Self-employed retirement plans St. Louis, MO. The independence of owning your own business in St. Louis, MO is one of the best aspects of having a self-directed career. That said, this independence sometimes brings with potential drawbacks, particularly regarding retirement savings, because you don't have the option of employer-sponsored retirement plans. Only 13% of self-employed individuals have a workplace retirement plan, but many should consider understanding their retirement options. In addition to enjoying a more secure retirement, seeking advice from a financial advisor in St. Louis, MO to establish your self-employed retirement plan can provide significant tax advantages that allow both you and your business to thrive.
Few St. Louis, MO investment consulting and retirement planning firms understand the needs of entrepreneurs as well as Correct Capital. Our founder's father was a small business owner himself (learn more about our story here), and Correct Capital take pride in supporting entrepreneurs with their retirement planning needs. We know that your goals for your business and retirement aren’t limited to basic numbers, and we work tirelessly to create customized solutions to meet your unique goals. Read on to discover about your self-employed retirement plan options in St. Louis, MO, or reach out to Correct Capital at 877-930-401k or contact us online to speak with a entrepreneurial financial advisor in St. Louis, MO today.
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Why St. Louis, MO Self-Employed Individuals Should Have a Retirement Plan
Retirement plans for self-employed individuals are essential for preparing you for the future, they also offer tangible benefits today. From flexible contributions to significant tax savings, partnering with a financial advisor in St. Louis, MO enables you to customize your retirement plan to fit your individual circumstances.
Flexibility That Fits Your Income
For those with fluctuating income over time, a plan like a SEP IRA or Solo 401(k) offers the option to adjust how much you save:
- Customizable Contributions: Contribute more during profitable years and scale back when revenues are down, so that your plan aligns with your financial situation.
- Roth Options: Opting for a Roth Solo 401(k) lets you settle taxes at the time of contribution, so you can withdraw without tax penalties in the future—a wise move if you believe your tax rate is likely to rise in the future.
Save Money on Taxes
Retirement plans for self-employed individuals provide powerful tax benefits:
- Tax-Deductible Contributions: Contributions to a SEP IRA shrink your tax liability, allowing you to keep more of your income.
- Tax-Deferred Growth: Investments grow tax-free until withdrawal, providing your money more time to accumulate.
- State-Specific Incentives: In some states, you could qualify for extra deductions as a self-employed individual. These local incentives can make these plans even more advantageous.
- Retirement Savings Contributions Credit (Saver’s Credit): Qualified participants can claim a tax credit of up to 50% of the first $2,000 put into a retirement plan, helping to lower your tax bill even more.
Protect Your Savings With Smart Investments
Building a secure retirement requires more than how much you save—it’s also determined by your investment strategy:
- Diversified Portfolios: Allocating your investments across different stocks, bonds, and alternatives serves to mitigate financial risk while continuing to build your retirement fund.
- Emergency Back-Up: Pairing your retirement plan with a dedicated business safety net ensures you don’t dipping into savings during financial hardships and risking extra costs.
Plan for the Future of Your St. Louis, MO Business
Preparing for retirement enables you to prepare for what’s next with your St. Louis, MO business:
- Selling Your Business: When selling your business, plans like SEP IRAs or Solo 401(k)s stay in your name and are not part of the sale. These accounts can provide the financial stability you’ll need later on. Remember that while selling your business results in a capital gain, contributions to retirement accounts are restricted by contribution limits (e.g., up to $7,000 for IRAs or up to $70,000 for Solo 401(k)s, with catch-up contributions, according to plan rules).
- Minimizing Taxes: Strategically planning your contributions helps lower the taxes you are required to pay when you transfer your business.
- Succession Planning: For those winding down or handing over their business, your retirement savings offer the funds you need during the change. You may also partner with a financial advisor with expertise in succession and retirement planning to reduce taxes during the sale.
With the proper savings strategy, you gain control over your financial future, cut down your tax obligations, and build a strong framework for both your retirement and your business goals.
Why Start a Self-Employed Retirement Plan in St. Louis, MO Now?
Time is one of the most crucial assets for building your retirement fund. Getting a head start not only helps you grow a bigger financial cushion but also minimizes the pressure of playing catch-up as you get older. Here’s why it pays to take action now:
The Cost of Waiting
Waiting to start your retirement fund can have a substantial impact on the total you’ll have when you reach retirement age. The biggest reason is compound interest—the concept where your investments generate earnings, and those returns, in turn, accumulate even more returns. The more time your money has to grow, the more significant the effect of this growth.
Example: Taylor and Alex are both entrepreneurs. Both of them want to save $500,000 for retirement by age 65:
- Alex begins contributing $5,000 annually at age 30.
