Self-employed retirement plans in Shrewsbury, MO. The freedom of running your own business in Shrewsbury, MO is a wonderful advantage to working for yourself. But increased leeway can be accompanied by a lack of security, particularly in terms of saving for retirement, you don't have an employer who will set up a plan for you. Barely more than 10% of self-employed people have retirement plans they save with, but many would be wise to look into their options. In addition to a more comfortable retirement, working with a financial advisor to get started and maintain your self-employed retirement plan in Shrewsbury, MO offers tax benefits that can help free up much-needed funds for your business.
Not many financial advisory and retirement planning firms will understand the needs of the self-employed and small business owners more than Correct Capital. In fact, we were inspired by a self-employed individual, our founder's father (you can discover more about our story on our website). We know that your business and retirement aspirations go beyond spreadsheets and percentages, and we are committed to providing tailored plans that reflect your goals. Read on to discover more about your self-employed retirement plan options in Shrewsbury, MO, or call Correct Capital at 877-930-4015 or contact us online to speak to a member of our advisory team today.
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 Shrewsbury, MO financial advisor can help you understand the benefits and drawbacks of each option and choose the most suitable one for your situation. Generally, your self-employed retirement plan options in Shrewsbury, MO include:
Traditional or Roth IRA
Plan Overview: IRAs, or Individual Retirement Arrangements, are long-term savings plans that provides individuals with tax advantages to save for retirement. 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. In contrast, Roth IRA deposits are made with money you've already paid taxes on, but qualified withdrawals in retirement, including investment gains, are tax-free. In both accounts, withdrawals are penalty-free 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 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 annual income 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, you must contribute an equal amount to their pensions. You may choose to contribute either a fixed dollar sum or a percentage of wages to employee accounts. SEP IRAs may be a suitable self-employed retirement plan for businesses that go 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 money you've yet to pay taxes on and withdrawals are taxed as income.
Eligibility: Any employer, including the self-employed, can establish a SEP.
Contribution Limits: Contribution limits for employees in a SEP IRA are the lesser of:
- 25% of compensation, or
- $66,000
For self-employed people, the amount eligible to be contributed is based on a unique 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 in the same same way as employer-sponsored 401(k) plans, and you can add funds as both an employer or employee with pre-tax money. This offers greater potential for savings than SEPs or IRAs, however the additional opportunities for saving are often counteracted by having less investment options available. In an individual 401(k) plan, you can make either traditional deferrals (with pre-tax money) or Roth deferrals (with after-tax money).
Eligibility: Only business owners 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 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.
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 the defined contribution plans mentioned above, a defined benefit plan doesn't oscillate based on investment gains, but allows self-employed people 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 are willing to make significant contributions. Contributions are tax deferred and contributions are taxed as income in retirement.
Eligibility: Any self-employed individual who runs an owner-only business 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 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 have demonstrated consistent profit patterns
- Partners or owners over age 40 who desire 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 are adjusted annually.
How a Financial Advisor Can Help Guide Your Self-Employed Retirement Plan in Shrewsbury, MO
A financial advisor in Shrewsbury, MO specialized in self-employed retirement plans can be indispensable for self-employed individuals. They have the know-how to help you understand the intricacies of retirement planning and implement a customized plan that acts as a roadmap through your financial future. A financial planner will evaluate your financial situation, understand your risk tolerance, and help you make sound 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 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 guidance as long as you work with us
- Maximize your retirement income by increasing your social security benefits
Self-Employed Retirement Plans in Shrewsbury, MO: Correct Capital's Process
Shrewsbury, MO business owners without the time, interest, 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 meeting your 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 — We only need a short 20-minute call for one of our advisors to understand if we're a good fit for you and your business. This short introduction allows us to get a feel for your needs with no obligation on your part.
- Gather Information — If we both decide to move forward, we'll request information, including how many employees you have (if any), your current finances, and what kind of retirement you want to live. This allows us to put together a custom 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 go over 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 monitor your plan to ensure it stays suited to your needs.
Our financial planners 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 clear communication and top-notch service to help you attain your self-employed retirement goals.
Other services we offer in Shrewsbury, 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 Shrewsbury, MO Self-Employed Retirement Plan
Your business isn't "just a business" to you, and your Shrewsbury, MO financial advisors need to offer more than simply sage financial advice. Correct Capital takes pride in getting to know our clients and their business to deliver personalized self-employed retirement plans. We offer all our Shrewsbury, MO clients the same 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 Shrewsbury, MO, call Correct Capital today at 877-930-4015 or contact us through our website.
