Self-employed retirement plans in Lemay, MO. The flexibility involved with having your own business in Lemay, MO is one of the great things about working for yourself. But that freedom can come with limited stability, particularly in in regards to building a retirement plan, you don't have an employer who will set up a plan for you. Only a fraction of self-employed individuals have a workplace retirement plan, but many would be wise to explore 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 Lemay, MO offers tax benefits 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 more than Correct Capital. Our founder's father was a small business owner himself (you can read more about our story on our website). We know that your business and retirement goals extend far beyond figures and numbers, and we are devoted to providing customized plans that reflect where you are and where you want to go. Continue reading to discover more about your self-employed retirement plan options in Lemay, MO, or call Correct Capital at 877-930-4015 or fill out our online form to speak to a small business financial advisor today.
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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 advantages and considerations. A Lemay, MO financial advisor can help you understand the benefits and drawbacks of each option and opt for the most suitable one for your specific needs. Generally, your self-employed retirement plan options in Lemay, MO include:
Traditional or Roth IRA
Plan Overview: IRAs, or Individual Retirement Accounts, are long-term savings plans that allows you to set aside money for the future, with special tax considerations. In a traditional IRA, contributions are deducted from your taxable income, and any gains on investments grow tax-deferred, but distributions in retirement are taxed as regular income. In contrast, Roth IRA payments are made with money you've already paid taxes on, but qualified distributions in retirement, including investment gains, are tax-free. In both a traditional an a Roth IRA, withdrawals can be made without extra fees if 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 share of of their annual income from self-employment. Since you are self-employed, you (the employee) have a contribution limit of no more than the 25% already contributed by you (the employer). If you have employees, you must contribute an equal amount to their plans. You may choose to contribute a flat-dollar amount or a percentage of wages to employee accounts. SEP IRAs may be a suitable self-employed retirement plan if your business experiences 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 haven't paid taxes on and withdrawals 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
- $66,000
For the self-employed individual, the annual contribution limit 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 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 increased savings opportunities than SEPs or IRAs, however the additional opportunities for saving are often counterbalanced by having less investment options available. 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 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 a predetermined benefit to self-employed individuals upon retirement. As opposed to other types of retirement plans, a defined benefit plan doesn't oscillate based on investment returns, but allows self-employed individuals to have an exact dollar figure as their income in retirement. This plan is best suited 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 withdrawals 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 open an individual defined benefit plan, but it's typically only well-suited for those over 50 who earn at least $250,000 a year. Typically, good candidates for defined benefit plans are:
- 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 have demonstrated consistent profit patterns
- Partners or owners over age 40 who desire to "catch up" or accelerate the retirement savings
Contribution Limits: The contribution limit must be determined by an actuary who calculates for your income, age, and retirement goals. Contribution limits change every year.
The Importance of a Financial Advisor for Your Self-Employed Retirement Plan in Lemay, MO
A financial advisor in Lemay, MO specialized in self-employed retirement plans can be an invaluable resource for self-employed individuals. They have the knowledge to help you navigate the complexities of retirement planning and develop a personalized approach 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 sound decisions about saving and investing for retirement. 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 guidance into and through retirement
- Increase your retirement income by increasing your social security benefits
Self-Employed Retirement Plans in Lemay, MO: Correct Capital's Process
Lemay, 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 burdened when looking at their options. At Correct Capital, our retirement consultants handle the lion's share of your retirement planning on your behalf, and strive to make meeting the golden years of your dreams as simple as possible for you. We can help you establish and maintain your self-employed retirement plan in a straightforward four-step process:
- Schedule a Call — We only need a brief 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 obligation for you.
- Gather Information — If we both decide to move forward, we'll request information, including the number of employees in your business (if applicable), your current finances, and what kind of retirement you want to have. 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 go over your plan in detail to ensure understand how it best correlates to your needs.
- Implementation and Monitoring — Once we've started to move forward, 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 ethical obligation to do what's best for you and only you. We pride ourselves in providing transparent communication and top-notch service to assist you reach your self-employed retirement goals.
Other services we offer in Lemay, MO include:
Call Correct Capital for Your Lemay, MO Self-Employed Retirement Plan
Your business isn't simply an enterprise to you, and your Lemay, MO financial advisors need to offer more than just sage financial advice. Correct Capital takes pride in getting to know our clients and what makes them and their business tick to deliver customized self-employed retirement plans. We give all our Lemay, 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 Lemay, MO, speak to a member of our team today at 877-930-4015 or contact us through our website.
