Self-employed retirement plans in Town and Country, MO. The freedom of running your own business in Town and Country, MO is a fantastic aspect of being self-employed. But more leeway can be accompanied by uncertainty, particularly in in regards to building a retirement plan, you don't have an employer who will set up a plan for you. Barely more than 10% 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 golden years of your dreams, partnering with a financial advisor to get started and maintain your self-employed retirement plan in Town and Country, MO offers significant tax advantages that can help you improve your bottom line.
Not many wealth management and retirement planning firms will understand the needs of the self-employed and small business owners as well as Correct Capital. Our founder's father was a small business owner himself (you can read more about our story here). We have a deep understanding that your business and retirement aspirations transcend mere monetary figures, and we are devoted 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 Town and Country, MO, or call Correct Capital at 314-930-401(k) or fill out our online form to speak to a member of our advisory team now.
Types of Self-Employed Retirement Plans
There are many retirement savings plans available for self-employed individuals, and which is best for you depends on your unique situation. A Town and Country, MO financial advisor can help you grasp the pros and cons of each option and opt for that helps both your short- and long-term goals. Generally, your self-employed retirement plan options in Town and Country, MO include:
Traditional or Roth IRA
Plan Overview: IRAs, or Individual Retirement Accounts, are investment accounts that offer specific tax advantages. If you deposit to a traditional IRA, deposits are deducted from your taxable income, and any gains on investments grow tax-deferred, but distributions in retirement are taxed as regular income. In contrast, Roth IRA payments are made with money you've already paid taxes on, but you pay no taxes on withdrawals or investment gains. 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, 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. As a self-employed individual, your contributions are limited to the amount already contributed by you (the employer), which cannot exceed 25%. If you have employees, you must contribute an equal amount to their plans. You may choose to contribute either a predetermined fixed dollar amount or a proportion of wages to employee accounts. SEP IRAs may be a suitable self-employed retirement plan for businesses that go through periods of variable income. SEP IRAs don't have the high upfront costs or administrative expenses often associated with other retirement plans.
SEPs work like traditional IRAs, where payments are made with pre-tax money and distributions are taxed as income.
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 self-employed people, the annual contribution limit 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 sole proprietors or those who only employ a spouse. Solo 401(k)s work similarly to employer-sponsored 401(k) plans, and you can make contributions as both an employer or employee with pre-tax money. This offers greater potential for savings than some other retirement savings plans, however the possibility of greater retirement savings is often counteracted by more limited investment options. In a one-participant 401(k) plan, you can make either traditional or Roth deferrals, which each feature the same tax advantages 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 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 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 an assured benefit to self-employed individuals once they've retired. In contrast to 401(k)s or IRAs, a defined benefit plan doesn't go up and down based on investment returns, but allows self-employed people to know exactly how much they'll get in retirement. This plan is ideal 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 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 open 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 want to save more than $66,000 (or $73,500 over age 50)
- Companies already contributing 3-4% who are willing 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 must be decided by an actuary based on your income, age, and retirement goals. Contribution limits are adjusted every year.
The Importance of a Financial Advisor for Your Self-Employed Retirement Plan in Town and Country, MO
A financial advisor in Town and Country, MO specialized in self-employed retirement plans can be a valuable asset for self-employed individuals. They have the know-how to help you understand the complexities of retirement planning and design a customized plan that aligns with your goals. A financial advisor will analyze your financial situation, adjust for your risk tolerance, and help you make sound 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
- Customize 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 support as you continue on the road to retirement
- Increase your retirement income by maximizing your social security benefits
Self-Employed Retirement Plans in Town and Country, MO: Correct Capital's Process
Town and Country, MO business owners who don't have the time, inclination, or knowledge to handle their self-employed retirement plan themselves can become overwhelmed when looking at their options. At Correct Capital, our retirement consultants handle the lion's share of your retirement planning for you, and endeavor to make meeting the golden years of your dreams as simple as possible for you. We can help you get set up with your self-employed retirement plan in four simple steps:
- Schedule a Call — We only need a brief 20-minute call for one of our advisors to know if we're the best firm to help you reach your goals. This brief introduction lets us understand your needs with no major time investment for you.
- Gather Information — If we seem like a good fit, we'll ask for information, including how many employees you have (if any), your current finances, and your retirement goals. This allows us to put together a custom plan suited specifically for your needs.
- Review Your Plan — After we put together a plan based on the information you provide, we'll meet with you and go over the details of your plan to ensure it's what you were looking for.
- Implementation and Monitoring — Once we've started to move forward, we'll put everything in place so you can start saving. Throughout our relationship, 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 are legally and ethically obligated to do what's in your best interest. We pride ourselves in providing transparent communication and top-notch service to assist you attain your self-employed retirement goals.
Other services we offer in Town and Country, MO include:
- 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
- Rollover 401(k)
Call Correct Capital for Your Town and Country, MO Self-Employed Retirement Plan
Your business isn't simply an enterprise to you, and your Town and Country, MO financial advisors need to provide you with more than simply wise financial advice. Correct Capital enjoys getting to know our clients and their business to deliver customized self-employed retirement plans. We offer all our Town and Country, 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 Town and Country, MO, call Correct Capital today at 314-930-401(k) or fill out our online form.