Self-employed retirement plans Springfield, MO. The independence of being your own boss in Springfield, MO is one of the best aspects of being self-employed. That said, this freedom sometimes brings with a lack of security, notably in terms of planning for retirement, since you don't have the option of a workplace retirement plan. Only 13% of self-employed individuals have a workplace retirement plan, yet countless could benefit from understanding their retirement options. In addition to having a more secure retirement, working with a financial advisor in Springfield, MO to set up your self-employed retirement plan offers significant tax advantages that enable you to move your business forward.
Few Springfield, MO wealth management and retirement planning firms truly grasp the challenges faced by small business owners better than Correct Capital. Our founder's father was a small business owner himself (read more of our story here), and Correct Capital are deeply experienced in helping businesses with their retirement planning needs. We recognize that your professional and personal aspirations aren’t limited to just monetary concerns, and we strive to offer 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 entrepreneurial financial advisor in Springfield, MO today.
Why Springfield, MO Self-Employed Individuals Should Have a Retirement Plan
Retirement plans for self-employed individuals help prepare you for the future, they also provide immediate benefits today. From flexible contributions to considerable tax savings, consulting a financial advisor in Springfield, MO helps you customize your retirement plan to suit your unique financial situation.
Flexibility That Fits Your Income
If your income changes annually, a plan like a SEP IRA or Solo 401(k) gives you the freedom to modify how much you save:
- Customizable Contributions: Contribute more during high-income years and scale back when revenues are down, so your plan fits your current income.
- Roth Options: Opting for a Roth Solo 401(k) lets you settle taxes at the time of contribution, enabling you to withdraw tax-free later—a smart decision if you anticipate your tax rate is likely to rise in the future.
Save Money on Taxes
Self-employed retirement plans offer valuable tax benefits:
- Tax-Deductible Contributions: Contributions to a Solo 401(k) reduce what you owe in taxes, allowing you to keep more of your earnings.
- Tax-Deferred Growth: Investments grow tax-free until withdrawal, which gives your money more time to compound.
- State-Specific Incentives: Based on your location, you may be eligible for state-specific tax breaks as a business owner. These state-level incentives can make these plans even more beneficial.
- Retirement Savings Contributions Credit (Saver’s Credit): Qualified participants can apply for a credit of up to 50% of the first $2,000 contributed a retirement plan, further reducing your tax bill even more.
Protect Your Savings With Smart Investments
Planning for a safe retirement isn’t only about how much you save—it’s also determined by your investment strategy:
- Diversified Portfolios: Distributing your investments across a mix of asset classes like stocks and bonds can help reduce risk while helping to grow your nest egg.
- Emergency Back-Up: Pairing your retirement plan with a financial buffer for your business helps you avoid dipping into savings during financial hardships and risking extra costs.
Plan for the Future of Your Springfield, MO Business
A thoughtful retirement strategy enables you to prepare for what’s next with your Springfield, MO business:
- Selling Your Business: When selling your business, retirement accounts like SEP IRAs and Solo 401(k)s remain your personal assets and don’t transfer with the business. These accounts can provide the reliable income you’ll need in the future. It’s important to note that while selling your business results in a capital gain, deposits into these plans are restricted by contribution limits (e.g., a maximum of $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: Strategically planning your contributions minimizes the taxes you might face when you pass on your business.
- Succession Planning: If you’re passing the business on, your retirement savings offer the funds you need through the transition. You can also seek advice from a financial advisor experienced in both succession and retirement strategies to minimize tax burdens associated with the transaction.
With the proper savings strategy, you gain control over your financial future, cut down your tax obligations, and build a solid base 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 resources when it comes to saving for retirement. Getting a head start not only helps you grow a larger nest egg but also minimizes the pressure of catching up later in life. This is why it makes sense to begin today:
The Cost of Waiting
Waiting to start your retirement fund could lead to a significant impact on the amount you’ll have when you reach retirement age. The main reason is compound interest—the financial principle where your investments generate earnings, and those returns, then, earn even more returns. The more time your money has to grow, the larger the benefit of this compounding process.
Example: Two individuals, Alex and Taylor are both self-employed professionals. Both of them want to save $500,000 for retirement by age 65:
- Alex initiates savings of $5,000 annually at age 30.
