Self-employed retirement plans Springfield, MO. The independence of owning your own business in Springfield, MO is one of the greatest advantages of being self-employed. However, this freedom can come with a lack of security, particularly when it comes to building your retirement fund, as you don't have access to employer-sponsored retirement plans. Only 13% of self-employed individuals have a workplace retirement plan, although many should consider looking into other possibilities. In addition to achieving a financially stable retirement, partnering with a financial advisor in Springfield, MO to create your self-employed retirement plan offers significant tax advantages that help both you and your business to thrive.
Few Springfield, MO investment consulting and retirement planning firms are as attuned to the requirements of self-employed individuals better than Correct Capital. Our company’s founder grew up with a father who was a small business owner himself (read more of our story here), and Correct Capital take pride in helping businesses with their retirement planning needs. We recognize that your business and retirement aspirations go far beyond just monetary concerns, and we are dedicated to create personalized solutions aligned with your vision. Keep reading to learn more about your self-employed retirement plan options in Springfield, MO, or call Correct Capital at 877-930-401k or contact us online to talk to a small business financial advisor in Springfield, MO today.
Why Springfield, MO Self-Employed Individuals Should Have a Retirement Plan
Retirement plans for self-employed individuals are essential for preparing you for the future, they also provide tangible benefits today. With customizable contribution options to substantial tax savings, partnering with a financial advisor in Springfield, MO enables you to customize your retirement plan to fit your unique financial situation.
Flexibility That Fits Your Income
If your income changes over time, a plan like a SEP IRA or Solo 401(k) offers the option to modify how much you save:
- Customizable Contributions: Contribute more during high-income years and scale back when income is lower, ensuring your plan fits your financial situation.
- Roth Options: Opting for a Roth Solo 401(k) lets you handle taxes upfront, allowing you to withdraw tax-free later—an advantageous choice if you anticipate your tax rate is likely to rise in the future.
Save Money on Taxes
Retirement plans for self-employed individuals provide valuable tax benefits:
- Tax-Deductible Contributions: Contributions to a Solo 401(k) reduce what you owe in taxes, helping you keep more of your hard-earned money.
- Tax-Deferred Growth: You won't pay taxes on investment growth until you withdraw it, providing your money more time to compound.
- State-Specific Incentives: Based on your location, you could qualify for extra tax breaks as a sole proprietor. These regional incentives can make these plans even more valuable.
- Retirement Savings Contributions Credit (Saver’s Credit): Qualified participants can take advantage of a credit of up to 50% of the first $2,000 contributed a retirement plan, helping to lower your tax bill even more.
Protect Your Savings With Smart Investments
Building a secure retirement isn’t only about how much you save—it’s also determined by your investment strategy:
- Diversified Portfolios: Allocating your investments across varied stocks, bonds, and other assets is a smart way to reduce risk while helping to grow your savings.
- Emergency Back-Up: Supplementing your retirement savings with a business emergency fund ensures you don’t dipping into savings during financial hardships and incurring penalties.
Plan for the Future of Your Springfield, MO Business
Retirement planning can assist you think through what’s next with your Springfield, MO business:
- Selling Your Business: For those considering a sale, plans like SEP IRAs or Solo 401(k)s remain your personal assets and won’t be included in the sale. These plans ensure the steady income you’ll need during retirement. Remember that while selling a business often leads to a capital gain, contributions to retirement accounts are restricted by contribution limits (e.g., up to $7,000 for IRAs or up to $70,000 for Solo 401(k)s, factoring in catch-up contributions, depending on plan details).
- Minimizing Taxes: Using retirement contributions wisely helps lower the taxes you’ll owe when you sell your business.
- Succession Planning: For those winding down or handing over their business, your retirement savings ensure financial security during the change. You can also seek advice from a financial advisor who specializes in succession planning and retirement accounts to help with taxes associated with the transaction.
With the proper savings strategy, you manage your financial future, reduce your tax burden, and establish a strong framework for both your retirement and your business goals.
Why Start a Self-Employed Retirement Plan in Springfield, MO Now?
There’s no denying that time is one of the most crucial factors in retirement planning. Beginning sooner rather than later not only helps you grow a more substantial retirement fund but also lowers the pressure of saving aggressively in the future. This is why it pays to take action now:
The Cost of Waiting
Waiting to start your retirement fund can have a significant impact on the savings you’ll have when you reach retirement age. The main reason is compound interest—the powerful process where your investments grow, and those returns, subsequently, generate even more returns. The longer your money has to grow, the greater the benefit of compounding.
