Self-employed retirement plans in St. Louis Hills, MO. The flexibility involved with having your own business in St. Louis Hills, MO is a fantastic aspect of being self-employed. But that freedom can come with uncertainty, particularly in in regards to 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 retirement plans they save with, but many would be better off exploring what plans are available. In addition to a more comfortable retirement, working with a financial advisor to get started and maintain your self-employed retirement plan in St. Louis Hills, MO offers significant tax advantages that can help propel 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 read more about our story here). We have a deep understanding that your business and retirement aspirations go beyond figures and numbers, and we are devoted to providing customized solutions that fit where you are and where you want to go. Read on to discover more about your self-employed retirement plan options in St. Louis Hills, MO, or call Correct Capital at 877-930-4015 or contact us online to speak to a member of our advisory team now.
What Self-Employed Retirement Plans Are There?
There are several retirement savings options that the self-employed can set up, and which is best for you depends on your unique situation. A St. Louis Hills, MO financial advisor can help you grasp the advantages and disadvantages of each option and select the most suitable one for your specific needs. Generally, your self-employed retirement plan options in St. Louis Hills, MO are comprised of:
Traditional or Roth IRA
Plan Overview: IRAs, or Individual Retirement Arrangements, are investment accounts that offer specific tax advantages. If you deposit to a traditional IRA, deposits are typically tax-deductible, and investment earnings grow tax-deferred, but distributions in retirement are taxed as regular income. On the other hand, Roth IRA payments are made with after-tax income, but you pay no taxes on withdrawals or investment gains. In both a traditional an a Roth IRA, distributions 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 share of of the money they make from their self-employment. Given that you are self-employed, your ability to contribute is restricted to the 25% already contributed by you in your position as the employer. If you have employees, you must contribute an equal amount to their plans. 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 for businesses that experience fluctuating income periods. SEP IRAs don't have the high upfront costs or administrative expenses other retirement plans do.
SEPs work like traditional IRAs, where deposits are made with money you haven't paid taxes on and distributions are taxed as income.
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
- $66,000
For the self-employed individual, the amount eligible to be contributed is based on 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 counterbalanced by having less investment options available. In a one-participant 401(k) plan, you can make either traditional deferrals (with pre-tax money) or Roth deferrals (with after-tax money).
Eligibility: Only business owners and their spouses have access to one-participant 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 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 after they've left the workforce. As opposed to other types of retirement plans, a defined benefit plan doesn't fluctuate based on investment gains, but allows self-employed individuals to know exactly how much they'll get in retirement. This plan is best suited for high-earning self-employed individuals who want to save a a significant sum for retirement and are willing to add substantial contributions. Contributions are tax deferred and contributions are taxed at your income level in retirement.
Eligibility: Any self-employed individual who runs a business with no employees besides the owner or has less than five employees can establish an individual defined benefit plan, but it's typically only recommended for those over 50 who earn well into the six figures. Typically, good candidates for defined benefit plans are:
- Partners or owners who want to contribute 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 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.
The Importance of a Financial Advisor for Your Self-Employed Retirement Plan in St. Louis Hills, MO
A financial advisor in St. Louis Hills, MO specialized in self-employed retirement plans can be a crucial partner for self-employed individuals. They have the experience to help you understand the intricacies of retirement planning and create a personalized approach that acts as a roadmap through your financial future. A financial planner will analyze your financial situation, understand your risk tolerance, and help you make smart decisions for yourself, both as employer and future retiree. Part of what we do for you includes:
- Help you choose 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 rules
- 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 long as you work with us
- Maximize your retirement income by increasing your social security benefits
Self-Employed Retirement Plans in St. Louis Hills, MO: Correct Capital's Process
St. Louis Hills, 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 when looking at their options. At Correct Capital, our financial advisors handle the lion's share of your retirement planning on your behalf, and strive to make achieving the golden years of your dreams 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 a short 20-minute call 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 your needs with no obligation on your part.
- Gather Information — If we both decide to move forward, we'll request more info, including how many employees you have (if any), your current financial situation, and what kind of retirement you want to live. This allows us to put together a custom 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 go over the specifics of your plan to ensure it's what you were looking for.
- Implementation and Monitoring — Once we've enacted your plan, we'll put everything in place so your savings can start growing immediately. Throughout our relationship, 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 have a legal and moral obligation to do what's in your best interest. We are proud to provide straightforward communication and excellent service to assist you attain your self-employed retirement goals.
Other services we offer in St. Louis Hills, MO include:
- Succession Planning
- Fiduciary Financial Advisor
- Company 401(k) Plans
- ESOP Advisor
- 401(k) For Small Business
Call Correct Capital for Your St. Louis Hills, MO Self-Employed Retirement Plan
Your business isn't simply an enterprise to you, and your St. Louis Hills, MO financial advisors need to provide you with more than merely wise financial advice. Correct Capital takes pride in 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. Louis Hills, 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 Hills, MO, call Correct Capital today at 877-930-4015 or contact us online.
