Self-employed retirement plans in Oakland, MO. The freedom of running your own business in Oakland, MO is a wonderful advantage to working for yourself. But increased leeway can be accompanied by a lack of security, particularly in terms of building a retirement plan, employer-sponsored plans aren't an option. Barely more than 10% of self-employed people have a workplace retirement plan, but many would be wise to explore their options. In addition to setting you up for the golden years of your dreams, partnering with a financial advisor to get started and maintain your self-employed retirement plan in Oakland, MO offers favorable tax incentives that can help propel you and your business towards success.
Not many wealth management and retirement planning firms know what it's like to be self-employed or a small business owner than Correct Capital. In fact, we were inspired by a small business owner, our founder's father (you can read more about our story on our website). We have a deep understanding that your business and retirement aspirations transcend figures and numbers, and we are devoted to providing tailored solutions that reflect your goals. Continue reading to read more about your self-employed retirement plan options in Oakland, MO, or call Correct Capital at 877-930-4015 or contact us online to speak to a member of our advisory team today.
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Correct Capital Wealth Management's office is physically located in St. Louis, MO, but we serve clients throughout the United States in both personal financial planning and corporate retirement plans.
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What Self-Employed Retirement Plans Are There?
There are many retirement savings plans that the self-employed can set up, each with its own set of benefits and considerations. A Oakland, MO financial advisor can help you comprehend the benefits and drawbacks of each option and choose that works best for you. Typically, your self-employed retirement plan options in Oakland, MO are comprised of:
Traditional or Roth IRA
Plan Overview: IRAs, or Individual Retirement Arrangements, are investment accounts that provides individuals with tax advantages to save for retirement. If you deposit to a traditional IRA, deposits are deducted from your taxable income, and any gains on investments grow tax-deferred, but distributions in retirement are liable to income tax. In contrast, Roth IRA payments are made with after-tax income, but you pay no taxes on withdrawals or investment gains. In both a traditional an a Roth IRA, distributions 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 portion of of the money they make from their 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, you must contribute an equal amount to their plans. You may choose to 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 for businesses that experience 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 payments 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 set up a SEP.
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 annual contribution limit is decided by 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 who only employ a spouse. Solo 401(k)s work 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 offset by more limited investment options. In an individual 401(k) plan, you can make either traditional or Roth deferrals, which each enjoy the same tax benefits as their IRA contribution counterparts.
Eligibility: Only business owners and their spouses have access to one-participant 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 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.
The total contribution 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 an assured benefit to self-employed individuals upon retirement. As opposed to 401(k)s or IRAs, a defined benefit plan doesn't oscillate based on investment returns, but allows self-employed people to know exactly how much they'll get in retirement. This plan is ideal 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 withdrawals are taxed as income in retirement.
Eligibility: Any self-employed individual who runs a business where they're the only owner or has less than five employees can establish 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 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 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 are adjusted every year.
How a Financial Advisor Can Help Guide Your Self-Employed Retirement Plan in Oakland, MO
A financial advisor in Oakland, MO specialized in self-employed retirement plans can be a crucial partner for self-employed individuals. They have the know-how to help you navigate the complexities of retirement planning and design a tailored strategy that gets you where you want to go. A financial planner will evaluate where your finances currently are, understand your risk tolerance, and help you make smart decisions for yourself, both as a business owner and future retiree. 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 that follows all IRS rules
- 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 support into and through retirement
- Increase your retirement income by maximizing your social security benefits
Self-Employed Retirement Plans in Oakland, MO: Correct Capital's Process
Oakland, 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 stressed when looking at their options. At Correct Capital, our financial advisors handle the lion's share of your retirement planning for you, and strive to make achieving the golden years of your dreams as easy as possible for you. We can help you establish and maintain your self-employed retirement plan in four simple steps:
- Schedule a Call — It only takes a brief 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 what you're looking for with no obligation on your part.
- 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 custom 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 understand how it best correlates to your needs.
- Implementation and Monitoring — Once we've agreed on your plan, we'll put everything in place so your savings can start growing immediately. 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 ethically obligated to do what's best for you and only you. We pride ourselves in providing clear communication and high-quality service to help you reach your self-employed retirement goals.
Other services we offer in Oakland, MO include:
Call Correct Capital for Your Oakland, MO Self-Employed Retirement Plan
Your business isn't simply an enterprise to you, and your Oakland, MO financial advisors need to offer more than just sound financial advice. Correct Capital enjoys getting to know our clients and what makes them and their business tick to deliver tailored self-employed retirement plans. We give all our Oakland, 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 Oakland, MO, call Correct Capital today at 877-930-4015 or contact us online.