- Taylor postpones starting contributions to age 40 but puts away $7,500 annually to catch up.
By age 65, using a projected 7% annual return:
- Alex contributes $180,000 and accumulates $691,184.39*.
- Taylor puts in $195,500 but achieves a total of only $474,367.78*.
How Early Contributions Grow
Regular, modest investments invested steadily can lead to significant growth. Consider this example showing the impact of consistent growth:
- Starting at age 25: Putting aside $200 per month in a retirement plan with an projected return of 7%, you’ll grow to approximately $497,303.29* by age 65.
- Starting at age 35: Investing the same $200 per month would result in only $235,412.97* by age 65—a difference of over $260,000, simply due to a 10-year delay.
The earlier you begin, the less you need to save each year to meet your retirement goals.
*These calculations are based on estimates generated with NerdWallet’s Compound Interest Calculator, assuming a 7% annual return. Annual deposits were multiplied by the number of years to estimate total contributions. The scenarios provided are meant to provide general guidance and are not a promise of future results. Actual results may vary depending on variables including market conditions, fees, and your unique situation. Be sure to speak with a financial advisor for guidance tailored to your needs.
Take Control of Your Financial Future
As a self-employed person in St. Louis, MO, it might seem easier to prioritize reinvesting in your business over saving for retirement. That said, beginning a plan now enables you to:
- Benefit from tax-deferred growth or penalty-free withdrawals in the future.
- Benefit from adjustable savings that adapt to your income.
- Create a safety net that offers peace of mind, no matter how your business changes.
Getting started now, the less you’ll have to worry about making up for lost time later in life. Saving for retirement now means taking control of your financial future and giving yourself the opportunity to turn your attention to your goals—both for your retirement years and your St. Louis, MO business.
Types of Self-Employed Retirement Plans
There are several retirement savings options designed for those working for themselves in St. Louis, MO, each providing its own advantages and considerations. A financial advisor will guide you to evaluate the pros and cons of each plan and determine the one ideal for your circumstances. In most cases, your self-employed retirement plan options in St. Louis, MO consist of:
Traditional or Roth IRA
Plan Overview: IRAs, or Individual Retirement Accounts, are financial tools for retirement that offer distinct tax benefits. In a standard IRA, the money you contribute is often tax-deductible, and investment earnings grow tax-deferred, but money taken out during retirement are taxable. In contrast, Roth IRA contributions using income already taxed, but retirement withdrawals that qualify, including earnings, are tax-free. In both cases, withdrawals come without penalties provided you are at least 59½.
Eligibility: While many retirement plans, such as 401(k)s, are tied to employment, IRAs, including traditional and Roth options are open to those with an earned income.
Contribution Limits: For 2025, annual contribution limits for IRAs remain $7,000, or $8,000 for those aged 50+.
Simplified Employee Pension Plan (SEP IRA)
Plan Overview: A Simplified Employee Pension (SEP) IRA is a retirement plan that allows those who are self-employed to save a percentage of their net business profits. Contributions must come from an employer, so, as a self-employed individual, you (the employee) are limited to contributions from the employer role above the 25% you (the employer) have designated. If you have employees, it's required to contribute the same amount for them as you do for yourself. It's your choice whether to contribute a set monetary value or a percentage of wages to employee accounts. SEP IRAs is a good option for businesses that experience fluctuating revenue streams. In contrast to some alternatives, SEP IRAs lack expensive setup or ongoing fees.
SEPs function like traditional IRAs, where the contributions are tax-deferred and withdrawals are taxed as income.
Eligibility: Both employers and self-employed individuals can establish a SEP.
Contribution Limits: Contribution limits for employees in a SEP IRA are capped at the lower of:
- 25% of compensation, or
- $70,000 for 2025
As a self-employed person, the amount eligible to be contributed is based on a special calculation.
Solo 401(k)
Plan Overview: Solo 401(k)s, sometimes referred to as an Individual 401(k) or one-participant 401(k) plan, is a savings option for the self-employed intended for companies that have no employees or when the sole employee is your spouse. These plans function similarly to employer-sponsored 401(k) plans, and enable contributions as both an employer and an employee with pre-tax money. This offers more savings versus SEPs or IRAs; however, the increased savings potential often come with more constrained investment avenues. Using a solo 401(k), you can make either traditional or Roth deferrals, which have the same tax benefits as their IRA contribution counterparts.
Eligibility: Only business owners and their spouses are eligible to open and contribute to a solo 401(k).
