Self-employed retirement plans in Lake St. Louis, MO. The freedom of having your own business in Lake St. Louis, MO is a wonderful advantage to working for yourself. But more leeway can be accompanied by a lack of security, particularly in terms of building a retirement plan, employer-sponsored plans aren't an option. Only a fraction of self-employed people have retirement plans they can contribute to, but many would be better off exploring what plans are available. In addition to a more comfortable retirement, partnering with a financial advisor to get started and maintain your self-employed retirement plan in Lake St. Louis, MO offers favorable tax incentives that can help you improve your bottom line.
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 learn more about our story on our website). We have a deep understanding that your business and retirement aspirations extend far beyond figures and numbers, and we are dedicated to offering customized plans that reflect where you are and where you want to go. Continue reading to learn more about your self-employed retirement plan options in Lake St. Louis, MO, or call Correct Capital at 314-930-401(k) or contact us online to speak to a small business financial advisor now.
Types of Self-Employed Retirement Plans
There are many retirement savings plans that the self-employed can establish, and which is best for you depends on your unique situation. A Lake St. Louis, 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 Lake St. Louis, MO include:
Traditional or Roth IRA
Plan Overview: IRAs, or Individual Retirement Accounts, are investment accounts that offer specific tax advantages. In a traditional IRA, contributions are typically tax-deductible, and investment earnings grow tax-deferred, but distributions in retirement are taxed as regular income. In contrast, Roth IRA payments are made with after-tax income, but qualified withdrawals in retirement, including investment gains, are tax-free. In both accounts, withdrawals can be made without extra fees if 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 are available to 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 the money they make from their self-employment. As a self-employed individual, your contributions are limited to the amount already contributed by you (the employer), which cannot exceed 25%. If you have employees, you would have to contribute the same amount for them as you do for yourself. You may choose to contribute either a fixed dollar sum or a percentage of annual income to employee accounts. SEP IRAs may be a suitable self-employed retirement plan for businesses that go through fluctuating income periods. SEP IRAs don't have expensive initial setup or administrative charges other retirement plans do.
SEPs work like traditional IRAs, where payments are made with money you've yet to pay taxes on and withdrawals are taxed as income.
Eligibility: Self-employed individuals and any employer, can set up a SEP.
Contribution Limits: Contribution limits for employees in a SEP IRA are the lesser of:
- 25% of compensation, or
For the self-employed individual, the amount eligible to be contributed is decided by 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 sole proprietors or those who only employ a spouse. Solo 401(k)s work about the same as employer-sponsored 401(k) plans, and you can add funds as an employee and on your own behalf as the employer. This offers greater potential for savings than SEPs or IRAs, however the additional opportunities for saving are often counterbalanced by more limited investment options. 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 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) of 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 an assured benefit to self-employed individuals after they've left the workforce. In contrast to 401(k)s or IRAs, a defined benefit plan doesn't fluctuate because of investment gains, but allows self-employed people to know exactly what they'll receive 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 a business where they're the only owner or has less than five employees can open an individual defined benefit plan, but it's typically only well-suited for those over 50 who 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 willing to do more
- Companies who have demonstrated consistent profit patterns
- Partners or owners over age 40 who want to make up for earlier years when they couldn't save as much
Contribution Limits: The contribution limit is determined by an actuary based on your income, age, and retirement goals. Contribution limits change every year.
Why You Need a Financial Advisor for Your Self-Employed Retirement Plan in Lake St. Louis, MO
A financial advisor in Lake St. Louis, 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 create a customized plan that aligns with your goals. A financial planner will analyze where your finances currently are, 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 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 guidelines
- 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 as long as you work with us
- Maximize your retirement income by maximizing your social security benefits
Self-Employed Retirement Plans in Lake St. Louis, MO: Correct Capital's Process
Lake St. Louis, 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 options available to them. At Correct Capital, our retirement consultants handle the bulk of the retirement planning work on your behalf, and attempt to make meeting the golden years of your dreams as easy as we possibly can. We can help you get set up with your self-employed retirement plan in four simple steps:
- Schedule a Call — We only need a short 20-minute call for a member of our advisor team to know if we're a good fit for you and your business. This brief introduction lets us get a feel for your needs with no major time investment for you.
- Gather Information — If we seem like a good fit, we'll ask for more info, including how many employees you have (if any), your current financial situation, and your retirement goals. 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 the specifics of your plan 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 meet with you and monitor 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 in your best interest. We pride ourselves in providing transparent communication and excellent service to assist you attain your self-employed retirement goals.
Other services we offer in Lake St. Louis, MO include:
- 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
- Rollover 401(k)
Call Correct Capital for Your Lake St. Louis, MO Self-Employed Retirement Plan
Your business isn't simply an enterprise to you, and your Lake St. Louis, MO financial advisors need to offer more than just sound financial advice. Correct Capital takes pride in getting to know our clients and their business to deliver tailored self-employed retirement plans. We offer all our Lake St. Louis, MO clients our I.O.U. promise: all of the advice we give you will be independent, objective, and unbiased. To get started on your self-employment retirement plan in Lake St. Louis, MO, speak to a financial advisor today at 314-930-401(k) or contact us online.