Self-employed retirement plans Springfield, MO. The independence of running your own company in Springfield, MO is one of the best aspects of working for yourself. However, this independence often comes with a lack of security, particularly in terms of building your retirement fund, as you don't have the benefit of 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 having a financially stable retirement, partnering 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 understand the needs of entrepreneurs as well as 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 we are deeply experienced in assisting business owners in their retirement planning needs. We recognize that your professional and personal aspirations extend well past simple financial figures, and we work tirelessly to create customized solutions aligned with your vision. Continue exploring to find out about your self-employed retirement plan options in Springfield, MO, or call Correct Capital at 877-930-401k or contact us online to speak with a small business financial advisor in Springfield, MO today.
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Correct Capital Wealth Management's office is physically located in St. Louis, MO, but we serve clients throughout the United States in both personal financial planning and corporate retirement plans.
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Why Springfield, MO Self-Employed Individuals Should Have a Retirement Plan
Retirement plans for self-employed individuals not only prepare you for the future, they also provide real benefits today. From flexible contributions to significant tax savings, working with a financial advisor in Springfield, MO enables you to design your retirement plan to suit your individual circumstances.
Flexibility That Fits Your Income
When your earnings vary over time, a plan like a SEP IRA or Solo 401(k) offers the option to tailor how much you save:
- Customizable Contributions: Set aside more during successful years and scale back when income is lower, so your plan aligns with your financial situation.
- Roth Options: Choosing a Roth Solo 401(k) lets you settle taxes at the time of contribution, allowing you to withdraw without tax penalties in the future—an advantageous choice if you expect your tax rate will increase in the future.
Save Money on Taxes
Self-employed retirement plans provide powerful 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: Investments grow tax-free until withdrawal, which gives your money more time to compound.
- State-Specific Incentives: In some states, you may be eligible for state-specific credits as a sole proprietor. These regional incentives make these plans even more beneficial.
- Retirement Savings Contributions Credit (Saver’s Credit): Eligible individuals can take advantage of a credit of up to 50% of the first $2,000 put into 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 linked to the way you invest:
- Diversified Portfolios: Allocating your investments across different stocks, bonds, and other assets is a smart way to minimize exposure to risk while helping to grow your nest egg.
- Emergency Back-Up: Supplementing your retirement savings with a dedicated business safety net helps you avoid tapping into your nest egg during challenging periods and facing tax penalties.
Plan for the Future of Your Springfield, MO Business
Preparing for retirement enables you to think through 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 yours and are not part of the sale. These accounts ensure the steady income you’ll need in the future. Keep in mind that while the sale of a business usually creates a capital gain, contributions to retirement accounts are restricted by contribution limits (e.g., as much as $7,000 for IRAs or as much as $70,000 for Solo 401(k)s, factoring in catch-up contributions, based on plan compensation).
- Minimizing Taxes: Strategically planning your contributions minimizes the taxes you’ll owe when you pass on your business.
- Succession Planning: Whether you’re transferring ownership, your retirement savings provide a stable foundation through the transition. You can also seek advice from a financial advisor who specializes in succession planning and retirement accounts to help with taxes during the sale.
With the best-fit retirement strategy, you gain control over your financial future, lower your tax bill, and build 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 assets when it comes to saving for retirement. Starting early not only lets you accumulate a bigger financial cushion but also reduces the pressure of catching up later in life. Here’s why it makes sense to begin today:
The Cost of Waiting
Waiting to start your retirement fund could lead to a major impact on the savings you’ll have when you stop working. The biggest reason is compound interest—the concept where your investments generate earnings, and those returns, in turn, accumulate even more returns. The longer your money has to grow, the greater the benefit of this compounding process.
Example: Two individuals, Alex and Taylor are both self-employed individuals. 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 puts away $7,500 annually to make up for lost time.
By age 65, assuming 7% annual return:
- Alex invests $180,000 and achieves a total of $691,184.39*.
