-date with how things are going and adjust your plan so it stays consistent with your needs.
Our financial advisors and retirement consultants are fiduciary advisors who have a legal and moral obligation to do what's best for you and only you. We pride ourselves in providing clear communication and excellent service to help you achieve your self-employed retirement goals.
Other services we offer in Kirkwood, MO include:
- Succession Planning
- 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
Call Correct Capital for Your Kirkwood, MO Self-Employed Retirement Plan
Your business isn't "just a business" to you, and your Kirkwood, MO financial advisors need to offer more than merely wise financial advice. Correct Capital enjoys getting to know our clients and their business to deliver tailored self-employed retirement plans. We offer all our Kirkwood, 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 Kirkwood, MO, speak to a financial advisor today at 314-930-401(k) or fill out our online form.