Self-employed retirement plans in St. Charles, MO. The freedom of having your own business in St. Charles, MO is a fantastic aspect of being self-employed. But increased leeway can be accompanied by uncertainty, particularly in terms of building a retirement plan, you don't have an employer who will set up a plan for you. Barely more than 10% of self-employed people have a workplace retirement plan, but many would be better off exploring what plans are available. In addition to a more comfortable retirement, partnering with a financial advisor to set up your self-employed retirement plan in St. Charles, MO offers tax benefits that can help boost you and your business towards success.
Only a handful of wealth management and retirement planning firms will understand the needs of the self-employed and small business owners as well as 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 have a deep understanding that your business and retirement goals transcend just profit, and we are committed to offering customized solutions that fit where you are and where you want to go. Continue reading to read more about your self-employed retirement plan options in St. Charles, MO, or call Correct Capital at 877-930-4015 or contact us online to speak to a member of our advisory team today.
Types of Self-Employed Retirement Plans
There are several retirement savings options available for self-employed individuals, and which is best for you depends on your unique situation. A St. Charles, MO financial advisor can help you understand the advantages and disadvantages of each option and choose that works best for you. Generally, your self-employed retirement plan options in St. Charles, MO are comprised of:
Traditional or Roth IRA
Plan Overview: IRAs, or Individual Retirement Accounts, are personal savings plans that provides individuals with tax advantages to save for retirement. In a traditional IRA, deposits are typically tax-deductible, and investment earnings grow tax-deferred, but distributions in retirement are subject to income tax. In contrast, Roth IRA deposits are made with money you've already paid taxes on, but you pay no taxes on withdrawals or earnings. 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 are available to anyone with an earned income.
Contribution Limits: For 2023, the maximum yearly contributions 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. As a self-employed individual, your contributions are limited to the amount already contributed by you (the employer), which cannot be more than 25%. If you have employees, they must receive the same amount you do. You may choose to contribute either a fixed dollar sum or a percentage of annual income to employee accounts. SEP IRAs may be an excellent self-employed retirement plan if your business goes through cycles of high revenue and low revenue. SEP IRAs don't have the costly startup or administrative fees often associated with other retirement plans.
SEPs work like traditional IRAs, where deposits are made with pre-tax money and withdrawals are taxed as income.
Eligibility: Self-employed individuals and any employer, can set up a SEP.
Contribution Limits: Contribution limits for employees in a SEP IRA are whichever is the least out of:
- 25% of compensation, or
- $66,000
For the self-employed individual, the amount eligible to be contributed is decided by 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 businesses with no employees or who only employ a spouse. Solo 401(k)s function in the same same way as employer-sponsored 401(k) plans, and you can add funds as an employee and on your own behalf as the employer. This offers greater potential for savings than SEPs or IRAs, however the possibility of greater retirement savings is often counteracted by more limited investment options. 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 sole proprietors and their spouses can set up 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) 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.
The total contribution 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 offers a a predetermined benefit to self-employed individuals once they've retired. As opposed to 401(k)s or IRAs, a defined benefit plan doesn't go up and down because of investment gains, but allows self-employed individuals to have an exact dollar figure as their income in retirement. This plan is best suited for high-earning self-employed individuals who want to save a a substantial portion for retirement and are willing to make substantial contributions. Contributions are tax deferred and withdrawals are taxed as income in retirement.
Eligibility: Any self-employed individual who runs a business where they're the only owner 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 well into the six figures. Those interested in defined benefit plans tend to be:
- Partners or owners who desire to contribute more than $66,000 (or $73,500 over age 50)
- Companies already contributing 3-4% who are want to contribute more
- Companies who are sure of their profit patterns
- Partners or owners over age 40 who want to make up for earlier years when they couldn't save as much
Contribution Limits: The contribution limit must be determined by an actuary based on your income, age, and retirement goals. Contribution limits are adjusted annually.
Why You Need a Financial Advisor for Your Self-Employed Retirement Plan in St. Charles, MO
A financial advisor in St. Charles, MO specialized in self-employed retirement plans can be a valuable asset for self-employed individuals. They have the expertise to help you understand the complexities of retirement planning and develop a tailored strategy that acts as a roadmap through your financial future. A financial planner will assess where your finances currently are, adjust for 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 choose a plan that best fits your needs and goals
- Customize the plan to your needs even further
- Adopt a written plan in accordance with IRS guidelines
- 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 you continue on the road to retirement
- Maximize your retirement income by maximizing your social security benefits
Self-Employed Retirement Plans in St. Charles, MO: Correct Capital's Process
St. Charles, 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 stressed 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 endeavor to make achieving the golden years of your dreams as simple as we possibly can. We can help you get set up with your self-employed retirement plan in a straightforward four-step process:
- Schedule a Call — We only need 20 minutes 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 what you're looking for with no obligation on your part.
- Gather Information — If we seem like a good fit, we'll ask for information, including the number of employees in your business (if applicable), 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 — Once we've compiled your plan, we'll meet with you and discuss your plan in detail to ensure you're comfortable with it.
- 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 keep you up-to-date with how things are going and monitor your plan so it stays consistent with your needs.
Our financial planners and retirement consultants are fiduciary advisors who are legally and ethically obligated to do what's best for you and only you. We are proud to provide clear communication and high-quality service to help you reach your self-employed retirement goals.
Other services we offer in St. Charles, MO include:
Call Correct Capital for Your St. Charles, MO Self-Employed Retirement Plan
Your business isn't "just a business" to you, and your St. Charles, MO financial advisors need to offer more than merely sage financial advice. Correct Capital enjoys getting to know our clients and what makes them and their business tick to deliver personalized self-employed retirement plans. We offer all our St. Charles, 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 St. Charles, MO, call Correct Capital today at 877-930-4015 or contact us through our website.
