Self-Employed Retirement Plans Tower Grove, MO

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Self-employed retirement plans in Tower Grove, MO. The flexibility involved with having your own business in Tower Grove, MO is one of the great things about being self-employed. But that freedom can be accompanied by limited stability, particularly in in regards to building a retirement plan, employer-sponsored plans aren't an option. Only a fraction of self-employed individuals have retirement plans they can contribute to, but many would be wise to explore what plans are available. In addition to a more comfortable retirement, partnering with a financial advisor to get started and maintain your self-employed retirement plan in Tower Grove, MO offers tax benefits that can help boost you and your business forward.

Not many financial advisory and retirement planning firms know what it's like to be self-employed or a small business owner as well as Correct Capital. In fact, we were inspired by a small business owner, our founder's father (you can read more about our story on our website). We have a deep understanding that your business and retirement goals extend far beyond figures and numbers, and we are committed to providing tailored plans that reflect your goals. Continue reading to read more about your self-employed retirement plan options in Tower Grove, MO, or call Correct Capital at 877-930-4015 or fill out our online form to speak to a small business financial advisor now.


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Types of Self-Employed Retirement Plans

There are several retirement savings plans available for self-employed individuals, each with its own set of advantages and considerations. A Tower Grove, MO financial advisor can help you understand the advantages and disadvantages of each option and select that works best for you. Typically, your self-employed retirement plan options in Tower Grove, MO are comprised of:


Traditional or Roth IRA

Plan Overview: IRAs, or Individual Retirement Accounts, are long-term savings plans that allows you to set aside money for the future, with special tax considerations. If you deposit to a traditional IRA, deposits are typically tax-deductible, and any gains on investments grow tax-deferred, but distributions in retirement are taxed as if it were income. 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 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 their net earnings 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 periods of variable income. 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 as income.

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
  • $66,000

For the self-employed individual, 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 function about the same as employer-sponsored 401(k) plans, and you can make contributions as both an employer or employee with pre-tax money. This offers more savings than some other retirement savings plans, however the possibility of greater retirement savings is often offset by more limited investment options. In an individual 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:

  1. 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.
  2. 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.

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 fixed benefit to self-employed individuals upon retirement. As opposed to the defined contribution plans mentioned above, a defined benefit plan doesn't fluctuate because of investment returns, but allows self-employed people 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 are willing to make substantial contributions. Contributions are tax deferred and withdrawals are taxed at your income level 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 not a great idea unless you're over 50 and 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 have demonstrated consistent 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 calculated by an actuary who calculates for your income, age, and retirement goals. Contribution limits are adjusted annually.

Why You Need 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 know-how to help you understand the complexities of retirement planning and develop a customized plan that acts as a roadmap through your financial future. A financial advisor will assess your financial situation, help you figure out your risk tolerance, and help you make sound decisions for yourself, both as a business owner 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 guidelines
  • 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 into and through 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, inclination, or knowledge to handle their self-employed retirement plan themselves can become stressed when looking at their options. At Correct Capital, our financial advisors handle the lion's share of your retirement planning for you, and endeavor to make achieving your retirement goals as easy as we possibly can. We can help you establish and maintain your self-employed retirement plan in a straightforward four-step process:

  1. Schedule a Call — It only takes 20 minutes for one of our advisors to understand if we're suitable for you and your business. This short introduction allows us to get a feel for what you're looking for with no major time investment on your part.
  2. Gather Information — If we seem like a good fit, 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 have. This allows us to put together a custom plan suited specifically for your needs.
  3. 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.
  4. Implementation and Monitoring — Once we've enacted your plan, we'll put everything in place so your savings can start growing immediately. As long as we work together, we'll meet with you and adjust your plan so it stays consistent with your needs.

Our financial advisors and retirement consultants are fiduciary advisors who are legally and ethically bound to do what's in your best interest. We are proud to provide straightforward communication and excellent service to help you attain your self-employed retirement goals.

Other services we offer in Tower Grove, MO include:

Self-Employed Retirement Plans Tower Grove, MO | Financial Advisors | Retirement Consultants Near Tower Grove

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 just sage financial advice. Correct Capital takes pride in getting to know our clients and their business to deliver customized self-employed retirement plans. We offer all our Tower Grove, 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 Tower Grove, MO, speak to a member of our team today at 877-930-4015 or fill out our online form.


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