Self-employed retirement plans in St. Louis, MO. The flexibility involved with running your own business in St. Louis, MO is a fantastic aspect of being self-employed. But increased leeway can come with limited stability, particularly in in regards to building a retirement plan, employer-sponsored plans aren't an option. Only a fraction of self-employed people have retirement plans they save with, but many would be wise to explore their options. 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, MO offers significant tax advantages that can help you improve your bottom line.
Not many wealth management 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 discover more about our story here). We know that your business and retirement aspirations transcend spreadsheets and percentages, and we are committed to providing personalized plans 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. Louis, MO, or call Correct Capital at 877-930-4015 or contact us online to speak to a member of our advisory team now.
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Types of Self-Employed Retirement Plans
There are several retirement savings plans that the self-employed can establish, and which is best for you depends on your unique situation. A St. Louis, MO financial advisor can help you grasp the pros and cons of each option and select that helps both your short- and long-term goals. Typically, your self-employed retirement plan options in St. Louis, MO include:
Traditional or Roth IRA
Plan Overview: IRAs, or Individual Retirement Accounts, are investment accounts that provides individuals with tax advantages to save for retirement. In a traditional IRA, deposits are deducted from your taxable income, and any gains on investments grow tax-deferred, but distributions in retirement are liable to income tax. On the other hand, Roth IRA payments are made with money you've already paid taxes on, but you pay no taxes on withdrawals or earnings. 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 set up through 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 their net earnings from 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, you must contribute an equal amount to their plans. You may choose to contribute either a predetermined fixed dollar amount or a proportion of wages to employee accounts. SEP IRAs may be a good self-employed retirement plan if your business goes through cycles of high revenue and low revenue. SEP IRAs don't have expensive initial setup or administrative charges 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: Any employer, including the self-employed, can set up a SEP.
Contribution Limits: Contribution limits for employees in a SEP IRA are the lesser of:
- 25% of compensation, or
- $66,000
For the self-employed individual, the maximum amount you can contribute in a given year 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 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 offset by more limited investment options. In an individual 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 business owners and their spouses can establish 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 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.
On an annual basis, contributions 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 a fixed monthly figure to self-employed individuals after they've left the workforce. In contrast to other types of retirement plans, a defined benefit plan doesn't fluctuate based on investment returns, 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 substantial portion 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 where they're the only owner or has less than five employees can establish an individual defined benefit plan, but it's typically only well-suited for those over 50 who earn well into the six figures. Typically, good candidates for defined benefit plans are:
- Partners or owners who desire 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 are sure of their 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.
Why You Need a Financial Advisor for Your Self-Employed Retirement Plan in St. Louis, MO
A financial advisor in St. Louis, MO specialized in self-employed retirement plans can be a crucial partner for self-employed individuals. They have the know-how to help you understand the complexities of retirement planning and implement a tailored strategy that gets you where you want to go. A financial advisor will look at where your finances currently are, help you figure out your risk tolerance, and help you make smart decisions about saving and investing for retirement. 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 that follows all IRS rules
- 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 guidance into and through retirement
- Maximize your retirement income by maximizing your social security benefits
Self-Employed Retirement Plans in St. Louis, MO: Correct Capital's Process
St. Louis, 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 financial advisors handle the lion's share of your retirement planning for you, and strive to make meeting your business and 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 — We only need a short 20-minute call for a member of our advisor team 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 major time investment 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 based entirely on type of advising you need.
- Review Your Plan — Once we've compiled your plan, we'll meet with you and discuss the details 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. As long as we work together, we'll meet with you and adjust your plan to ensure it stays suited to your needs.
Our financial planners and retirement consultants are fiduciary advisors who have a legal and moral obligation to do what's best for you and only you. We are proud to provide clear communication and excellent service to assist you achieve your self-employed retirement goals.
Other services we offer in St. Louis, MO include:
- 401(k) Audit
- High-Net-Worth Wealth Management
- Retirement Planner
- Financial Planning
- Retirement Plan Consultants
- Succession Planning
- Fiduciary Financial Advisor
- Company 401(k) Plans
- ESOP Advisor
Call Correct Capital for Your St. Louis, MO Self-Employed Retirement Plan
Your business isn't simply an enterprise to you, and your St. Louis, MO financial advisors need to offer more than simply sage financial advice. Correct Capital enjoys getting to know our clients and their business to deliver personalized self-employed retirement plans. We give all our St. Louis, MO clients the same 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, MO, speak to a financial advisor today at 877-930-4015 or fill out our online form.