- Taylor puts in $195,500 but only ends up with $474,367.78*.
How Early Contributions Grow
Small, consistent savings invested steadily can lead to impressive growth. Here’s a simple scenario showing the impact of consistent growth:
- Starting at age 25: If you invest $200 per month in a retirement plan with an expected yearly growth rate of 7%, you’ll end up with $497,303.29* by age 65.
- Starting at age 35: Saving the same $200 per month yields only $235,412.97* by age 65—a shortfall of over $260,000, just from a 10-year delay.
Starting sooner, the less effort required each year to meet your retirement goals.
*The figures provided in this example represent 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. This information is for illustrative purposes only and do not guarantee future performance. Actual results may vary based on variables including market conditions, fees, and individual circumstances. Be sure to speak with a financial advisor for personalized advice.
Take Control of Your Financial Future
If you’re self-employed in Springfield, MO, it is often the case that you put more emphasis on reinvesting in your business rather than saving for retirement. That said, beginning a plan now allows you to:
- Leverage tax-free future growth or penalty-free withdrawals in the future.
- Enjoy adjustable savings that change with your cash flow.
- Establish a safety net that provides security, no matter how your business develops.
Starting early, the less you’ll have to worry about playing catch-up later in life. Taking steps toward your retirement goals today means gaining control over your financial future and giving yourself the opportunity to focus on your goals—both for your golden years and your Springfield, MO business.
Types of Self-Employed Retirement Plans
A variety of retirement savings options available for entrepreneurs in Springfield, MO, each with its own benefits and trade-offs. A financial advisor will guide you to understand the benefits and drawbacks of each option and choose the one most suitable for your circumstances. Typically, your self-employed retirement plan options in Springfield, MO consist of:
Traditional or Roth IRA
Plan Overview: IRAs, or Individual Retirement Accounts, are financial tools for retirement that include distinct tax benefits. In a standard IRA, contributions are typically tax-deductible, and earnings grow without immediate taxation, but retirement distributions are taxed as income. In contrast, Roth IRA contributions are made with after-tax income, but eligible distributions during retirement, including earnings, are not taxed. In both accounts, withdrawals come without penalties provided you are at least 59½.
Eligibility: Unlike plans linked to your job, traditional and Roth IRAs are available to anyone with an earned income.
Contribution Limits: For 2025, annual contribution limits for IRAs are set at $7,000, or $8,000 for those aged 50+.
Simplified Employee Pension Plan (SEP IRA)
Plan Overview: SEP IRAs serves as a retirement savings option that permits entrepreneurs to contribute a percentage of their net earnings. Contributions are strictly employer contributions an employer, so, as a independent business owner, you (the employee) cannot make additional contributions above the 25% you (the employer) allocate. If you have employees, it's required to contribute the same amount for them as you do for yourself. You may choose to contribute a fixed dollar figure or a percentage of wages to employee accounts. A SEP IRA may be ideal for companies with periods of inconsistent earnings. Compared to other retirement options, SEP IRAs don’t have the high fees associated with starting or maintaining other plans.
SEPs work like conventional IRAs, where contributions are made with pre-tax money 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 are the lesser 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: A Solo 401(k) plan, also called an Individual 401(k) or one-participant 401(k) plan, is a savings option for the self-employed intended for businesses without employees or when the sole employee is your spouse. Solo 401(k)s function similarly to standard 401(k) plans, and enable contributions as both the employer and the employee with pre-tax money. This provides more savings versus SEPs or IRAs; however, the increased savings potential may be offset by more limited investment options. In a solo 401(k) plan, you can make either traditional or Roth deferrals, which share the same tax benefits as their IRA contribution counterparts.
Eligibility: This plan is exclusively for business owners and their spouses can set up and contribute to a solo 401(k).
