Self-Employed Retirement Plans Millstadt, IL

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Self-employed retirement plans in Millstadt, IL. The freedom of running your own business in Millstadt, IL is a fantastic aspect of working for yourself. But that freedom can be accompanied by limited stability, particularly in in regards to building a retirement plan, employer-sponsored plans aren't an option. Only a fraction of self-employed individuals have retirement plans they save with, but many would be better off exploring their options. In addition to a more comfortable retirement, working with a financial advisor to set up your self-employed retirement plan in Millstadt, IL offers significant tax advantages that can help you improve your bottom line.

Few financial advisory and retirement planning firms know what it's like to be self-employed or a small business owner more than Correct Capital. Our founder's father was a small business owner himself (you can learn more about our story on our website). We know that your business and retirement goals transcend just profit, and we are devoted to providing tailored solutions that fit your goals. Read on to learn more about your self-employed retirement plan options in Millstadt, IL, or call Correct Capital at 877-930-4015 or fill out our online form to speak to a member of our advisory team at your convenience.


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What Self-Employed Retirement Plans Are There?

There are a few different retirement savings options available for self-employed individuals, and which is best for you depends on your unique situation. A Millstadt, IL financial advisor can help you understand the benefits and drawbacks of each option and select that helps both your short- and long-term goals. Typically, your self-employed retirement plan options in Millstadt, IL are comprised of:


Traditional or Roth IRA

Plan Overview: IRAs, or Individual Retirement Accounts, are long-term savings plans that provides individuals with tax advantages to save for retirement. If you deposit to a traditional IRA, deposits are typically tax-deductible, 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 after-tax income, but qualified distributions in retirement, including investment gains, are tax-free. In both a traditional an a Roth IRA, withdrawals are penalty-free as long as 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, 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 portion of of their annual income from self-employment. Given that you are self-employed, your ability to contribute is restricted to the 25% already contributed by you in your position as the employer. If you have employees, they must receive the same amount you do. You can either contribute either a predetermined fixed dollar amount or a proportion of annual income to employee accounts. SEP IRAs may be an excellent self-employed retirement plan if your business experiences periods of variable income. SEP IRAs don't have the high upfront costs or administrative expenses often associated with other retirement plans.

SEPs work like traditional IRAs, where deposits are made with money you haven't paid taxes on and distributions are taxed at your income at the time of withdrawal.

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 the lesser of:

  • 25% of compensation, or
  • $66,000

For self-employed people, the annual contribution limit is based on a specific formula.

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 function similarly to employer-sponsored 401(k) plans, and you can add funds as both an employer or employee with pre-tax money. This offers increased savings opportunities than SEPs or IRAs, however the possibility of greater retirement savings is often counteracted by more limited investment options. In a one-participant 401(k) plan, you can make either traditional or Roth deferrals, which each enjoy the same tax advantages as their IRA contribution counterparts.

Eligibility: Only self-employed individuals 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:

  1. 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.
  2. Employer profit-sharing contributions (as an employer) which cannot exceed 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 offers a a predetermined benefit to self-employed individuals upon retirement. In contrast to 401(k)s or IRAs, a defined benefit plan doesn't fluctuate based on investment returns, but allows self-employed people 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 want to add 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 establish 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 want to contribute 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 want to "catch up" or accelerate the retirement savings

Contribution Limits: The contribution limit is calculated by an actuary based on your income, age, and retirement goals. Contribution limits are adjusted annually.

Why You Need a Financial Advisor for Your Self-Employed Retirement Plan in Millstadt, IL

A financial advisor in Millstadt, IL specialized in self-employed retirement plans can be a crucial partner for self-employed individuals. They have the knowledge to help you understand the complexities of retirement planning and develop a customized plan that acts as a roadmap through your financial future. A financial advisor will look at your financial situation, adjust for your risk tolerance, and guide you in making informed decisions about saving and investing for retirement. 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 in accordance with 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 into and through retirement
  • Maximize your retirement income by maximizing your social security benefits

Self-Employed Retirement Plans in Millstadt, IL: Correct Capital's Process

Millstadt, IL 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 lion's share of your retirement planning for you, and endeavor to make meeting your business and retirement aspirations as easy as possible for you. We can help you establish and maintain your self-employed retirement plan in four simple steps:

  1. Schedule a Call — We only need 20 minutes for a member of our advisor team to know if we're a good fit for you and your business. This brief introduction allows us to understand your needs with no major time investment for you.
  2. Gather Information — If we both decide to move forward, we'll ask for 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.
  3. Review Your Plan — Once we've compiled your plan, we'll meet with you and discuss the details of your plan to ensure you understand it.
  4. 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 to ensure it stays suited to 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 top-notch service to help you reach your self-employed retirement goals.

Other services we offer in Millstadt, IL include:

Self-Employed Retirement Plans Millstadt, IL | Financial Advisors | Retirement Consultants Near Millstadt

Call Correct Capital for Your Millstadt, IL Self-Employed Retirement Plan

Your business isn't simply an enterprise to you, and your Millstadt, IL financial advisors need to provide you with 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 personalized self-employed retirement plans. We give all our Millstadt, IL 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 Millstadt, IL, speak to a member of our team today at 877-930-4015 or fill out our online form.


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