Self-employed retirement plans in Oakland, MO. The flexibility involved with running your own business in Oakland, MO is a fantastic aspect of working for yourself. But increased leeway can be accompanied by a lack of security, especially in in regards to saving for retirement, 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 their options. 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 Oakland, MO offers tax benefits that can help propel you and your business forward.
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. Our founder's father was a small business owner himself (you can discover more about our story here). We know that your business and retirement aspirations extend far beyond mere monetary figures, and we are committed to offering tailored solutions that reflect your goals. Read on to discover more about your self-employed retirement plan options in Oakland, MO, or call Correct Capital at 314-930-4015 or fill out our online form to speak to a member of our advisory team today.
Types of Self-Employed Retirement Plans
There are many retirement savings plans available for self-employed individuals, and which is best for you depends on your unique situation. A Oakland, MO financial advisor can help you comprehend the pros and cons of each option and opt for that works best for you. Generally, your self-employed retirement plan options in Oakland, MO include:
Traditional or Roth IRA
Plan Overview: IRAs, or Individual Retirement Arrangements, are personal savings plans that provides individuals with tax advantages to save for retirement. In a traditional IRA, deposits are deducted from your taxable income, and any gains on investments grow tax-deferred, but withdrawals 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 earnings. In both accounts, withdrawals can be made without penalty as long as 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, 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 the money they make from their 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 a flat-dollar amount or a percentage of annual income to employee accounts. SEP IRAs may be an excellent self-employed retirement plan for businesses that experience fluctuating income periods. 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've yet to pay taxes on and withdrawals are taxed at your income at the time of withdrawal.
Eligibility: Self-employed individuals and any employer, can set up a SEP.
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 amount eligible to be contributed 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 who only employ a spouse. Solo 401(k)s function 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 possibility of greater retirement savings is 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 self-employed individuals and their spouses have access to solo 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.
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 fixed monthly figure to self-employed individuals upon retirement. As opposed to the defined contribution plans mentioned above, a defined benefit plan doesn't go up and down because of investment returns, but allows self-employed individuals 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 want to make significant contributions. Contributions are tax deferred and contributions 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 at least $250,000 a year. Those interested in defined benefit plans tend to be:
- Partners or owners who desire to contribute more than $66,000 (or $73,500 over age 50)
- Companies already contributing 3-4% who are willing 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 must be determined by an actuary based on your income, age, and retirement goals. Contribution limits change annually.
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 an invaluable resource for self-employed individuals. They have the experience to help you navigate the intricacies of retirement planning and develop a personalized approach that gets you where you want to go. A financial planner will look at your financial situation, understand your risk tolerance, and help you make smart decisions about your financial future. 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 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 guidance as you continue on the road to retirement
- Maximize 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 have the time, desire, or knowledge to handle their self-employed retirement plan themselves 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 on your behalf, and attempt to make achieving the golden years of your dreams as easy as we possibly can. We can help you establish and maintain your self-employed retirement plan in a straightforward four-step process:
- Schedule a Call — It only takes 20 minutes 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 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 information, including the number of employees in your business (if applicable), your current financial situation, and your retirement goals. This allows us to put together a custom plan based entirely on type of advising you need.
- Review Your Plan — After we put together a plan based on the information you provide, we'll meet with you and discuss 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 your savings can start growing immediately. Throughout your time partnering with us, we'll meet with you and monitor your plan so it stays consistent with your needs.
Our financial advisors and retirement consultants are fiduciary advisors who are legally and ethically obligated to do what's in your best interest. We pride ourselves in providing straightforward communication and high-quality service to assist you attain your self-employed retirement goals.
Other services we offer in Oakland, MO include:
- Succession Planning
- 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
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 provide you with 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 we give you will be independent, objective, and unbiased. To get started on your self-employment retirement plan in Oakland, MO, call Correct Capital today at 314-930-4015 or fill out our online form.
