Self-employed retirement plans in St. Louis Hills, MO. The freedom of running your own business in St. Louis Hills, MO is a wonderful advantage to working for yourself. But that freedom can be accompanied by uncertainty, especially in terms of saving for retirement, you don't have an employer who will set up a plan for you. Only 13% of self-employed individuals have retirement plans they save with, but many would be wise to explore 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. Louis Hills, MO offers favorable tax incentives that can help free up much-needed funds for your business.
Few financial advisory and retirement planning firms know what it's like to be self-employed or a small business owner more than Correct Capital. In fact, we were inspired by a small business owner, our founder's father (you can discover more about our story on our website). We have a deep understanding that your business and retirement aspirations extend far beyond spreadsheets and percentages, and we are devoted to offering customized plans that fit your goals. Continue reading to discover more about your self-employed retirement plan options in St. Louis Hills, MO, or call Correct Capital at 877-930-4015 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 several retirement savings plans available for self-employed individuals, and which is best for you depends on your unique situation. A St. Louis Hills, MO financial advisor can help you grasp the benefits and drawbacks of each option and opt for that helps both your short- and long-term goals. Typically, your self-employed retirement plan options in St. Louis Hills, MO are comprised of:
Traditional or Roth IRA
Plan Overview: IRAs, or Individual Retirement Accounts, are long-term savings plans that provides individuals with tax advantages to save for retirement. In a traditional IRA, contributions are typically tax-deductible, and any gains on investments grow tax-deferred, but distributions in retirement are subject to income tax. In contrast, Roth IRA contributions are made with money you've already paid taxes on, but qualified withdrawals in retirement, including earnings, are tax-free. In both accounts, 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 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. Since you are self-employed, you (the employee) have a contribution limit of no more than the 25% already contributed by you (the employer). 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 for businesses that go 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 payments are made with money you've yet to pay taxes on and distributions are taxed at your income at the time of distribution.
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 annual contribution limit is decided by a special 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 sole proprietors or those whose only employee is a spouse. Solo 401(k)s work similarly to employer-sponsored 401(k) plans, and you can add funds as both an employer or employee with pre-tax money. This offers increased savings opportunities than SEPs or IRAs, however the possibility of greater retirement savings is often counterbalanced by more limited investment options. 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 have access to solo 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 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 provides a an assured benefit to self-employed individuals after they've left the workforce. In contrast to the defined contribution plans mentioned above, a defined benefit plan doesn't oscillate 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 significant sum for retirement and are willing to make 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 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 do 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 is determined by an actuary who calculates for your income, age, and retirement goals. Contribution limits change every year.
Why You Need 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 know-how to help you navigate the intricacies of retirement planning and design a tailored strategy that aligns with your goals. A financial advisor will assess where your finances currently are, understand your risk tolerance, and guide you in making informed decisions about saving and investing for retirement. 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 in accordance with 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 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 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 burdened with the different plans available to them. At Correct Capital, our financial advisors handle the lion's share of your retirement planning for you, and endeavor to make achieving your retirement goals as easy as possible for you. We can help you get set up with your self-employed retirement plan in four simple steps:
- Schedule a Call — It only takes 20 minutes for a member of our advisor team to understand if we're the best firm to help you reach your goals. This brief introduction allows us to understand what you're looking for with no obligation for you.
- Gather Information — If we seem like a good fit, we'll request information, including the number of employees in your business (if applicable), your current finances, and your retirement goals. This allows us to put together a custom 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 discuss the details of your plan to ensure understand how it best correlates to your needs.
- Implementation and Monitoring — Once we've enacted your plan, we'll put everything in place so you can start saving. Throughout your time partnering with us, we'll keep you up-to-date with how things are going and adjust your plan so it stays consistent with your needs.
Our financial advisors and retirement consultants are fiduciary advisors who have a legal and moral obligation to do what's best for you and only you. We pride ourselves in providing straightforward communication and top-notch 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
- Small Business Retirement Plans
- Tax Planning
Call Correct Capital for Your St. Louis Hills, MO Self-Employed Retirement Plan
Your business isn't "just a business" to you, and your St. Louis Hills, MO financial advisors need to provide you with more than merely wise financial advice. Correct Capital enjoys getting to know our clients and what makes them and their business tick to deliver tailored self-employed retirement plans. We give all our St. Louis Hills, 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. Louis Hills, MO, speak to a member of our team today at 877-930-4015 or fill out our online form.