Example: Two individuals, Alex and Taylor are both entrepreneurs. They each aim to save $500,000 for retirement by age 65:
- Alex initiates savings of $5,000 annually at age 30.
- Taylor waits until age 40 but puts away $7,500 annually to catch up.
By age 65, with an assumption of 7% annual return:
- Alex puts in $180,000 and achieves a total of $691,184.39*.
- Taylor contributes $195,500 but only ends up with $474,367.78*.
How Early Contributions Grow
Small, consistent savings made consistently often create significant growth. Consider this example showing the power of compound interest:
- Starting at age 25: If you invest $200 per month in a retirement plan with an projected return of 7%, you’ll accumulate $497,303.29* by age 65.
- Starting at age 35: Contributing the same $200 per month leaves you with only $235,412.97* by age 65—a shortfall of over $260,000, just from a 10-year delay.
Starting sooner, the lower your annual savings needs each year to achieve your retirement goals.
*These calculations are estimates calculated using NerdWallet’s Compound Interest Calculator, based on a 7% annual return. These calculations involved multiplying yearly deposits by the years contributed. These examples are meant to provide general guidance and are not a promise of future results. Outcomes may change based on variables including market conditions, fees, and personal factors. We recommend consulting a financial advisor for personalized advice.
Take Control of Your Financial Future
As a self-employed person in Springfield, MO, it is often the case that you prioritize reinvesting in your business rather than saving for retirement. However, starting a plan now allows you to:
- Benefit from tax-deferred growth or penalty-free withdrawals later on.
- Benefit from flexible contributions that align with your cash flow.
- Create a safety net that provides security, no matter how your business develops.
Getting started now, the less you’ll need to worry about playing catch-up later in life. Saving for retirement now means managing your financial future and creating for yourself the opportunity to concentrate on your goals—both for your future retirement and your Springfield, MO business.
Types of Self-Employed Retirement Plans
There are several retirement savings options available for entrepreneurs in Springfield, MO, each with its own benefits and trade-offs. A financial advisor is available to help you evaluate the pros and cons of each plan and identify the one ideal for your circumstances. Generally speaking, your self-employed retirement plan options in Springfield, MO are:
Traditional or Roth IRA
Plan Overview: Individual Retirement Accounts (IRAs), as explained here, represent financial tools for retirement that provide key tax perks. In a conventional IRA, contributions are typically tax-deductible, and returns grow free of current taxes, but withdrawals in retirement are subject to income tax. In contrast, Roth IRAs require contributions from post-tax earnings, but eligible distributions during retirement, including earnings, are tax-free. In both accounts, withdrawals come without penalties as long as you are at least 59½.
Eligibility: Unlike plans linked to your job, both traditional and Roth IRAs are available to anyone with an earned income.
Contribution Limits: For 2025, annual contribution limits for IRAs remain $7,000, or $8,000 if you qualify for catch-up contributions.
Simplified Employee Pension Plan (SEP IRA)
Plan Overview: The Simplified Employee Pension IRA offers a way to save for retirement that allows entrepreneurs to save a percentage of their net business profits. Contributions can only be made by an employer, so, as a self-employed individual, you (the employee) would not be able to contribute above the 25% you (the employer) allocate. If you have employees, you must contribute the same amount for them as you do for yourself. It's your choice whether to contribute a fixed dollar figure or a percentage of wages to employee accounts. A SEP IRA works well for entrepreneurs facing cycles of high revenue and low revenue. Unlike other plans, SEP IRAs are free of the high fees associated with starting or maintaining other plans.
SEPs work like standard IRAs, where contributions are made with pre-tax money and retirement distributions are taxable.
Eligibility: Employers of any type, including self-employed individuals can establish a SEP.
Contribution Limits: Contribution limits for employees in a SEP IRA are capped at the lower of:
- 25% of compensation, or
- $70,000 for 2025
As a self-employed person, the allowable contribution is based on a special calculation.
Solo 401(k)
Plan Overview: The Solo 401(k), commonly known as an Individual 401(k) or one-participant 401(k) plan, is a savings option for the self-employed meant for businesses with no employees or if the only employee is your spouse. Solo 401(k)s operate much like standard 401(k) plans, and allow you to contribute as both an employee or an employer with pre-tax money. This offers more savings compared to SEPs or IRAs; however, the extra savings options often come with more restricted investment choices. With this type of plan, you can make either traditional or Roth deferrals, which have the same tax benefits as their IRA contribution counterparts.
Eligibility: Solo 401(k)s are available solely to business owners and their spouses are eligible to open 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:
- Employee contributions of up to 100% of your earned income from self-employment, subject to the annual contribution limit. The contribution limits for 2025 include $23,500, or $31,000 for those aged 50 and above, or $34,750 for individuals aged 60-63 in 2025.
