Self-employed retirement plans in Sunset Hills, MO. The flexibility involved with running your own business in Sunset Hills, MO is one of the great things about working for yourself. But that freedom can come with a lack of security, especially in terms of building a retirement plan, as you don't have access to any employer plans. Only 13% of self-employed individuals have a workplace retirement plan, but many would be better off exploring their options. In addition to a more comfortable retirement, partnering with a financial advisor to set up your self-employed retirement plan in Sunset Hills, MO offers tax benefits that can help free up much-needed funds for your business.
Few wealth management and retirement planning firms will understand the needs of the self-employed and small business owners as well as Correct Capital. In fact, we were inspired by a small business owner, our founder's father (you can discover more about our story here). We know that your business and retirement aspirations extend far beyond mere monetary figures, and we are committed to providing tailored plans that fit your goals. Continue reading to learn more about your self-employed retirement plan options in Sunset Hills, MO, or call Correct Capital at 877-930-4015 or contact us online to speak to a small business financial advisor today.
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What Self-Employed Retirement Plans Are There?
There are many retirement savings options available for self-employed individuals, and which is best for you depends on your unique situation. A Sunset Hills, MO financial advisor can help you comprehend the pros and cons of each option and opt for the most suitable one for your situation. 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 offer specific tax advantages. If you deposit to a traditional IRA, deposits are typically tax-deductible, 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 withdrawals in retirement, including investment gains, 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, 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 annual income from 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 may choose to contribute a flat-dollar amount or a percentage of annual income to employee accounts. SEP IRAs may be a suitable self-employed retirement plan if your business experiences fluctuating income periods. SEP IRAs don't have the costly startup or administrative fees often associated with other retirement plans.
SEPs work like traditional IRAs, where payments are made with pre-tax money and withdrawals are taxed as income.
Eligibility: Any employer, including the self-employed, can establish 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 annual contribution limit is based on 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 similarly to employer-sponsored 401(k) plans, and you can add funds as an employee and on your own behalf as the employer. This offers more 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 deferrals (with pre-tax money) or Roth deferrals (with after-tax money).
Eligibility: Only business owners 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 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) 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 fixed benefit to self-employed individuals once they've retired. As opposed to 401(k)s or IRAs, a defined benefit plan doesn't oscillate because of investment gains, but allows self-employed people 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 significant sum for retirement and are willing to add substantial contributions. Contributions are tax deferred and contributions are taxed as income in retirement.
Eligibility: Any self-employed individual who runs a business with no employees besides the 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 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 want 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 is decided by an actuary who calculates for your income, age, and retirement goals. Contribution limits change each 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 a crucial partner 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 analyze 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 pick 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
- 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 long as you work with us
- Increase your retirement income by maximizing 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 plans available to them. At Correct Capital, our retirement consultants handle the bulk of the retirement planning work on your behalf, and endeavor to make achieving your retirement goals as easy as possible for you. We can help you establish and maintain your self-employed retirement plan in four simple steps:
- 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 brief 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 request more info, including how many employees you have (if any), your current financial situation, and what kind of retirement you want to have. 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 discuss the specifics of your plan to ensure you're comfortable with it.
- Implementation and Monitoring — Once we've started to move forward, we'll put everything in place so your savings can start growing immediately. Throughout our relationship, we'll meet with you 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 morally bound to do what's best for you and only you. We are proud to provide straightforward communication and excellent service to help you attain your self-employed retirement goals.
Other services we offer in Sunset Hills, MO include:
Call Correct Capital for Your Sunset Hills, MO Self-Employed Retirement Plan
Your business isn't merely a business to you, and your Sunset Hills, MO financial advisors need to offer more than simply 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 the same 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 877-930-4015 or fill out our online form.
