Self-employed retirement plans in Ladue, MO. The flexibility involved with having your own business in Ladue, MO is one of the great things about being self-employed. But increased leeway can come with limited stability, especially in when it comes to building a retirement plan, you don't have an employer who will set up a plan for you. Barely more than 10% of self-employed individuals have retirement plans they can contribute to, but many would be wise to look into their options. In addition to setting you up for the golden years of your dreams, working with a financial advisor to set up your self-employed retirement plan in Ladue, MO offers favorable tax incentives that can help free up much-needed funds for your business.
Few wealth management 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 small business owner, our founder's father (you can read more about our story on our website). We have a deep understanding that your business and retirement goals extend far beyond figures and numbers, and we are committed to providing tailored solutions that fit your goals. Continue reading to discover more about your self-employed retirement plan options in Ladue, MO, or call Correct Capital at 877-930-4015 or fill out our online form to speak to a member of our advisory team today.
Types of Self-Employed Retirement Plans
There are a few different retirement savings plans that the self-employed can establish, each with its own set of benefits and considerations. A Ladue, MO financial advisor can help you understand the pros and cons of each option and choose the most suitable one for your specific needs. Typically, your self-employed retirement plan options in Ladue, MO are comprised of:
Traditional or Roth IRA
Plan Overview: IRAs, or Individual Retirement Arrangements, are investment accounts that provides individuals with tax advantages to save for retirement. If you deposit to 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. On the other hand, Roth IRA deposits are made with money you've already paid taxes on, but qualified withdrawals in retirement, including earnings, are tax-free. In both accounts, withdrawals are penalty-free if you are at least 59½.
Eligibility: While many retirement plans, such as 401(k)s, are set up through employment, traditional and Roth IRAs can be set up by anyone with an earned income.
Contribution Limits: For 2023, annual contribution limits 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. 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 would have to contribute the same amount for them as you do for yourself. You can either contribute either a fixed dollar sum or a percentage of wages to employee accounts. SEP IRAs may be a good self-employed retirement plan for businesses that experience fluctuating income periods. SEP IRAs don't have the high upfront costs or administrative expenses other retirement plans do.
SEPs work like traditional IRAs, where payments are made with pre-tax money and distributions 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 whichever is the least out of:
- 25% of compensation, or
- $66,000
For self-employed people, the maximum amount you can contribute in a given year is based on a unique calculation.
Solo 401(k)
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 whose only employee is a spouse. Solo 401(k)s work about the same as employer-sponsored 401(k) plans, and you can make contributions as both an employer or employee with pre-tax money. This offers more savings than SEPs or IRAs, however the possibility of greater retirement savings is often offset by having less investment options available. In a one-participant 401(k) plan, you can make either traditional deferrals (with pre-tax money) or Roth deferrals (with after-tax money).
Eligibility: Only self-employed individuals 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:
- 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) of 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.
The total contribution 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 an assured monthly figure to self-employed individuals once they've retired. As opposed to the defined contribution plans mentioned above, a defined benefit plan doesn't oscillate because of investment returns, 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 substantial portion for retirement and are willing to add significant contributions. Contributions are tax deferred and withdrawals are taxed as income in retirement.
Eligibility: Any self-employed individual who runs an owner-only business or has less than five employees can establish an individual defined benefit plan, but it's typically only well-suited for those over 50 who earn at least $250,000 a year. Those interested in defined benefit plans tend to be:
- Partners or owners who desire to contribute more than $66,000 (or $73,500 over age 50)
- Companies already contributing 3-4% who are want to contribute more
- Companies who are sure of their profit patterns
- Partners or owners over age 40 who desire to "catch up" or accelerate the retirement savings
Contribution Limits: The contribution limit is calculated by an actuary who calculates for your income, age, and retirement goals. Contribution limits are adjusted every year.
Why You Need 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 valuable asset for self-employed individuals. They have the know-how to help you navigate the complexities of retirement planning and develop a customized plan that gets you where you want to go. A financial planner will assess your financial situation, adjust for your risk tolerance, and help you make smart 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
- Tailor the plan to your needs even further
- Adopt a written plan in accordance with IRS guidelines
- Arrange a trust plan for assets
- Implement a record keeping system
- Help you understand the plan's terms
- Monitor and adjust your plan as needed
- Offer continued financial education and support as you continue on the road to retirement
- Increase your retirement income by maximizing your social security benefits
Self-Employed Retirement Plans in Ladue, MO: Correct Capital's Process
Ladue, MO business owners who don't have the time, desire, or knowledge to handle their self-employed retirement plan themselves can become stressed with the different options available to them. At Correct Capital, our financial advisors handle the lion's share of your retirement planning on your behalf, and endeavor to make achieving your retirement goals as simple 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 20 minutes for one of our advisors to understand if we're suitable for you and your business. This short introduction allows us to get a feel for your needs with no major time investment for you.
- Gather Information — If we both decide to move forward, we'll request more info, including the number of employees in your business (if applicable), your current financial situation, and what kind of retirement you want to have. This allows us to put together a personalized plan based entirely on type of advising you need.
- Review Your Plan — Once we've compiled your plan, we'll meet with you and discuss your plan in detail to ensure understand how it best correlates to your needs.
- Implementation and Monitoring — Once we've enacted your plan, we'll put everything in place so your savings can start growing immediately. Throughout your time working with us, we'll meet with you and adjust your plan so it stays consistent with your needs.
Our financial planners and retirement consultants are fiduciary advisors who have a legal and moral obligation to do what's in your best interest. We pride ourselves in providing clear communication and excellent service to assist you attain your self-employed retirement goals.
Other services we offer in Ladue, MO include:
- Succession Planning
- Fiduciary Financial Advisor
- Company 401(k) Plans
- ESOP Advisor
- 401(k) For Small Business
Call Correct Capital for Your Ladue, MO Self-Employed Retirement Plan
Your business isn't merely a business to you, and your Ladue, MO financial advisors need to offer more than merely wise financial advice. Correct Capital takes pride in getting to know our clients and what makes them and their business tick to deliver tailored self-employed retirement plans. We give 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 877-930-4015 or contact us online.
