Self-employed retirement plans in Manchester, MO. The flexibility involved with having your own business in Manchester, MO is a wonderful advantage to being self-employed. But increased leeway can come with limited stability, particularly in in regards to building a retirement plan, employer-sponsored plans aren't an option. Only 13% of self-employed individuals have a workplace retirement plan, but many would be better off exploring 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 Manchester, MO offers favorable tax incentives that can help propel 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 as well as Correct Capital. In fact, we were inspired by a self-employed individual, our founder's father (you can learn more about our story here). We know that your business and retirement goals go beyond spreadsheets and percentages, and we are committed to offering tailored solutions that fit where you are and where you want to go. Continue reading to read more about your self-employed retirement plan options in Manchester, MO, or call Correct Capital at 877-930-4015 or fill out our online form to speak to a member of our advisory team now.
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Types of Self-Employed Retirement Plans
There are several retirement savings plans available for self-employed individuals, each with its own set of advantages and considerations. A Manchester, MO financial advisor can help you grasp the advantages and disadvantages of each option and select the most suitable one for your circumstances. Generally, your self-employed retirement plan options in Manchester, MO are comprised of:
Traditional or Roth IRA
Plan Overview: IRAs, or Individual Retirement Accounts, are investment accounts that allows you to set aside money for the future, with special tax considerations. 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 subject to income tax. On the other hand, Roth IRA payments are made with money you've already paid taxes on, but qualified withdrawals in retirement, including investment gains, are tax-free. In both a traditional an a Roth IRA, withdrawals are penalty-free 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. 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, they must receive the same amount you do. You may choose to contribute either a predetermined fixed dollar amount or a proportion of wages to employee accounts. SEP IRAs may be a good self-employed retirement plan if your business experiences cycles of high revenue and low revenue. SEP IRAs don't have expensive initial setup or administrative charges often associated with other retirement plans.
SEPs work like traditional IRAs, where deposits are made with pre-tax money and withdrawals are taxed as income.
Eligibility: Self-employed individuals and any employer, can set up a simplified employee pension plan.
Contribution Limits: Contribution limits for employees in a SEP IRA are the lesser of:
- 25% of compensation, or
- $66,000
For the self-employed individual, the amount eligible to be contributed is based on a special 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 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 more 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 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 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 offers a a predetermined monthly figure to self-employed individuals once they've retired. In contrast to the defined contribution plans mentioned above, a defined benefit plan doesn't go up and down based on investment gains, but allows self-employed individuals to have an exact dollar figure as their income in retirement. This plan is ideal for high-earning self-employed individuals who want to save a a large amount for retirement and are willing to add significant 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 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 want to do more
- Companies who are sure of their 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 is decided by an actuary who calculates for your income, age, and retirement goals. Contribution limits change annually.
How a Financial Advisor Can Help Guide Your Self-Employed Retirement Plan in Manchester, MO
A financial advisor in Manchester, MO specialized in self-employed retirement plans can be a valuable asset for self-employed individuals. They have the expertise to help you understand the complexities of retirement planning and implement a customized plan that acts as a roadmap through your financial future. A financial advisor will analyze your financial situation, understand 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
- Personalize the plan to your needs even further
- Adopt a written plan that follows all IRS regulations
- 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
- Maximize your retirement income by increasing your social security benefits
Self-Employed Retirement Plans in Manchester, MO: Correct Capital's Process
Manchester, MO business owners who don't have the time, inclination, or knowledge to handle their self-employed retirement plan themselves can become burdened 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 the golden years of your dreams as easy as possible for you. We can help you get set up with your self-employed retirement plan in a straightforward four-step process:
- Schedule a Call — It only takes 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 short introduction lets us understand your needs with no major time investment on your part.
- Gather Information — If we seem like a good fit, we'll ask for information, 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 suited specifically for your needs.
- Review Your Plan — After we put together a plan based on the information you provide, we'll meet with you and go over your plan in detail to ensure you're comfortable with it.
- Implementation and Monitoring — Once we've enacted your plan, we'll put everything in place so you can start saving. Throughout our relationship, 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 planners and retirement consultants are fiduciary advisors who are legally and morally obligated to do what's best for you and only you. We are proud to provide clear communication and high-quality service to help you reach your self-employed retirement goals.
Other services we offer in Manchester, MO include:
Call Correct Capital for Your Manchester, MO Self-Employed Retirement Plan
Your business isn't "just a business" to you, and your Manchester, MO financial advisors need to offer more than just sound 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 Manchester, 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 Manchester, MO, speak to a financial advisor today at 877-930-4015 or contact us through our website.