- Profit-sharing contributions (as an employer) cannot exceed 25% of your adjusted self-employment income, which is defined as net profit minus half of your self-employment tax and the deferrals you made.
Your combined contributions must not surpass $70,000, or $77,500 if you're over age 50 (as of 2025), $81,250 for those aged 60-63 in 2025.
Individual Defined Benefit Plan
Plan Overview: A defined benefit plan represents a type of retirement plan that guarantees a set amount to entrepreneurs upon retirement. Unlike defined contribution plans mentioned above, investment returns don’t affect the payout, but allows self-employed individuals to know the precise amount they'll have in retirement. This option is recommended for higher-income professionals who want to save a substantial amount for retirement and are prepared to contribute substantial contributions. Contributions offer tax-deferred growth, and withdrawals are taxed as income during retirement.
Eligibility: Any self-employed individual managing a one-person company or employing fewer than five people can open an individual defined benefit plan, but it's typically advised for those over 50 who make $250,000 or more annually. Typically, good candidates for defined benefit plans include:
- Partners or owners who want to invest more than $70,000 (or $77,500 for individuals 50 and older)
- Businesses currently investing 3-4% and are willing to do more
- Organizations showing consistent profit patterns
- Entrepreneurs over age 40 who desire to "catch up" or accelerate the retirement savings
Contribution Limits: The cap on contributions is calculated by an actuary using your earnings, age, and retirement objectives. Contribution limits are updated yearly.
The Importance of a Financial Advisor in Springfield, MO for Your Self-Employed Retirement Plan
Partnering with an advisor in Springfield, MO specialized in self-employed retirement plans is an invaluable resource for self-employed individuals. They bring the skills needed to understand the intricacies of saving for retirement and craft a tailored strategy that aligns with your goals. An expert in your area will evaluate your financial situation, determine how much risk you’re comfortable with, and guide you in making informed decisions about saving and investing for retirement. Included in what we do for you features:
- Help you choose a plan that best fits your needs and goals
- Tailor the plan to your needs even further
- Formalize a plan in writing in accordance with IRS guidelines
- Arrange a trust plan for assets
- Ensure you comprehend the plan's terms
- Review and modify your plan to keep it aligned with your goals
- Provide ongoing education and advice throughout your retirement planning process
- Boost your retirement earnings by optimizing your social security benefits
Self-Employed Retirement Plans in Springfield, MO: Correct Capital's Process
Self-employed individuals in Springfield, MO who don’t have the time or expertise to oversee their own retirement planning on their own often feel overwhelmed when faced with their choices. Through our team at Correct Capital, our Springfield, MO financial advisors handle the bulk of your savings plan setup for you, working to make meeting your future savings targets as easy as possible for you. We can help you get set up your self-employed retirement plan in a quick, four-step process:
- Schedule a Call: A quick 20-minute call is all it takes, a member of our advisor team will assess if we're suited to your needs for you and your business. This brief introduction helps us understand what you're looking for with zero commitment or extensive time commitment on your part.
- Gather Information: If we both decide to move forward, we'll gather information, including how many employees you have (if any), your existing financial picture, and your retirement goals. This enables us to craft a personalized strategy designed just for you.
- Review Your Plan: When we finalize a plan from the information you provide, we'll meet with you and go over your plan step by step to ensure you understand it and explain its fit to your circumstances.
- Implementation and Monitoring: After we agree on your plan, we'll put everything in place so you can begin contributing. Throughout our relationship, we'll have regular meetings and monitor your plan to keep it tailored to your evolving circumstances.
Our Springfield, MO financial advisors and retirement plan consultants are fiduciary advisors, meaning they are committed by law and ethics to prioritize your needs above all else.
Other financial advisory services we offer in Springfield, MO include:
- Retirement Financial Planning
- Investment Management
- 401(k) Audit
- High-Net-Worth Wealth Management
- Retirement Planner
- Financial Planning
- Retirement Plan Consultants
Call Correct Capital for Your Self-Employed Retirement Plan in Springfield, MO
You don't see your business as "just a business", and your Springfield, MO financial advisors need to offer more than simply sound financial advice. With Correct Capital, we take the time to get to know our clients and their businesses to create customized self-employed retirement plans. To every client in Springfield, MO, we provide our I.O.U. promise: all of the advice you get from us will be independent, objective, and unbiased. To begin on your self-employment retirement plan, call Correct Capital today at 877-930-401k or contact us online.
