Self-employed retirement plans in Sunset Hills, MO. The flexibility involved with having your own business in Sunset Hills, MO is a fantastic aspect of working for yourself. But more leeway can be accompanied by a lack of security, particularly in when it comes to building a retirement plan, as you don't have access to any employer plans. Only 13% of self-employed people have a workplace retirement plan, but many would be wise to explore what plans are available. In addition to setting you up for the retirement of your dreams, partnering with a financial advisor to get started and maintain your self-employed retirement plan in Sunset Hills, MO offers significant tax advantages that can help drive you and your business forward.
Only a handful of financial advisory and retirement planning firms know what it's like to be self-employed or a small business owner than Correct Capital. In fact, we were inspired by a small business owner, our founder's father (you can read more about our story here). We have a deep understanding that your business and retirement goals transcend just profit, and we are devoted to providing personalized 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 Sunset Hills, MO, or call Correct Capital at 314-930-401(k) or contact us online to speak to a small business financial advisor today.
What Self-Employed Retirement Plans Are There?
There are a few different retirement savings options that the self-employed can contribute to, each with its own set of advantages and considerations. A Sunset Hills, MO financial advisor can help you comprehend the advantages and disadvantages of each option and choose that works best for you. Generally, your self-employed retirement plan options in Sunset Hills, MO include:
Traditional or Roth IRA
Plan Overview: IRAs, or Individual Retirement Accounts, are personal savings plans that provides individuals with tax advantages to save for retirement. In a traditional IRA, contributions 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 deposits are made with money you've already paid taxes on, but qualified distributions in retirement, including investment gains, are tax-free. In both a traditional an a Roth IRA, distributions can be made without penalty if you are at least 59½.
Eligibility: While many retirement plans, such as 401(k)s, are set up through an employer, 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 portion 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 fixed dollar sum or a percentage of annual income to employee accounts. SEP IRAs may be an excellent self-employed retirement plan if your business experiences fluctuating income periods. SEP IRAs don't have the costly startup or administrative fees other retirement plans do.
SEPs work like traditional IRAs, where payments 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 establish 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
For the self-employed individual, the amount eligible to be contributed is decided by 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 businesses with no employees or whose only employee is a spouse. Solo 401(k)s function 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 SEPs or IRAs, however the additional opportunities for saving are often counterbalanced by having less investment options available. In an individual 401(k) plan, you can make either traditional deferrals (with pre-tax money) or Roth deferrals (with after-tax money).
Eligibility: Only sole proprietors and their spouses have access to one-participant 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 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 offers a a predetermined monthly figure to self-employed individuals after they've left the workforce. In contrast to the defined contribution plans mentioned above, a defined benefit plan doesn't go up and down because of investment returns, but allows self-employed people to know exactly what they'll receive in retirement. This plan is ideal for high-earning self-employed individuals who want to save a a significant sum for retirement and want to add substantial contributions. Contributions are tax deferred and withdrawals 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 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 desire to contribute more than $66,000 (or $73,500 over age 50)
- Companies already contributing 3-4% who are willing to do more
- Companies who are sure of their profit patterns
- Partners or owners over age 40 who want to "catch up" or accelerate the retirement savings
Contribution Limits: The contribution limit is decided by an actuary who calculates for your income, age, and retirement goals. Contribution limits are adjusted every year.
Why You Need a Financial Advisor for Your Self-Employed Retirement Plan in Sunset Hills, MO
A financial advisor in Sunset Hills, MO specialized in self-employed retirement plans can be an invaluable resource for self-employed individuals. They have the expertise to help you navigate the intricacies of retirement planning and implement a personalized approach that gets you where you want to go. A financial planner will analyze where your finances currently are, understand your risk tolerance, and guide you in making informed 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
- Personalize the plan to your needs even further
- Adopt a written plan in accordance with 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 as long as you work with us
- Increase your retirement income by increasing your social security benefits
Self-Employed Retirement Plans in Sunset Hills, MO: Correct Capital's Process
Sunset Hills, 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 stressed with the different options available to them. At Correct Capital, our financial advisors handle the lion's share of your retirement planning on your behalf, and strive to make achieving the golden years of your dreams as simple 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 one of our advisors to know if we're the best firm to help you reach your goals. This short introduction lets us understand what you're looking for with no obligation for you.
- Gather Information — If we both decide to move forward, we'll request more info, including how many employees you have (if any), your current finances, and what kind of retirement you want to live. This allows us to put together a personalized plan suited specifically for your needs.
- Review Your Plan — Once we've compiled your plan, we'll meet with you and go over the specifics of your plan to ensure understand how it best correlates to your needs.
- Implementation and Monitoring — Once we've started to move forward, 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 monitor your plan to ensure it stays suited to your needs.
Our financial advisors and retirement consultants are fiduciary advisors who are legally and ethically bound to do what's best for you and only you. We are proud to provide straightforward communication and high-quality service to assist you achieve your self-employed retirement goals.
Other services we offer in Sunset Hills, 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 Sunset Hills, MO Self-Employed Retirement Plan
Your business isn't "just a business" to you, and your Sunset Hills, MO financial advisors need to offer more than just wise financial advice. Correct Capital takes pride in getting to know our clients and their business to deliver customized self-employed retirement plans. We give all our Sunset Hills, 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 Sunset Hills, MO, call Correct Capital today at 314-930-401(k) or fill out our online form.