Contribution Limits: If you are self-employed with a solo 401(k) plan, you have the ability to make two types of contributions:
- Deferrals as an employee of up to 100% of your earned income from self-employment, capped at the annual contribution limit. For 2025, the limits will be $23,500, or $31,000 if you're over 50, or $34,750 for individuals aged 60-63 in 2025.
- Employer profit-sharing contributions (as an employer) are limited to 25% of your net self-employment income, which is calculated as net profits less half of your self-employment tax and the elective deferrals you made.
The total contribution cannot exceed $70,000, or $77,500 if you're over age 50 (in 2025), $81,250 if you attain age 60-63 in 2025.
Individual Defined Benefit Plan
Plan Overview: A defined benefit plan is a retirement option that delivers a fixed, predetermined benefit to self-employed individuals upon retirement. In contrast to the plans discussed earlier, a defined benefit plan doesn't fluctuate based on investment returns, but enables participants to determine what they'll receive in retirement. This plan is recommended for higher-income professionals who aim to accumulate a significant sum for retirement and are willing to make sizeable contributions. Contributions are tax deferred, and withdrawals are taxable as income upon retirement.
Eligibility: Self-employed professionals running an owner-only business or with less than five employees can open an individual defined benefit plan, but it's most commonly suggested for individuals aged 50+ who generate a minimum of $250,000 yearly. Typically, good candidates for defined benefit plans include:
- Business owners or partners who desire to contribute more than $70,000 (or $77,500 for those aged 50+)
- Organizations that already put in 3-4% and are willing to do more
- Businesses that have demonstrated consistent profit patterns
- Partners or owners over age 40 who wish to accelerate savings or increase their retirement contributions rapidly
Contribution Limits: The cap on contributions requires calculation from an actuary using your earnings, age, and retirement objectives. Allowable contributions are adjusted each year.
The Importance of a Financial Advisor in St. Louis, MO for Your Self-Employed Retirement Plan
Partnering with an advisor in St. Louis, MO focused on self-employed retirement strategies can be an important asset for those working for themselves. They have the expertise to help navigate the complexities of retirement planning and develop a tailored strategy that matches your objectives. A financial advisor in St. Louis, MO will assess where you stand financially, identify your risk preferences, and help you in selecting the best options about saving and investing for retirement. A key part of what we do for you includes:
- Guide you in choosing a plan that suits your unique requirements
- Further adapt the plan to fit you personally even further
- Adopt a written plan in accordance with IRS guidelines
- Set up an asset trust plan
- Help you understand the plan's terms
- Track and fine-tune your plan to keep it aligned with your goals
- Offer continued financial education and guidance as you continue on the road to retirement
- Increase your retirement income by making the most of your social security
Self-Employed Retirement Plans in St. Louis, MO: Correct Capital's Process
Self-employed individuals in St. Louis, MO who lack the time, interest, or knowledge to handle their own retirement planning on their own may end up overwhelmed by their options. With Correct Capital, our St. Louis, MO financial advisors manage the lion's share of your retirement planning for you, to help make meeting your financial objectives as straightforward as possible for you. We will guide you in creating your self-employed retirement plan in four simple steps:
- Schedule a Call: In just 20 minutes, a member of our advisor team can determine if our services align for you and your business. This short conversation helps us learn about your needs with zero commitment or major time investment on your part.
- Gather Information: Should we agree to proceed, we'll ask for information, including whether you have employees, your present financial standing, and your retirement goals. This enables us to craft a custom plan suited specifically for your needs.
- Review Your Plan: When we finalize a plan based on the information you provide, we'll sit down with you and review your plan thoroughly to help you fully grasp it and explain its fit to your circumstances.
- Implementation and Monitoring: When we finalize on your plan, we'll set everything up so you can start saving. As time goes on, we'll meet with you and track your progress to make sure it remains aligned with your goals.
Our St. Louis, MO financial advisors and retirement plan consultants serve as fiduciary advisors, which means they are legally and ethically bound to act in your best interest.
Other financial advisory services we offer in St. Louis, MO include:
- Roth Conversion
- Investment Management
- 401(k) Audit
- High-Net-Worth Wealth Management
- Retirement Planner
- Financial Planning
- Retirement Plan Consultants
- Succession Planning
- Fiduciary Financial Advisor
Call Correct Capital for Your Self-Employed Retirement Plan in St. Louis, MO
You don't see your business as "just a business", and your St. Louis, MO financial advisors must deliver more than simply sound financial advice. With Correct Capital, we make it a priority to understand our clients and their businesses to provide customized self-employed retirement plans. We offer all our St. Louis, MO clients our I.O.U. promise: all guidance we provide will be independent, objective, and unbiased. To begin on your self-employment retirement plan, reach out to Correct Capital at 877-930-401k or contact us online.
