Self-employed retirement plans in Oakville, MO. The freedom of having your own business in Oakville, MO is one of the great things about working for yourself. But that freedom can come with limited stability, especially in when it comes to building a retirement plan, as you don't have access to any employer plans. Only 13% of self-employed people have retirement plans they save with, but many would be wise to look into what plans are available. In addition to setting you up for the golden years of your dreams, partnering with a financial advisor to set up your self-employed retirement plan in Oakville, MO offers favorable tax incentives 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 as well as Correct Capital. In fact, we were inspired by a small business owner, our founder's father (you can learn more about our story here). We have a deep understanding that your business and retirement aspirations transcend figures and numbers, and we are committed to offering tailored plans that reflect where you are and where you want to go. Continue reading to read more about your self-employed retirement plan options in Oakville, MO, or call Correct Capital at 877-930-4015 or contact us online to speak to a member of our advisory team today.
Types of Self-Employed Retirement Plans
There are several retirement savings plans available for self-employed individuals, each with its own set of benefits and considerations. A Oakville, MO financial advisor can help you grasp the advantages and disadvantages of each option and select that works best for you. Typically, your self-employed retirement plan options in Oakville, MO include:
Traditional or Roth IRA
Plan Overview: IRAs, or Individual Retirement Arrangements, are investment accounts that allows you to set aside money for the future, with special tax considerations. In a traditional IRA, contributions are deducted from your taxable income, and any gains on investments grow tax-deferred, but distributions in retirement are taxed as if it were income. In contrast, Roth IRA contributions are made with money you've already paid taxes on, but qualified distributions in retirement, including earnings, are tax-free. In both a traditional an a Roth IRA, 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 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 percentage of of their net earnings 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, you must contribute an equal amount to their pensions. You can either contribute either a fixed dollar sum or a percentage of wages to employee accounts. SEP IRAs may be a good self-employed retirement plan for businesses that experience fluctuating income periods. 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 pre-tax money and distributions are taxed as income.
Eligibility: Self-employed individuals and any employer, 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 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 similarly to 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 counterbalanced by more limited investment options. In an individual 401(k) plan, you can make either traditional or Roth deferrals, which each feature the same tax benefits as their IRA contribution counterparts.
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 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 monthly figure to self-employed individuals upon retirement. As opposed to other types of retirement plans, a defined benefit plan doesn't go up and down because of investment returns, but allows self-employed individuals to know exactly what they'll receive in retirement. This plan is best suited for high-earning self-employed individuals who want to save a a significant sum for retirement and are willing to add substantial 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 not a great idea unless you're over 50 and earn well into the six figures. 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 want to contribute more
- Companies who have demonstrated consistent profit patterns
- Partners or owners over age 40 who desire to make up for earlier years when they didn'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 annually.
How a Financial Advisor Can Help Guide Your Self-Employed Retirement Plan in Oakville, MO
A financial advisor in Oakville, MO specialized in self-employed retirement plans can be a valuable asset for self-employed individuals. They have the knowledge 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 planner will look at your financial situation, adjust for 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
- Customize the plan to your needs even further
- Adopt a written plan in accordance with IRS regulations
- 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 as long as you work with us
- Maximize your retirement income by maximizing your social security benefits
Self-Employed Retirement Plans in Oakville, MO: Correct Capital's Process
Oakville, 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 overwhelmed with the different options available to them. At Correct Capital, our retirement consultants handle the lion's share of your retirement planning on your behalf, and attempt to make achieving your business and retirement aspirations as simple 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 one of our advisors to know if we're the best firm to help you reach your goals. This brief introduction lets us understand your needs with no obligation for you.
- Gather Information — If we both decide to move forward, we'll request more info, including how many employees you have (if any), your current financial situation, 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 your plan in detail to ensure understand how it best correlates to your needs.
- Implementation and Monitoring — Once we've started to move forward, 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 monitor your plan so it stays consistent with your needs.
Our financial advisors and retirement consultants are fiduciary advisors who are legally and ethically bound 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 Oakville, MO include:
- Succession Planning
- Fiduciary Financial Advisor
- Company 401(k) Plans
- ESOP Advisor
- 401(k) For Small Business
- Small Business Retirement Plans
- Tax Planning
Call Correct Capital for Your Oakville, MO Self-Employed Retirement Plan
Your business isn't "just a business" to you, and your Oakville, MO financial advisors need to offer more than simply wise 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 offer all our Oakville, MO clients the same 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 Oakville, MO, speak to a member of our team today at 877-930-4015 or contact us online.