Contribution Limits: If you are self-employed with a solo 401(k) plan, you can make two types of contributions:
- Deferrals as an employee of up to 100% of your self-employment income, capped at the annual contribution limit. The contribution limits for 2025 include $23,500, or $31,000 if you're over 50, or $34,750 for those who turn 60-63 in 2025.
- Employer profit-sharing contributions (as an employer) must not surpass 25% of your net self-employment income, which is calculated as net profits less half of your self-employment tax and the employee contributions you made.
Your combined contributions must not surpass $70,000, or $77,500 if you're over age 50 (in 2025), $81,250 if you attain age 60-63 in 2025.
Individual Defined Benefit Plan
Plan Overview: Defined benefit plans offers a structured retirement solution that provides a fixed, predetermined benefit to self-employed individuals upon retirement. Unlike defined contribution plans mentioned above, investment returns don’t affect the payout, but enables participants to determine what they'll have in retirement. This option is best suited for high-earning professionals who aim to accumulate a substantial amount for retirement and can commit to making substantial contributions. Contributions are tax deferred, and withdrawals are taxable as income upon retirement.
Eligibility: Entrepreneurs running an owner-only business or employing fewer than five people can open an individual defined benefit plan, but it's typically suggested for those over 50 who make $250,000 or more annually. Typically, good candidates for defined benefit plans tend to be:
- Entrepreneurs who aim to deposit more than $70,000 (or $77,500 for individuals 50 and older)
- Businesses currently investing 3-4% but are open to increasing contributions
- Companies that have demonstrated consistent profit patterns
- Business leaders over age 40 who wish to accelerate savings or increase their retirement contributions rapidly
Contribution Limits: The cap on contributions is calculated by an actuary determined by your income, age, and retirement goals. Contribution limits change annually.
The Importance of a Financial Advisor in Springfield, MO for Your Self-Employed Retirement Plan
Partnering with an advisor in Springfield, MO experienced with retirement plans for the self-employed is an important asset for those working for themselves. They bring the skills needed to guide you through the challenges of retirement planning and design a customized plan that reflects your aspirations. A financial advisor in Springfield, MO will evaluate your financial situation, identify your risk preferences, and help you in choosing wisely about saving and investing for retirement. A key part of what we do for you involves:
- Help you choose a plan that aligns with your objectives and circumstances
- Further adapt the plan to your specific situation even further
- Create a written plan in accordance with IRS guidelines
- Organize a trust plan to manage your assets
- Help you understand the plan's terms
- Review and modify your plan as needed
- Deliver continuous support and financial insights to help you navigate your retirement journey
- Boost your retirement earnings by maximizing your social security benefits
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 on their own may end up overwhelmed as they look at their options. With Correct Capital, our Springfield, MO financial advisors manage the majority of your savings plan setup for you, to help make meeting your future savings targets as hassle-free 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 can determine if we're a good fit for you and your business. This initial call helps us learn about your needs with no obligation or extensive time commitment on your part.
- Gather Information: If we both decide to move forward, we'll ask for information, including whether you have employees, your present financial standing, and your future objectives. This allows us to put together a tailored approach designed just for you.
- Review Your Plan: Once we've developed a plan using the information you provide, we'll sit down with you and review your plan step by step to help you fully grasp it and explain its fit to your circumstances.
- Implementation and Monitoring: After we agree on your plan, we'll implement the necessary steps so you can start saving. As time goes on, we'll check in and monitor your plan to make sure it remains aligned with your goals.
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:
- 401(k) Audit
- High-Net-Worth Wealth Management
- Retirement Planner
- Financial Planning
- Retirement Plan Consultants
- Fiduciary Financial Advisor
Call Correct Capital for Your Self-Employed Retirement Plan in Springfield, MO
Your business isn't "just a business" to you, and your Springfield, MO financial advisors should provide more than simply sound financial advice. With Correct Capital, we take the time to get to know our clients and their businesses to deliver personalized self-employed retirement plans. All our clients in Springfield, MO benefit from our 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, reach out to Correct Capital at 877-930-401k or contact us online.
