Self-employed retirement plans in Sappington, MO. The flexibility involved with having your own business in Sappington, MO is one of the great things about being self-employed. But more leeway can come with a lack of security, particularly 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 better off exploring 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 Sappington, MO offers significant tax advantages that can help propel you and your business forward.
Only a handful of financial advisory and retirement planning firms know what it's like to be self-employed or a small business owner more than Correct Capital. In fact, we were inspired by a small business owner, our founder's father (you can discover more about our story on our website). We have a deep understanding that your business and retirement aspirations go beyond figures and numbers, and we are committed to offering personalized plans that reflect your goals. Continue reading to read more about your self-employed retirement plan options in Sappington, MO, or call Correct Capital at 877-930-4015 or contact us online to speak to a small business financial advisor today.
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What Self-Employed Retirement Plans Are There?
There are a few different retirement savings options available for self-employed individuals, and which is best for you depends on your unique situation. A Sappington, MO financial advisor can help you comprehend the pros and cons of each option and select that helps both your short- and long-term goals. Generally, your self-employed retirement plan options in Sappington, MO are comprised of:
Traditional or Roth IRA
Plan Overview: IRAs, or Individual Retirement Arrangements, are personal savings plans that allows you to set aside money for the future, with special tax considerations. In a traditional IRA, deposits are typically tax-deductible, and any gains on investments grow tax-deferred, but withdrawals in retirement are subject to income tax. In contrast, Roth IRA contributions are made with money you've already paid taxes on, but qualified distributions in retirement, including investment gains, are tax-free. In both accounts, withdrawals 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 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 percentage 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, you must contribute an equal amount to their pensions. You may choose to contribute either a predetermined fixed dollar amount or a proportion of annual income to employee accounts. SEP IRAs may be a suitable self-employed retirement plan if your business goes through periods of variable income. SEP IRAs don't have expensive initial setup or administrative charges other retirement plans do.
SEPs work like traditional IRAs, where payments are made with pre-tax money and withdrawals 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 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 businesses with no employees or 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 some other retirement savings plans, however the possibility of greater retirement savings is often offset by having less investment options available. In a one-participant 401(k) plan, you can make either traditional or Roth deferrals, which each feature the same tax advantages as their IRA contribution counterparts.
Eligibility: Only sole proprietors 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) of up to 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 after they've left the workforce. As opposed 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 want 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 open 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 desire to contribute more than $66,000 (or $73,500 over age 50)
- Companies already contributing 3-4% who are willing to contribute more
- Companies who have demonstrated consistent profit patterns
- Partners or owners over age 40 who want to make up for earlier years when they didn't save as much
Contribution Limits: The contribution limit is determined 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 Sappington, MO
A financial advisor in Sappington, MO specialized in self-employed retirement plans can be a crucial partner for self-employed individuals. They have the experience to help you navigate the complexities of retirement planning and design a customized plan that aligns with your goals. A financial planner will evaluate where your finances currently are, understand your risk tolerance, and help you make smart decisions about saving and investing for retirement. 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 in accordance with 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 Sappington, MO: Correct Capital's Process
Sappington, 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 retirement consultants handle the bulk of the retirement planning work on your behalf, and endeavor to make meeting 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 — We only need a short 20-minute call for a member of our advisor team to know if we're suitable for you and your business. This short introduction lets us understand 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 how many employees you have (if any), your current finances, and your retirement goals. This allows us to put together a personalized plan based entirely on type of advising you need.
- Review Your Plan — Once we've compiled your plan, we'll meet with you and go over your plan in detail to ensure it's what you were looking for.
- Implementation and Monitoring — Once we've agreed on your plan, we'll put everything in place so you can start saving. As long as we work together, we'll keep you up-to-date with how things are going and adjust your plan to ensure it stays suited to your needs.
Our financial advisors and retirement consultants are fiduciary advisors who are legally and morally bound to do what's in your best interest. We pride ourselves in providing straightforward communication and excellent service to help you reach your self-employed retirement goals.
Other services we offer in Sappington, MO include:
Call Correct Capital for Your Sappington, MO Self-Employed Retirement Plan
Your business isn't "just a business" to you, and your Sappington, MO financial advisors need to offer more than just wise 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 Sappington, 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 Sappington, MO, speak to a financial advisor today at 877-930-4015 or contact us through our website.
