Self-employed retirement plans in Warson Woods, MO. The freedom of having your own business in Warson Woods, MO is one of the great things about being self-employed. But that freedom can be accompanied by limited stability, especially in when it comes to saving for retirement, as you don't have access to any employer plans. Only a fraction of self-employed individuals have retirement plans they can contribute to, but many would be better off exploring what plans are available. 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 Warson Woods, MO offers tax benefits that can help you improve your bottom line.
Only a handful of 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. Our founder's father was a small business owner himself (you can learn more about our story on our website). We know that your business and retirement aspirations extend far beyond mere monetary figures, and we are dedicated to providing customized plans that reflect where you are and where you want to go. Continue reading to learn more about your self-employed retirement plan options in Warson Woods, 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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Types of Self-Employed Retirement Plans
There are several retirement savings options available for self-employed individuals, and which is best for you depends on your unique situation. A Warson Woods, MO financial advisor can help you comprehend the advantages and disadvantages of each option and choose the most suitable one for your circumstances. Typically, your self-employed retirement plan options in Warson Woods, MO are comprised of:
Traditional or Roth IRA
Plan Overview: IRAs, or Individual Retirement Arrangements, are investment accounts that offer specific tax advantages. In a traditional IRA, deposits are deducted from your taxable income, and any gains on investments grow tax-deferred, but distributions in retirement are liable to income tax. On the other hand, Roth IRA payments are made with after-tax income, but you pay no taxes on withdrawals or investment gains. In both accounts, distributions can be made without extra fees if you are at least 59½.
Eligibility: While many retirement plans, such as 401(k)s, are set up through an employer, 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 percentage of of the money they make from their 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, you would have to contribute the same amount for them as you do for yourself. You may choose to contribute either a fixed dollar sum or a percentage of wages to employee accounts. SEP IRAs may be a good self-employed retirement plan if your business experiences cycles of high revenue and low revenue. SEP IRAs don't have the costly startup or administrative fees often associated with other retirement plans.
SEPs work like traditional IRAs, where contributions are made with pre-tax money and distributions are taxed as income.
Eligibility: Any employer, including the self-employed, can set up 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
- $66,000
For the self-employed individual, the maximum amount you can contribute in a given year is decided by a specific formula.
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 in the same same way as employer-sponsored 401(k) plans, and you can add funds as both an employer or employee with pre-tax money. This offers increased savings opportunities than SEPs or IRAs, however the additional opportunities for saving are often counterbalanced by having less investment options available. In a one-participant 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 sole proprietors 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 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.
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 provides a a predetermined monthly figure to self-employed individuals upon retirement. In contrast to 401(k)s or IRAs, a defined benefit plan doesn't fluctuate based on investment gains, 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 large amount 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 where they're the only owner or has less than five employees can open 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 want to do more
- Companies who have demonstrated consistent profit patterns
- Partners or owners over age 40 who want to "catch up" or accelerate the retirement savings
Contribution Limits: The contribution limit is calculated by an actuary who calculates for your income, age, and retirement goals. Contribution limits are adjusted annually.
How a Financial Advisor Can Help Guide Your Self-Employed Retirement Plan in Warson Woods, MO
A financial advisor in Warson Woods, MO specialized in self-employed retirement plans can be a crucial partner for self-employed individuals. They have the knowledge to help you understand the complexities of retirement planning and design a customized plan that acts as a roadmap through your financial future. A financial advisor will evaluate your financial situation, help you figure out your risk tolerance, and help you make smart decisions about your financial future. Part of what we do for you includes:
- Help you choose 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 into and through retirement
- Increase your retirement income by increasing your social security benefits
Self-Employed Retirement Plans in Warson Woods, MO: Correct Capital's Process
Warson Woods, MO business owners without the time, desire, or knowledge to handle their self-employed retirement plan themselves can become overwhelmed with the different plans available to them. At Correct Capital, our retirement consultants handle the lion's share of your retirement planning for you, and attempt 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 — We only need a short 20-minute call for one of our advisors to understand if we're the best firm to help you reach your goals. This brief introduction allows us to get a feel for your needs with no obligation on your part.
- 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 finances, and what kind of retirement you want to live. This allows us to put together a personalized plan based entirely on type of advising you need.
- Review Your Plan — After we put together a plan based on the information you provide, we'll meet with you and discuss your plan in detail to ensure it's what you were looking for.
- Implementation and Monitoring — Once we've agreed on your plan, we'll put everything in place so you can start saving. Throughout your time partnering with us, we'll keep you up-to-date with how things are going and adjust your plan so it stays consistent with your needs.
Our financial planners and retirement consultants are fiduciary advisors who are legally and ethically bound to do what's best for you and only you. We are proud to provide straightforward communication and top-notch service to help you achieve your self-employed retirement goals.
Other services we offer in Warson Woods, MO include:
Call Correct Capital for Your Warson Woods, MO Self-Employed Retirement Plan
Your business isn't merely a business to you, and your Warson Woods, MO financial advisors need to offer more than merely wise 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 Warson Woods, MO clients the same I.O.U. promise: all of the advice you get from us will be independent, objective, and unbiased. To get started on your self-employment retirement plan in Warson Woods, MO, call Correct Capital today at 877-930-4015 or contact us through our website.
