Self-employed retirement plans in Oakville, MO. The flexibility involved with having your own business in Oakville, MO is a fantastic aspect of working for yourself. But more leeway can come with limited stability, particularly in terms of saving for retirement, as you don't have access to any employer plans. Barely more than 10% of self-employed individuals have retirement plans they save with, but many would be better off exploring their options. In addition to setting you up for the retirement of your dreams, partnering with a financial advisor to get started and maintain your self-employed retirement plan in Oakville, MO offers tax benefits that can help free up much-needed funds for your business.
Not many wealth management and retirement planning firms will understand the needs of the self-employed and small business owners than Correct Capital. In fact, we were inspired by a self-employed individual, our founder's father (you can read more about our story on our website). We know that your business and retirement goals extend far beyond just profit, and we are committed to providing customized plans that reflect your goals. Read on to read more about your self-employed retirement plan options in Oakville, MO, or call Correct Capital at 314-930-401(k) or contact us online to speak to a small business financial advisor now.
What Self-Employed Retirement Plans Are There?
There are a few different retirement savings plans available for self-employed individuals, and which is best for you depends on your unique situation. A Oakville, MO financial advisor can help you comprehend the benefits and drawbacks of each option and opt for that helps both your short- and long-term goals. Generally, your self-employed retirement plan options in Oakville, MO are comprised of:
Traditional or Roth IRA
Plan Overview: IRAs, or Individual Retirement Accounts, are personal savings plans that offer specific tax advantages. If you deposit to a traditional IRA, contributions are typically tax-deductible, and any gains on investments grow tax-deferred, but withdrawals in retirement are liable to income tax. On the other hand, Roth IRA payments are made with after-tax income, but qualified distributions in retirement, including investment gains, are tax-free. In both accounts, 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 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 their net earnings from self-employment. As a self-employed individual, your contributions are limited to the amount already contributed by you (the employer), which cannot exceed 25%. If you have employees, you must contribute an equal amount to their plans. You may choose to contribute either a fixed dollar sum or a percentage of annual income to employee accounts. SEP IRAs may be a good self-employed retirement plan for businesses that go through fluctuating income periods. SEP IRAs don't have expensive initial setup or administrative charges other retirement plans do.
SEPs work like traditional IRAs, where contributions are made with money you haven't paid taxes on and distributions are taxed as income.
Eligibility: Any employer, including the self-employed, can set up a simplified employee pension plan.
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 maximum amount you can contribute in a given year is decided by 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 whose only employee is a spouse. Solo 401(k)s function 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 counteracted by having less investment options available. In a solo 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 self-employed individuals 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 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. In contrast to 401(k)s or IRAs, 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 ideal for high-earning self-employed individuals who want to save a a substantial portion for retirement and want to add substantial contributions. Contributions are tax deferred and contributions are taxed at your income level in retirement.
Eligibility: Any self-employed individual who runs a business where they're the only owner or has less than five employees can open 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. Typically, good candidates for defined benefit plans are:
- Partners or owners who want 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 want to "catch up" or accelerate the retirement savings
Contribution Limits: The contribution limit is calculated by an actuary who calculates for your income, age, and retirement goals. Contribution limits change annually.
Why You Need a Financial Advisor for Your Self-Employed Retirement Plan in Oakville, MO
A financial advisor in Oakville, MO specialized in self-employed retirement plans can be an invaluable resource for self-employed individuals. They have the expertise to help you understand the intricacies of retirement planning and develop a personalized approach that aligns with your goals. A financial planner will evaluate your financial situation, adjust for your risk tolerance, and guide you in making informed 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
- Personalize 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 guidance into and through retirement
- Increase your retirement income by increasing your social security benefits
Self-Employed Retirement Plans in Oakville, MO: Correct Capital's Process
Oakville, MO business owners who don't have the time, desire, or knowledge to handle their self-employed retirement plan themselves can become overwhelmed 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 strive to make meeting your business and retirement goals as easy as we possibly can. 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 one of our advisors to know if we're the best firm to help you reach your goals. This brief introduction allows us to get a feel for what you're looking for with no major time investment on your part.
- Gather Information — If we seem like a good fit, we'll request information, including the number of employees in your business (if applicable), your current financial situation, and what kind of retirement you want to live. 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 discuss the details 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. 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 best for you and only you. We are proud to provide transparent communication and top-notch 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
- Social Security Consultants Near Me
Call Correct Capital for Your Oakville, MO Self-Employed Retirement Plan
Your business isn't simply an enterprise to you, and your Oakville, MO financial advisors need to provide you with more than simply sound 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 offer all our Oakville, 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 Oakville, MO, speak to a financial advisor today at 314-930-401(k) or contact us online.
