Self-employed retirement plans in St. Charles County, MO. The freedom of running your own business in St. Charles County, MO is a fantastic aspect of being self-employed. But that freedom can be accompanied by uncertainty, particularly in terms of saving for retirement, employer-sponsored plans aren't an option. Barely more than 10% of self-employed individuals have retirement plans they can contribute to, but many would be better off exploring what plans are available. In addition to setting you up for the retirement of your dreams, partnering with a financial advisor to set up your self-employed retirement plan in St. Charles County, MO offers tax benefits that can help you improve your bottom line.
Only a handful of financial advisory and retirement planning firms know what it's like to be self-employed or a small business owner as well as Correct Capital. In fact, we were inspired by a small business owner, our founder's father (you can learn more about our story here). We know that your business and retirement aspirations transcend mere monetary figures, and we are committed to providing personalized plans that fit your goals. Continue reading to learn more about your self-employed retirement plan options in St. Charles County, MO, or call Correct Capital at 314-930-401(k) or fill out our online form to speak to a member of our advisory team today.
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 St. Charles County, MO financial advisor can help you understand the pros and cons of each option and choose that helps both your short- and long-term goals. Typically, your self-employed retirement plan options in St. Charles County, MO include:
Traditional or Roth IRA
Plan Overview: IRAs, or Individual Retirement Accounts, are investment accounts that allows you to set aside money for the future, with special tax considerations. If you deposit to a traditional IRA, deposits are typically tax-deductible, and any gains on investments grow tax-deferred, but withdrawals in retirement are taxed as regular income. On the other hand, Roth IRA payments are made with after-tax income, but qualified withdrawals 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 tied to employment, 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 portion 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 would have to contribute the same amount for them as you do for yourself. You can either contribute a flat-dollar amount or a percentage of annual income to employee accounts. SEP IRAs may be a good self-employed retirement plan if your business experiences periods of variable income. SEP IRAs don't have the costly startup or administrative fees other retirement plans do.
SEPs work like traditional IRAs, where payments are made with money you haven't paid taxes on and withdrawals are taxed at your income at the time of withdrawal.
Eligibility: Self-employed individuals and any employer, can set up a simplified employee pension plan.
Contribution Limits: Contribution limits for employees in a SEP IRA are the lesser of:
- 25% of compensation, or
For the self-employed individual, the maximum amount you can contribute in a given year is decided by a unique calculation.
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 work in the same same way as 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 SEPs or IRAs, however the possibility of greater retirement savings is often counterbalanced 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 can establish 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:
- 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) which cannot exceed 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 once they've retired. In contrast to 401(k)s or IRAs, a defined benefit plan doesn't oscillate because of investment returns, but allows self-employed individuals to have an exact dollar figure as their income in retirement. This plan is ideal for high-earning self-employed individuals who want to save a a large amount for retirement and want to add significant contributions. Contributions are tax deferred and contributions are taxed at your income level in retirement.
Eligibility: Any self-employed individual who runs an owner-only business or has less than five employees can establish 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. Those interested in defined benefit plans tend to be:
- 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 are sure of their profit patterns
- Partners or owners over age 40 who desire to "catch up" or accelerate the retirement savings
Contribution Limits: The contribution limit must be calculated by an actuary who calculates for your income, age, and retirement goals. Contribution limits are adjusted each year.
How a Financial Advisor Can Help Guide Your Self-Employed Retirement Plan in St. Charles County, MO
A financial advisor in St. Charles County, MO specialized in self-employed retirement plans can be an invaluable resource for self-employed individuals. They have the experience to help you understand the complexities of retirement planning and develop a customized plan that acts as a roadmap through your financial future. A financial planner will analyze where your finances currently are, understand your risk tolerance, and guide you in making informed decisions for yourself, both as a business owner and future retiree. Part of what we do for you includes:
- Help you pick a plan that best fits your needs and goals
- Personalize the plan to your needs even further
- Adopt a written plan that follows all IRS guidelines
- Arrange a trust plan for assets
- Create a record keeping system
- Help you understand the plan's terms
- Monitor and adjust your plan as needed
- Offer continued financial education and support into and through retirement
- Maximize your retirement income by maximizing your social security benefits
Self-Employed Retirement Plans in St. Charles County, MO: Correct Capital's Process
St. Charles County, 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 burdened with the different options available to them. At Correct Capital, our financial advisors handle the lion's share of your retirement planning for you, and strive to make achieving your retirement goals as simple 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 20 minutes for a member of our advisor team to know if we're the best firm to help you reach your goals. This short introduction allows us to get a feel for what you're looking for with no major time investment for you.
- Gather Information — If we both decide to move forward, we'll ask for more info, including how many employees you have (if any), your current financial situation, and what kind of retirement you want to have. This allows us to put together a personalized 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 discuss your plan in detail to ensure it's what you were looking for.
- Implementation and Monitoring — Once we've started to move forward, we'll put everything in place so your savings can start growing immediately. As long as we work together, we'll meet with you 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 morally bound to do what's in your best interest. We pride ourselves in providing clear communication and high-quality service to help you achieve your self-employed retirement goals.
Other services we offer in St. Charles County, MO include:
- Company 401(k) Plans
- ESOP Advisor
- 401(k) For Small Business
- Small Business Retirement Plans
- Tax Planning
- Social Security Consultants Near Me
- Retirement Calculator
- Retirement Planning
- Rollover 401(k)
Call Correct Capital for Your St. Charles County, MO Self-Employed Retirement Plan
Your business isn't simply an enterprise to you, and your St. Charles County, MO financial advisors need to provide you with more than merely sound 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 St. Charles County, MO clients our 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 St. Charles County, MO, speak to a financial advisor today at 314-930-401(k) or fill out our online form.