- Taylor delays savings until age 40 but saves $7,500 annually to make up for lost time.
By age 65, assuming 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 impressive growth. Consider this example showing the power of compounding:
- Starting at age 25: Putting aside $200 per month in a retirement plan with an average annual return of 7%, you’ll end up with $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 difference of over $260,000, simply due to a 10-year delay.
The earlier you begin, the less effort required each year to reach your retirement goals.
*These calculations are estimates derived from NerdWallet’s Compound Interest Calculator, with the assumption of a 7% annual return. Annual deposits were multiplied by the number of years to estimate total contributions. The scenarios provided are intended as illustrative examples and are not a promise of future results. Outcomes may change based on factors such as market conditions, fees, and individual circumstances. Always consult a financial advisor for personalized advice.
Take Control of Your Financial Future
For self-employed individuals in Springfield, MO, it might seem easier to put more emphasis on reinvesting in your business rather than saving for retirement. Even so, beginning a plan now enables you to:
- Leverage tax-free future growth or withdrawals without taxes in the future.
- Enjoy flexible contributions that change with your cash flow.
- Build a safety net that ensures stability, no matter how your business develops.
Getting started now, the less you’ll have to worry about playing catch-up later in life. Saving for retirement now means taking control of your financial future and creating for yourself the ability to focus on your goals—both for your retirement years and your Springfield, MO business.
Types of Self-Employed Retirement Plans
A variety of retirement savings options available for self-employed individuals in Springfield, MO, each with its own advantages and considerations. A financial advisor is available to help you understand the advantages and disadvantages of each option and choose the one best suited for your needs. Typically, your self-employed retirement plan options in Springfield, MO consist of:
Traditional or Roth IRA
Plan Overview: Individual Retirement Accounts (IRAs), as explained here, represent long-term savings plans that offer distinct tax benefits. In a standard IRA, the money you contribute is often tax-deductible, and investment earnings grow tax-deferred, but withdrawals in retirement are taxed as income. In contrast, Roth IRA contributions using income already taxed, but eligible distributions during retirement, including earnings, are tax-free. In both cases, withdrawals don’t incur penalties as long as you are at least 59½.
Eligibility: Unlike plans linked to your job, IRAs, including traditional and Roth options are accessible for individuals with an earned income.
Contribution Limits: For 2025, annual contribution limits for IRAs remain $7,000, or $8,000 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 enables those who are self-employed to save a percentage of their net business profits. Contributions are strictly employer contributions an employer, so, as a sole proprietor, you (the employee) are limited to contributions from the employer role more than the 25% you (the employer) already contributed. If you have employees, you are obligated to contribute the same amount for them as you do for yourself. You may choose to contribute a flat-dollar amount or a percentage of wages to employee accounts. This type of plan is a good option 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 function like conventional IRAs, where the contributions are tax-deferred and retirement distributions are taxable.
Eligibility: Both employers and self-employed individuals can open a SEP.
Contribution Limits: Contribution limits for employees in a SEP IRA must not exceed:
- 25% of compensation, or
- $70,000 for 2025
As a self-employed person, the contribution you can make is based on a special calculation.
Solo 401(k)
Plan Overview: Solo 401(k)s, also called an Individual 401(k) or one-participant 401(k) plan, is a retirement savings plan meant for businesses without employees or where the only employee is a spouse. Solo 401(k)s operate much like employer-sponsored 401(k) plans, and allow you to contribute as both the employer and the employee with pre-tax money. This allows for more savings than SEPs or IRAs; however, the additional opportunities can be balanced by more restricted investment choices. With this type of plan, you can make either traditional or Roth deferrals, which offer the same tax benefits as their IRA contribution counterparts.
Eligibility: Only business owners and their spouses may establish and contribute to a solo 401(k).
Contribution Limits: As a self-employed individual with a solo 401(k) plan, you are allowed to make two types of contributions:
- Elective deferrals (as an employee) of up to 100% of your self-employed earnings, up to the annual contribution limit. In 2025, those limits are $23,500, or $31,000 if you are 50 or older, or $34,750 for individuals aged 60-63 in 2025.
- Contributions as an employer (as an employer) must not surpass 25% of your net earnings from self-employment, which is your net profit minus half of your self-employment tax and the deferrals you made.
