Self-employed retirement plans in University City, MO. The flexibility involved with having your own business in University City, MO is a fantastic aspect of being self-employed. But that freedom can be accompanied by uncertainty, particularly in in regards to saving for retirement, as you don't have access to any employer plans. Barely more than 10% of self-employed people have a workplace retirement plan, but many would be better off exploring their options. In addition to setting you up for the retirement of your dreams, working with a financial advisor to set up your self-employed retirement plan in University City, MO offers significant tax advantages that can help boost you and your business towards success.
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 on our website). We know that your business and retirement goals go beyond mere monetary figures, and we are dedicated to providing customized solutions that fit your goals. Read on to read more about your self-employed retirement plan options in University City, 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 benefits and considerations. A University City, MO financial advisor can help you grasp the pros and cons of each option and choose that works best for you. Typically, your self-employed retirement plan options in University City, MO are comprised of:
Traditional or Roth IRA
Plan Overview: IRAs, or Individual Retirement Arrangements, are long-term savings plans that allows you to set aside money for the future, with special tax considerations. In a traditional IRA, contributions are typically tax-deductible, and any gains on investments grow tax-deferred, but distributions in retirement are subject to income tax. In contrast, Roth IRA deposits are made with money you've already paid taxes on, but you pay no taxes on withdrawals or earnings. In both accounts, distributions 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 are available to 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 their net earnings from self-employment. Contributions can only be made by an employer, so, as a self-employed individual, you (the employee) would not be able to contribute more than the 25% you (the employer) already contributed. If you have employees, you must contribute an equal amount to their plans. You can either 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 goes through fluctuating income periods. SEP IRAs don't have the high upfront costs or administrative expenses often associated with other retirement plans.
SEPs work like traditional IRAs, where deposits are made with money you haven't paid taxes on and withdrawals are taxed at your income at the time of distribution.
Eligibility: Any employer, including the self-employed, can establish a simplified employee pension plan.
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 maximum amount you can contribute in a given year is decided by a unique 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 similarly to employer-sponsored 401(k) plans, and you can make contributions as an employee and on your own behalf as the employer. This offers greater potential for savings than SEPs or IRAs, however the additional opportunities for saving are often offset by having less investment options available. In a solo 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 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:
- 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.
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 provides a a predetermined monthly figure 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 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 substantial portion for retirement and are willing to make significant contributions. Contributions are tax deferred and withdrawals are taxed as income 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 want to contribute more
- Companies who have demonstrated consistent profit patterns
- Partners or owners over age 40 who want to make up for earlier years when they didn't save as much
Contribution Limits: The contribution limit is determined by an actuary based on your income, age, and retirement goals. Contribution limits are adjusted each year.
The Importance of a Financial Advisor for Your Self-Employed Retirement Plan in University City, MO
A financial advisor in University City, 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 design a customized plan that acts as a roadmap through your financial future. A financial planner will assess where your finances currently are, help you figure out your risk tolerance, and guide you in making informed 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
- Tailor the plan to your needs even further
- Adopt a written plan that follows all IRS regulations
- 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 maximizing your social security benefits
Self-Employed Retirement Plans in University City, MO: Correct Capital's Process
University City, MO business owners without the time, desire, or knowledge to handle their self-employed retirement plan themselves can become burdened 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 meeting the golden years of your dreams 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 — We only need 20 minutes for a member of our advisor team to understand if we're a good fit for you and your business. This short introduction lets us get a feel for your needs with no major time investment for you.
- Gather Information — If we seem like a good fit, we'll request more info, including the number of employees in your business (if applicable), your current financial situation, and your retirement goals. 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 your plan in detail to ensure you understand it.
- 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 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 morally bound to do what's best for you and only you. 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 University City, MO include:
Call Correct Capital for Your University City, MO Self-Employed Retirement Plan
Your business isn't "just a business" to you, and your University City, MO financial advisors need to offer more than simply sound financial advice. Correct Capital enjoys getting to know our clients and what makes them and their business tick to deliver customized self-employed retirement plans. We give all our University City, 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 University City, MO, call Correct Capital today at 877-930-4015 or fill out our online form.
