Self-employed retirement plans in Ladue, MO. The freedom of having your own business in Ladue, MO is a fantastic aspect of working for yourself. But that freedom can be accompanied by a lack of security, especially in terms of saving for retirement, you don't have an employer who will set up a plan for you. Only 13% of self-employed people have a workplace retirement plan, but many would be wise to look into what plans are available. In addition to a more comfortable retirement, partnering with a financial advisor to set up your self-employed retirement plan in Ladue, MO offers significant tax advantages that can help free up much-needed funds for your business.
Few financial advisory and retirement planning firms will understand the needs of the self-employed and small business owners than Correct Capital. In fact, we were inspired by a self-employed individual, our founder's father (you can discover more about our story here). We have a deep understanding that your business and retirement aspirations go beyond just profit, and we are dedicated to offering personalized plans that reflect your goals. Read on to learn more about your self-employed retirement plan options in Ladue, MO, or call Correct Capital at 314-930-401(k) or fill out our online form to speak to a small business financial advisor now.
What Self-Employed Retirement Plans Are There?
There are a few different retirement savings options that the self-employed can set up, and which is best for you depends on your unique situation. A Ladue, MO financial advisor can help you comprehend the advantages and disadvantages of each option and choose that works best for you. Typically, your self-employed retirement plan options in Ladue, MO are comprised of:
Traditional or Roth IRA
Plan Overview: IRAs, or Individual Retirement Accounts, are long-term savings plans that provides individuals with tax advantages to save for retirement. In a traditional IRA, deposits are deducted from your taxable income, and investment earnings grow tax-deferred, but withdrawals in retirement are taxed as if it were income. In contrast, Roth IRA deposits are made with after-tax income, but you pay no taxes on withdrawals or earnings. In both accounts, withdrawals are penalty-free as long as you are at least 59½.
Eligibility: While many retirement plans, such as 401(k)s, are tied to employment, 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 portion of of their net earnings from self-employment. Contributions can only be made by an employer, so, as a self-employed individual, you (the employee) would not be able to contribute more than the 25% you (the employer) already contributed. If you have employees, you must contribute an equal amount to their pensions. You can either contribute either a predetermined fixed dollar amount or a proportion of annual income to employee accounts. SEP IRAs may be a suitable self-employed retirement plan if your business experiences cycles of high revenue and low revenue. SEP IRAs don't have the high upfront costs or administrative expenses other retirement plans do.
SEPs work like traditional IRAs, where contributions are made with pre-tax money and withdrawals are taxed at your income at the time of withdrawal.
Eligibility: Any employer, including the self-employed, can set up a SEP.
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 maximum amount you can contribute in a given year is based on a special 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 sole proprietors or those who only employ 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 additional opportunities for saving are often offset by more limited investment options. In a solo 401(k) plan, you can make either traditional deferrals (with pre-tax money) or Roth deferrals (with after-tax money).
Eligibility: Only business owners and their spouses have access to individual 401(k)s.
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 a maximum 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 a maximum of 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 upon retirement. In contrast to other types of retirement plans, a defined benefit plan doesn't fluctuate based on investment gains, but allows self-employed individuals to know exactly how much they'll get in retirement. This plan is best suited for high-earning self-employed individuals who want to save a a significant sum for retirement and are willing to make substantial contributions. Contributions are tax deferred and contributions are taxed at your income level in retirement.
Eligibility: Any self-employed individual who runs an owner-only business or has less than five employees can open 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. Typically, good candidates for defined benefit plans are:
- Partners or owners who want to contribute more than $66,000 (or $73,500 over age 50)
- Companies already contributing 3-4% who are want to do more
- Companies who have demonstrated consistent profit patterns
- Partners or owners over age 40 who desire to make up for earlier years when they couldn't save as much
Contribution Limits: The contribution limit must be 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 Ladue, MO
A financial advisor in Ladue, MO specialized in self-employed retirement plans can be a crucial partner for self-employed individuals. They have the knowledge to help you navigate the intricacies of retirement planning and implement a customized plan 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 guide you in making informed decisions for yourself, both as employer and future retiree. Part of what we do for you includes:
- Help you choose 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 guidance into and through retirement
- Maximize your retirement income by increasing your social security benefits
Self-Employed Retirement Plans in Ladue, MO: Correct Capital's Process
Ladue, 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 stressed when looking at their options. At Correct Capital, our retirement consultants handle the bulk of the retirement planning work on your behalf, and endeavor to make achieving your retirement goals as easy as we possibly can. We can help you establish and maintain your self-employed retirement plan in four simple steps:
- Schedule a Call — We only need a short 20-minute call for one of our advisors to know if we're the best firm to help you reach your goals. This brief introduction allows us to get a feel for what you're looking for with no major time investment for you.
- Gather Information — If we both decide to move forward, we'll ask for 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 personalized plan suited specifically for your needs.
- Review Your Plan — Once we've compiled your plan, we'll meet with you and discuss your plan in detail to ensure it's what you were looking for.
- Implementation and Monitoring — Once we've agreed on your plan, we'll put everything in place so you can start saving. As long as we work together, 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 ethical obligation to do what's in your best interest. We pride ourselves in providing clear communication and high-quality service to assist you attain your self-employed retirement goals.
Other services we offer in Ladue, MO include:
- 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
- Retirement Planning
Call Correct Capital for Your Ladue, MO Self-Employed Retirement Plan
Your business isn't simply an enterprise to you, and your Ladue, MO financial advisors need to offer more than merely sage financial advice. Correct Capital takes pride in getting to know our clients and their business to deliver customized self-employed retirement plans. We offer all our Ladue, MO clients the same 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 Ladue, MO, call Correct Capital today at 314-930-401(k) or contact us through our website.