Self-employed retirement plans in St. Peters, MO. The freedom of running your own business in St. Peters, MO is one of the great things about being self-employed. But that freedom can come with limited stability, particularly in terms of saving for retirement, you don't have an employer who will set up a plan for you. Only a fraction of self-employed individuals have retirement plans they save with, but many would be better off exploring 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. Peters, 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. Our founder's father was a small business owner himself (you can learn more about our story here). We have a deep understanding that your business and retirement aspirations transcend spreadsheets and percentages, and we are committed to providing tailored plans that fit where you are and where you want to go. Read on to discover more about your self-employed retirement plan options in St. Peters, MO, or call Correct Capital at 877-930-4015 or fill out our online form to speak to a small business financial advisor now.
Types of Self-Employed Retirement Plans
There are several retirement savings options available for self-employed individuals, each with its own set of advantages and considerations. A St. Peters, MO financial advisor can help you grasp the benefits and drawbacks of each option and opt for the most suitable one for your specific needs. Typically, your self-employed retirement plan options in St. Peters, MO are comprised of:
Traditional or Roth IRA
Plan Overview: IRAs, or Individual Retirement Arrangements, are long-term savings plans that allows you to set aside money for the future, with special tax considerations. In a traditional IRA, deposits are deducted from your taxable income, and any gains on investments grow tax-deferred, but withdrawals in retirement are liable to income tax. On the other hand, 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, withdrawals 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 can be set up by anyone with an earned income.
Contribution Limits: For 2023, annual contribution limits 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 their annual income 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 would have to contribute the same amount for them as you do for yourself. 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 go through fluctuating income periods. SEP IRAs don't have the costly startup or administrative fees other retirement plans do.
SEPs work like traditional IRAs, where contributions are made with pre-tax money and withdrawals are taxed at your income at the time of distribution.
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 whichever is the least out of:
- 25% of compensation, or
- $66,000
For self-employed people, 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 sole proprietors or those who only employ a spouse. Solo 401(k)s work in the same same way as employer-sponsored 401(k) plans, and you can add funds as both an employer or employee with pre-tax money. This offers greater potential for savings than some other retirement savings plans, 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 have access to individual 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 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 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 provides a an assured monthly figure to self-employed individuals after they've left the workforce. In contrast to 401(k)s or IRAs, a defined benefit plan doesn't go up and down because of 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 substantial portion for retirement and are willing to make substantial contributions. Contributions are tax deferred and contributions are taxed as income 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 only recommended for those over 50 who earn at least $250,000 a year. Those interested in defined benefit plans tend to be:
- 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 contribute more
- Companies who have demonstrated consistent profit patterns
- Partners or owners over age 40 who want to "catch up" or accelerate the retirement savings
Contribution Limits: The contribution limit must be calculated by an actuary based on your income, age, and retirement goals. Contribution limits change every year.
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 expertise to help you understand the intricacies of retirement planning and develop a tailored strategy that aligns with your goals. A financial planner will look at your financial situation, 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
- Tailor 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 support as you continue on the road to retirement
- Maximize your retirement income by increasing your social security benefits
Self-Employed Retirement Plans in St. Peters, MO: Correct Capital's Process
St. Peters, MO business owners without the time, desire, or knowledge to handle their self-employed retirement plan themselves can become overwhelmed with the different options available to them. At Correct Capital, our retirement consultants handle the bulk of the retirement planning work for you, and endeavor to make achieving your business and retirement aspirations as easy as we possibly can. We can help you get set up with your self-employed retirement plan in four simple steps:
- Schedule a Call — We only need 20 minutes for a member of our advisor team to understand if we're suitable for you and your business. This short introduction lets us understand your needs with no obligation for you.
- Gather Information — If we both decide to move forward, we'll request information, including the number of employees in your business (if applicable), your current financial situation, and what kind of retirement you want to have. 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 details of your plan to ensure it's what you were looking for.
- Implementation and Monitoring — Once we've agreed on your plan, we'll put everything in place so you can start saving. Throughout your time partnering with us, we'll meet with you and monitor your plan so it stays consistent with your needs.
Our financial planners and retirement consultants are fiduciary advisors who have a legal and ethical obligation to do what's best for you and only you. We pride ourselves in providing clear communication and excellent service to help you attain your self-employed retirement goals.
Other services we offer in St. Peters, MO include:
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 provide you with more than simply sound financial advice. Correct Capital takes pride in getting to know our clients and their business to deliver tailored self-employed retirement plans. We offer all our St. Peters, 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. Peters, MO, call Correct Capital today at 877-930-4015 or contact us through our website.
