Self-employed retirement plans in St. Peters, MO. The flexibility involved with having your own business in St. Peters, MO is a fantastic aspect of working for yourself. But more leeway can come with a lack of security, particularly in in regards to building a retirement plan, you don't have an employer who will set up a plan for you. Only 13% of self-employed individuals have retirement plans they can contribute to, but many would be better off exploring their options. In addition to a more comfortable retirement, partnering with a financial advisor to get started and maintain your self-employed retirement plan in St. Peters, MO offers significant tax advantages that can help boost you and your business forward.
Only a handful of 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 on our website). We have a deep understanding that your business and retirement aspirations extend far beyond figures and numbers, and we are devoted to providing personalized solutions that fit where you are and where you want to go. Continue reading to learn more about your self-employed retirement plan options in St. Peters, MO, or call Correct Capital at 314-930-401(k) or fill out our online form to speak to a member of our advisory team now.
What Self-Employed Retirement Plans Are There?
There are a few different retirement savings options that the self-employed can set up, and which is best for you depends on your unique situation. A St. Peters, MO financial advisor can help you understand 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. Peters, 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. In a traditional IRA, deposits are deducted from your taxable income, and investment earnings grow tax-deferred, but distributions in retirement are taxed as regular income. On the other hand, Roth IRA contributions are made with after-tax income, but qualified withdrawals in retirement, including investment gains, are tax-free. In both accounts, withdrawals are penalty-free 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 can be set up by 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 percentage 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, they must receive the same amount you do. 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 for businesses that experience 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 at your income at the time of withdrawal.
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 the lesser of:
- 25% of compensation, or
For the self-employed individual, the amount eligible to be contributed is decided by a special 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 whose only employee is a spouse. Solo 401(k)s work about the same as 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 some other retirement savings plans, however the additional opportunities for saving are often counterbalanced by more limited investment options. In a solo 401(k) plan, you can make either traditional or Roth deferrals, which each feature 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 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.
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 an assured benefit to self-employed individuals once they've retired. In contrast to the defined contribution plans mentioned above, a defined benefit plan doesn't fluctuate because of investment gains, but allows self-employed people to have an exact dollar figure as their income in retirement. This plan is ideal for high-earning self-employed individuals who want to save a a large amount for retirement and are willing to make substantial 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 establish an individual defined benefit plan, but it's typically not a great idea unless you're over 50 and earn well into the six figures. Those interested in defined benefit plans tend to be:
- Partners or owners who desire 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 are sure of their profit patterns
- Partners or owners over age 40 who desire to make up for earlier years when they didn't save as much
Contribution Limits: The contribution limit must be decided by an actuary based on your income, age, and retirement goals. Contribution limits change annually.
The Importance of a Financial Advisor for Your Self-Employed Retirement Plan in St. Peters, MO
A financial advisor in St. Peters, MO specialized in self-employed retirement plans can be an invaluable resource for self-employed individuals. They have the experience to help you understand the intricacies of retirement planning and create a personalized approach that gets you where you want to go. A financial planner will assess where your finances currently are, help you figure out 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 regulations
- 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
- Increase your retirement income by maximizing your social security benefits
Self-Employed Retirement Plans in St. Peters, MO: Correct Capital's Process
St. Peters, 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 options available to them. At Correct Capital, our financial advisors handle the bulk of the retirement planning work for you, and attempt to make achieving 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 four simple steps:
- Schedule a Call — It only takes 20 minutes for one of our advisors to know if we're the best firm to help you reach your goals. This short introduction allows us to understand what you're looking for with no major time investment on your part.
- Gather Information — If we both decide to move forward, we'll ask for 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 personalized 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 specifics of your plan to ensure you're comfortable with it.
- Implementation and Monitoring — Once we've enacted your plan, we'll put everything in place so you can start saving. As long as we work together, we'll keep you up-to-date with how things are going and adjust your plan to ensure it stays suited to 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 assist you achieve your self-employed retirement goals.
Other services we offer in St. Peters, MO include:
- 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
- Retirement Planning
Call Correct Capital for Your St. Peters, MO Self-Employed Retirement Plan
Your business isn't simply an enterprise to you, and your St. Peters, MO financial advisors need to offer more than merely wise 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 give all our St. Peters, 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. Peters, MO, speak to a member of our team today at 314-930-401(k) or contact us online.