The total contribution cannot exceed $70,000, or $77,500 if you're over age 50 (as of 2025), $81,250 if you attain age 60-63 in 2025.
Individual Defined Benefit Plan
Plan Overview: A defined benefit plan represents a type of retirement plan that delivers a pre-established payout to entrepreneurs upon retirement. Unlike defined contribution plans mentioned above, a defined benefit plan doesn't fluctuate based on investment returns, but allows self-employed individuals to know exactly how much they'll have in retirement. This option is best suited for wealthier professionals who want to save a significant sum for retirement and are prepared to contribute substantial contributions. Contributions are tax deferred, and withdrawals are taxed as income in retirement.
Eligibility: Self-employed professionals running an owner-only business or employing fewer than five people are eligible to open an individual defined benefit plan, but it's generally recommended for people above age 50 who generate a minimum of $250,000 yearly. Generally, good candidates for defined benefit plans tend to be:
- Entrepreneurs who desire to contribute more than $70,000 (or $77,500 for individuals 50 and older)
- Companies already contributing 3-4% but are open to increasing contributions
- Businesses showing consistent profit patterns
- Partners or owners over age 40 who desire to "catch up" or increase their retirement contributions rapidly
Contribution Limits: The maximum allowable contribution must be determined by an actuary based on your income, age, and retirement goals. Allowable contributions are updated yearly.
The Importance of a Financial Advisor in Springfield, MO for Your Self-Employed Retirement Plan
A financial advisor in Springfield, MO specialized in self-employed retirement plans is an important asset for entrepreneurs. They offer the knowledge to assist navigate the complexities of retirement planning and craft a tailored strategy that reflects your aspirations. An expert in your area will assess where you stand financially, identify your risk preferences, and assist you in selecting the best options about saving and investing for retirement. Part of what we do for you includes:
- Assist in selecting a plan that aligns with your objectives and circumstances
- Further adapt the plan to your specific situation even further
- Formalize a plan in writing in accordance with IRS guidelines
- Arrange a trust plan for assets
- Help you understand the plan's terms
- Monitor and adjust your plan as needed
- Offer continued financial education and guidance throughout your retirement planning process
- Increase your retirement income by making the most of your social security
Self-Employed Retirement Plans in Springfield, MO: Correct Capital's Process
Entrepreneurs in Springfield, MO who don’t have the time or expertise to manage their self-employed retirement plan independently may end up overwhelmed as they look at their options. Through our team at Correct Capital, our Springfield, MO financial advisors handle the lion's share of your retirement strategy for you, to help make meeting your financial objectives as easy as possible for you. We will guide you in creating your self-employed retirement plan in a quick, four-step process:
- Schedule a Call: In just 20 minutes, a member of our advisor team can help understand if we're a good fit for you and your business. This brief introduction helps us get a sense of your goals with zero commitment or significant effort on your part.
- Gather Information: If we both decide to move forward, we'll gather information, including your employee count, your current financial situation, and your retirement goals. This enables us to craft a personalized strategy that aligns with your goals.
- Review Your Plan: Once we've developed a plan from the information you provide, we'll schedule a meeting and go over your plan step by step to ensure you understand it and explain its fit to your circumstances.
- Implementation and Monitoring: Once we've agreed on your plan, we'll implement the necessary steps so you can begin contributing. Over the course of our partnership, we'll check in and review your strategy to keep it tailored to your evolving circumstances.
Our Springfield, MO financial advisors and retirement plan consultants serve as fiduciary advisors, meaning they are required by law and ethical standards to act in your best interest.
Other financial advisory services we offer in Springfield, MO include:
- Financial Planning for Business Owners
- Comprehensive Financial Planning
- Retirement Income Planning
- Investment Planning
- Retirement Financial Planning
- Independent Financial Advisor
- Roth Conversion
- Investment Management
- 401(k) Audit
- High-Net-Worth Wealth Management
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 must deliver more than basic financial recommendations. At Correct Capital, we focus on building a relationship with our clients and their businesses to provide customized self-employed retirement plans. To every client in Springfield, MO, we provide our I.O.U. promise: everything we recommend will be independent, objective, and unbiased. To get started on your self-employment retirement plan, call Correct Capital today at 877-930-401k or contact us online.
