Self-employed retirement plans in Lemay, MO. The flexibility involved with having your own business in Lemay, MO is a fantastic aspect of working for yourself. But increased leeway 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. Barely more than 10% of self-employed people have a workplace retirement plan, but many would be wise to explore what plans are available. In addition to setting you up for the retirement of your dreams, working with a financial advisor to get started and maintain your self-employed retirement plan in Lemay, MO offers tax benefits that can help boost you and your business forward.
Only a handful of wealth management 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 have a deep understanding that your business and retirement aspirations go beyond spreadsheets and percentages, and we are committed to providing personalized solutions that reflect your goals. Continue reading to read more about your self-employed retirement plan options in Lemay, MO, or call Correct Capital at 314-930-401(k) or contact us online to speak to a member of our advisory team at your convenience.
What Self-Employed Retirement Plans Are There?
There are several retirement savings plans available for self-employed individuals, and which is best for you depends on your unique situation. A Lemay, MO financial advisor can help you comprehend the pros and cons 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. If you deposit to a traditional IRA, contributions are typically tax-deductible, and investment earnings grow tax-deferred, but distributions in retirement are liable to income tax. In contrast, Roth IRA deposits are made with after-tax income, but you pay no taxes on withdrawals or earnings. In both accounts, distributions are penalty-free as long as 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, 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. 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 good self-employed retirement plan for businesses that go through cycles of high revenue and low revenue. SEP IRAs don't have the costly startup or administrative fees often associated with other retirement plans.
SEPs work like traditional IRAs, where deposits are made with money you've yet to pay taxes on and withdrawals are taxed at your income at the time of distribution.
Eligibility: Any employer, including the self-employed, can set up a SEP.
Contribution Limits: Contribution limits for employees in a SEP IRA are the lesser of:
- 25% of compensation, or
For self-employed people, the maximum amount you can contribute in a given year is decided by a specific formula.
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 who only employ a spouse. Solo 401(k)s work about the same as employer-sponsored 401(k) plans, and you can make contributions as an employee and on your own behalf as the employer. 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 one-participant 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) 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 predetermined monthly figure to self-employed individuals after they've left the workforce. In contrast to 401(k)s or IRAs, a defined benefit plan doesn't go up and down because of investment gains, but allows self-employed people 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 large amount for retirement and want to add substantial contributions. Contributions are tax deferred and withdrawals are taxed at your income level 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 not a great idea unless you're over 50 and earn at least $250,000 a year. Typically, good candidates for defined benefit plans are:
- 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 do 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 must be determined 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 Lemay, MO
A financial advisor in Lemay, MO specialized in self-employed retirement plans can be a crucial partner for self-employed individuals. They have the expertise to help you understand the intricacies of retirement planning and implement a personalized approach that gets you where you want to go. A financial advisor will assess your financial situation, adjust for your risk tolerance, and help you make sound 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
- Tailor 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 support as you continue on the road to retirement
- Increase your retirement income by maximizing 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 with the different options available to them. At Correct Capital, our financial advisors handle the lion's share of your retirement planning for you, and strive to make achieving your retirement goals as simple as we possibly can. We can help you get set up with your self-employed retirement plan in a straightforward four-step process:
- Schedule a Call — We only need a short 20-minute call 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 what you're looking for with no obligation on your part.
- 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 finances, and what kind of retirement you want to live. 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 enacted your plan, we'll put everything in place so your savings can start growing immediately. As long as we work together, we'll keep you up-to-date with how things are going and monitor your plan so it stays consistent with your needs.
Our financial planners and retirement consultants are fiduciary advisors who are legally and morally obligated to do what's in your best interest. We are proud to provide clear communication and excellent service to help you attain your self-employed retirement goals.
Other services we offer in Lemay, 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 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 merely sage financial advice. Correct Capital enjoys getting to know our clients and their business to deliver tailored self-employed retirement plans. We give all our Lemay, 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 Lemay, MO, speak to a member of our team today at 314-930-401(k) or contact us through our website.