Self-employed retirement plans in St. Louis, MO. The freedom of having your own business in St. Louis, MO is a fantastic aspect of being self-employed. But that freedom can be accompanied by uncertainty, particularly in terms of saving for retirement, employer-sponsored plans aren't an option. Only 13% of self-employed people have retirement plans they can contribute to, but many would be better off exploring their options. 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, MO offers tax benefits that can help propel you and your business towards success.
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 goals go beyond spreadsheets and percentages, and we are dedicated to providing customized solutions that fit where you are and where you want to go. Read on to read more about your self-employed retirement plan options in St. Louis, MO, or call Correct Capital at 314-930-401(k) or contact us online to speak to a small business financial advisor now.
Types of Self-Employed Retirement Plans
There are many retirement savings options that the self-employed can contribute to, each with its own set of benefits and considerations. A St. Louis, MO financial advisor can help you understand the benefits and drawbacks of each option and select that works best for you. Generally, your self-employed retirement plan options in St. Louis, MO include:
Traditional or Roth IRA
Plan Overview: IRAs, or Individual Retirement Arrangements, are investment accounts 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 any gains on investments grow tax-deferred, but distributions in retirement are taxed as if it were income. On the other hand, Roth IRA payments are made with after-tax income, but qualified withdrawals in retirement, including earnings, are tax-free. In both accounts, distributions can be made without penalty as long as 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 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 can either contribute either a predetermined fixed dollar amount or a proportion of wages to employee accounts. SEP IRAs may be an excellent self-employed retirement plan if your business goes 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 deposits are made with money you've yet to pay taxes on and withdrawals are taxed as income.
Eligibility: Self-employed individuals and any employer, can set up a simplified employee pension plan.
Contribution Limits: Contribution limits for employees in a SEP IRA are the lesser of:
- 25% of compensation, or
For self-employed people, the annual contribution limit is based on a unique 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 sole proprietors or those who only employ a spouse. Solo 401(k)s work about the same as employer-sponsored 401(k) plans, and you can add funds as an employee and on your own behalf as the employer. This offers increased savings opportunities than SEPs or IRAs, however the additional opportunities for saving are often offset by having less investment options available. In an individual 401(k) plan, you can make either traditional or Roth deferrals, which each enjoy the same tax benefits as their IRA contribution counterparts.
Eligibility: Only self-employed individuals and their spouses can set up 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.
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 monthly figure to self-employed individuals upon retirement. As opposed to the defined contribution plans mentioned above, a defined benefit plan doesn't oscillate based on investment gains, but allows self-employed people to know exactly what they'll receive 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 a business with no employees besides the owner 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. 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 want to do 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 change annually.
How a Financial Advisor Can Help Guide 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 expertise to help you understand the intricacies of retirement planning and design a tailored strategy that acts as a roadmap through your financial future. A financial planner will evaluate your financial situation, understand your risk tolerance, and help you make smart decisions about your financial future. Part of what we do for you includes:
- Help you choose 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 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 you continue on the road to 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 have the time, desire, or knowledge to handle their self-employed retirement plan themselves can become burdened with the different options available to them. At Correct Capital, our retirement consultants handle the lion's share of your retirement planning on your behalf, and endeavor to make meeting the golden years of your dreams as simple as possible for you. We can help you get set up with your self-employed retirement plan in a straightforward four-step process:
- Schedule a Call — It only takes 20 minutes for a member of our advisor team to understand if we're a good fit for you and your business. This short introduction lets us get a feel for your needs with no obligation on your part.
- Gather Information — If we seem like a good fit, we'll request more info, including the number of employees in your business (if applicable), 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 go over the specifics of your plan to ensure you understand it.
- Implementation and Monitoring — Once we've started to move forward, 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 planners and retirement consultants are fiduciary advisors who are legally and morally bound to do what's in your best interest. We pride ourselves in providing transparent communication and top-notch service to help you achieve your self-employed retirement goals.
Other services we offer in St. Louis, 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, MO Self-Employed Retirement Plan
Your business isn't merely a business to you, and your St. Louis, MO financial advisors need to offer more than simply sound financial advice. Correct Capital enjoys getting to know our clients and what makes them and their business tick to deliver personalized self-employed retirement plans. We offer all our St. Louis, 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, MO, call Correct Capital today at 314-930-401(k) or contact us online.