Self-employed retirement plans in Rock Hill, MO. The freedom of running your own business in Rock Hill, MO is a wonderful advantage to working for yourself. But that freedom can be accompanied by uncertainty, especially in in regards to 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 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 Rock Hill, MO offers tax benefits that can help propel you and your business towards success.
Not many 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 self-employed individual, our founder's father (you can read more about our story here). We know that your business and retirement goals go beyond spreadsheets and percentages, and we are dedicated to providing tailored plans that fit where you are and where you want to go. Read on to discover more about your self-employed retirement plan options in Rock Hill, MO, or call Correct Capital at 877-930-4015 or contact us online to speak to a small business financial advisor at your convenience.
What Self-Employed Retirement Plans Are There?
There are several retirement savings plans available for self-employed individuals, and which is best for you depends on your unique situation. A Rock Hill, MO financial advisor can help you grasp the advantages and disadvantages of each option and select that works best for you. Generally, your self-employed retirement plan options in Rock Hill, 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. In a traditional IRA, contributions are deducted from your taxable income, and any gains on investments grow tax-deferred, but distributions in retirement are liable to income tax. On the other hand, Roth IRA deposits are made with after-tax income, but you pay no taxes on withdrawals or earnings. In both accounts, distributions can be made without extra fees if 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 share of of their net earnings from 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 can either 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 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 payments 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 annual contribution limit 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 an employee and on your own behalf as the employer. This offers increased savings opportunities than SEPs or IRAs, however the additional opportunities for saving are often counteracted 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 can set up 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 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) of 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 a predetermined monthly figure to self-employed individuals upon retirement. In contrast to the defined contribution plans mentioned above, a defined benefit plan doesn't oscillate because of 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 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 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. 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 must be decided by an actuary based on your income, age, and retirement goals. Contribution limits are adjusted annually.
How a Financial Advisor Can Help Guide Your Self-Employed Retirement Plan in Rock Hill, MO
A financial advisor in Rock Hill, MO specialized in self-employed retirement plans can be an invaluable resource for self-employed individuals. They have the knowledge to help you understand the intricacies of retirement planning and design a tailored strategy that aligns with your goals. A financial planner will evaluate where your finances currently are, understand 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 choose 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 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 as long as you work with us
- Maximize your retirement income by maximizing your social security benefits
Self-Employed Retirement Plans in Rock Hill, MO: Correct Capital's Process
Rock Hill, MO business owners without the time, interest, or knowledge to handle their self-employed retirement plan themselves can become overwhelmed when looking at their options. At Correct Capital, our retirement consultants handle the lion's share of your retirement planning on your behalf, and strive to make meeting the golden years of your dreams as easy as possible for you. We can help you get set up with 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 suitable for you and your business. This short 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 your retirement goals. This allows us to put together a personalized plan suited specifically for your needs.
- 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.
- Implementation and Monitoring — Once we've enacted 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 adjust your plan so it stays consistent with your needs.
Our financial advisors and retirement consultants are fiduciary advisors who have a legal and moral obligation to do what's in your best interest. We are proud to provide straightforward communication and excellent service to assist you reach your self-employed retirement goals.
Other services we offer in Rock Hill, 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 Rock Hill, MO Self-Employed Retirement Plan
Your business isn't simply an enterprise to you, and your Rock Hill, MO financial advisors need to offer more than simply sound financial advice. Correct Capital enjoys getting to know our clients and what makes them and their business tick to deliver customized self-employed retirement plans. We give all our Rock Hill, 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 Rock Hill, MO, speak to a financial advisor today at 877-930-4015 or fill out our online form.
