Self-employed retirement plans in Tower Grove, MO. The freedom of running your own business in Tower Grove, MO is a fantastic aspect of being self-employed. But that freedom can come with uncertainty, especially in in regards to saving for retirement, as you don't have access to any employer plans. Barely more than 10% of self-employed individuals have retirement plans they can contribute to, but many would be wise to look into their options. In addition to setting you up for the retirement of your dreams, partnering with a financial advisor to set up your self-employed retirement plan in Tower Grove, MO offers favorable tax incentives that can help free up much-needed funds for your business.
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 self-employed individual, our founder's father (you can read more about our story here). We know that your business and retirement goals extend far beyond spreadsheets and percentages, and we are dedicated to offering tailored plans that fit where you are and where you want to go. Read on to learn more about your self-employed retirement plan options in Tower Grove, MO, or call Correct Capital at 314-930-401(k) or contact us online to speak to a member of our advisory team today.
Types of Self-Employed Retirement Plans
There are a few different retirement savings options that the self-employed can establish, and which is best for you depends on your unique situation. A Tower Grove, MO financial advisor can help you comprehend the advantages and disadvantages of each option and choose that helps both your short- and long-term goals. Typically, your self-employed retirement plan options in Tower Grove, 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 typically tax-deductible, and any gains on investments grow tax-deferred, but distributions in retirement are taxed as if it were income. In contrast, Roth IRA deposits are made with after-tax income, but you pay no taxes on withdrawals or investment gains. In both a traditional an a Roth IRA, distributions are penalty-free as long as you are at least 59½.
Eligibility: While many retirement plans, such as 401(k)s, are set up through 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 the money they make from their 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, they must receive the same amount you do. You may choose to 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 goes through fluctuating income periods. SEP IRAs don't have the high upfront costs or administrative expenses other retirement plans do.
SEPs work like traditional IRAs, where deposits are made with money you've yet to pay taxes on and withdrawals are taxed at your income at the time of distribution.
Eligibility: Any employer, including the self-employed, can set up a SEP.
Contribution Limits: Contribution limits for employees in a SEP IRA are whichever is the least out of:
- 25% of compensation, or
For self-employed people, the maximum amount you can contribute in a given year 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 businesses with no employees or whose only employee is a spouse. Solo 401(k)s work in the same same way as 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 more limited investment options. In an individual 401(k) plan, you can make either traditional or Roth deferrals, which each enjoy the same tax advantages as their IRA contribution counterparts.
Eligibility: Only business owners 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) which cannot exceed 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.
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 monthly figure to self-employed individuals once they've retired. As opposed to 401(k)s or IRAs, a defined benefit plan doesn't fluctuate because of investment gains, but allows self-employed individuals to have an exact dollar figure as their income in retirement. This plan is best suited for high-earning self-employed individuals who want to save a a substantial portion for retirement and want 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 a business where they're the only 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. Typically, good candidates for defined benefit plans are:
- 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 desire to make up for earlier years when they couldn't save as much
Contribution Limits: The contribution limit must be determined by an actuary who calculates for your income, age, and retirement goals. Contribution limits are adjusted annually.
The Importance of a Financial Advisor for Your Self-Employed Retirement Plan in Tower Grove, MO
A financial advisor in Tower Grove, MO specialized in self-employed retirement plans can be indispensable for self-employed individuals. They have the knowledge to help you navigate the complexities of retirement planning and create a tailored strategy that gets you where you want to go. A financial planner will analyze where your finances currently are, understand your risk tolerance, and help you make smart decisions about your financial future. Part of what we do for you includes:
- Help you pick 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 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 support as you continue on the road to retirement
- Maximize your retirement income by increasing your social security benefits
Self-Employed Retirement Plans in Tower Grove, MO: Correct Capital's Process
Tower Grove, MO business owners without the time, interest, or knowledge to handle their self-employed retirement plan themselves can become overwhelmed when looking at their options. At Correct Capital, our financial advisors handle the lion's share of your retirement planning on your behalf, and attempt to make achieving the golden years of your dreams 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 — It only takes a short 20-minute call for one of our advisors to understand if we're a good fit for you and your business. This short introduction allows us to understand your needs with no obligation on your part.
- Gather Information — If we both decide to move forward, 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 have. This allows us to put together a custom 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 understand it.
- Implementation and Monitoring — Once we've agreed on your plan, we'll put everything in place so your savings can start growing immediately. Throughout your time partnering with us, we'll meet with you and adjust your plan to ensure it stays suited to your needs.
Our financial planners and retirement consultants are fiduciary advisors who have a legal and moral obligation to do what's best for you and only you. We are proud to provide straightforward communication and top-notch service to assist you attain your self-employed retirement goals.
Other services we offer in Tower Grove, 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 Tower Grove, MO Self-Employed Retirement Plan
Your business isn't "just a business" to you, and your Tower Grove, MO financial advisors need to offer more than merely sage financial advice. Correct Capital enjoys getting to know our clients and what makes them and their business tick to deliver tailored self-employed retirement plans. We offer all our Tower Grove, 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 Tower Grove, MO, speak to a member of our team today at 314-930-401(k) or contact us through our website.