Self-employed retirement plans in St. Louis County, MO. The freedom of running your own business in St. Louis County, MO is one of the great things about being self-employed. But that freedom can be accompanied by limited stability, particularly in terms of building a retirement plan, you don't have an employer who will set up a plan for you. Only a fraction of self-employed people have a workplace retirement plan, but many would be better off exploring what plans are available. In addition to setting you up for the golden years of your dreams, partnering with a financial advisor to get started and maintain your self-employed retirement plan in St. Louis County, MO offers tax benefits that can help boost you and your business towards success.
Not many financial advisory and retirement planning firms will understand the needs of the self-employed and small business owners than Correct Capital. In fact, we were inspired by a self-employed individual, 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 offering customized solutions that fit your goals. Read on to discover more about your self-employed retirement plan options in St. Louis County, MO, or call Correct Capital at 314-930-401(k) or contact us online to speak to a small business financial advisor at your convenience.
Types of Self-Employed Retirement Plans
There are several retirement savings plans available for self-employed individuals, and which is best for you depends on your unique situation. A St. Louis County, MO financial advisor can help you grasp the advantages and disadvantages of each option and select that works best for you. Generally, your self-employed retirement plan options in St. Louis County, MO include:
Traditional or Roth IRA
Plan Overview: IRAs, or Individual Retirement Arrangements, are personal savings plans that provides individuals with tax advantages to save for retirement. If you deposit to a traditional IRA, contributions are deducted from your taxable income, and investment earnings grow tax-deferred, but distributions in retirement are subject to income tax. On the other hand, Roth IRA contributions are made with money you've already paid taxes on, but you pay no taxes on withdrawals or investment gains. In both a traditional an a Roth IRA, distributions are penalty-free 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, 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 share of of their net earnings from 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, they must receive the same amount you do. You may choose to contribute either a predetermined fixed dollar amount or a proportion of annual income to employee accounts. SEP IRAs may be a good self-employed retirement plan if your business experiences fluctuating income periods. SEP IRAs don't have the high upfront costs or administrative expenses often associated with other retirement plans.
SEPs work like traditional IRAs, where payments are made with money you've yet to pay taxes on and withdrawals are taxed at your income at the time of withdrawal.
Eligibility: Self-employed individuals and any employer, can establish a simplified employee pension plan.
Contribution Limits: Contribution limits for employees in a SEP IRA are whichever is the least out of:
- 25% of compensation, or
For self-employed people, the annual contribution limit is decided by a special 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 businesses with no employees or whose only employee is a spouse. Solo 401(k)s function about the same as employer-sponsored 401(k) plans, and you can make contributions as both an employer or employee with pre-tax money. This offers more savings than SEPs or IRAs, however the additional opportunities for saving are often counteracted by having less investment options available. 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 have access to individual 401(k)s.
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 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 a maximum of 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. In contrast to the defined contribution plans mentioned above, a defined benefit plan doesn't go up and down because of investment returns, but allows self-employed people 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 substantial portion for retirement and want to make substantial contributions. Contributions are tax deferred and withdrawals are taxed as income in retirement.
Eligibility: Any self-employed individual who runs an owner-only business 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 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 willing to contribute more
- Companies who have demonstrated consistent 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 determined by an actuary who calculates for your income, age, and retirement goals. Contribution limits are adjusted annually.
How a Financial Advisor Can Help Guide Your Self-Employed Retirement Plan in St. Louis County, MO
A financial advisor in St. Louis County, MO specialized in self-employed retirement plans can be a crucial partner for self-employed individuals. They have the knowledge to help you understand the intricacies of retirement planning and develop a personalized approach that gets you where you want to go. A financial planner will assess where your finances currently are, help you figure out your risk tolerance, and help you make smart 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
- Tailor 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 as long as you work with us
- Increase your retirement income by increasing your social security benefits
Self-Employed Retirement Plans in St. Louis County, MO: Correct Capital's Process
St. Louis 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 when looking at their options. At Correct Capital, our retirement consultants handle the bulk of the retirement planning work on your behalf, and attempt to make achieving your business and retirement aspirations as easy as possible for you. We can help you establish and maintain your self-employed retirement plan in four simple steps:
- Schedule a Call — We only need 20 minutes for a member of our advisor team to know if we're suitable for you and your business. This short introduction allows us to understand what you're looking for with no obligation on your part.
- Gather Information — If we seem like a good fit, 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 based entirely on type of advising you need.
- Review Your Plan — After we put together a plan based on the information you provide, we'll meet with you and go over your plan in detail to ensure understand how it best correlates to your needs.
- Implementation and Monitoring — Once we've started to move forward, we'll put everything in place so your savings can start growing immediately. Throughout our relationship, we'll meet with you and monitor your plan so it stays consistent with your needs.
Our financial advisors and retirement consultants are fiduciary advisors who have a legal and ethical obligation to do what's in your best interest. We pride ourselves in providing transparent communication and top-notch service to assist you reach your self-employed retirement goals.
Other services we offer in St. Louis County, MO include:
- Succession Planning
- Fiduciary Financial Advisor
- Company 401(k) Plans
- ESOP Advisor
- 401(k) For Small Business
- Small Business Retirement Plans
- Tax Planning
- Social Security Consultants Near Me
- Retirement Calculator
Call Correct Capital for Your St. Louis County, MO Self-Employed Retirement Plan
Your business isn't merely a business to you, and your St. Louis County, MO financial advisors need to provide you with more than just wise financial advice. Correct Capital takes pride in getting to know our clients and their business to deliver customized self-employed retirement plans. We give all our St. Louis County, MO clients 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 in St. Louis County, MO, speak to a financial advisor today at 314-930-401(k) or fill out our online form.