Self-employed retirement plans in Warson Woods, MO. The flexibility involved with running your own business in Warson Woods, MO is a fantastic aspect of being self-employed. But that freedom can come with a lack of security, particularly in when it comes to building a retirement plan, you don't have an employer who will set up a plan for you. Only a fraction of self-employed people have retirement plans they save with, but many would be better off exploring 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 Warson Woods, MO offers favorable tax incentives that can help free up much-needed funds for your business.
Not many wealth management and retirement planning firms will understand the needs of the self-employed and small business owners than Correct Capital. In fact, we were inspired by a small business owner, our founder's father (you can discover more about our story on our website). We know that your business and retirement goals go beyond figures and numbers, and we are dedicated to offering personalized solutions that fit where you are and where you want to go. Read on to read more about your self-employed retirement plan options in Warson Woods, 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 a few different retirement savings plans that the self-employed can contribute to, and which is best for you depends on your unique situation. A Warson Woods, MO financial advisor can help you grasp the pros and cons of each option and select that helps both your short- and long-term goals. Typically, your self-employed retirement plan options in Warson Woods, MO are comprised of:
Traditional or Roth IRA
Plan Overview: IRAs, or Individual Retirement Accounts, are investment accounts that allows you to set aside money for the future, with special tax considerations. 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 subject to income tax. In contrast, Roth IRA contributions are made with money you've already paid taxes on, but qualified distributions in retirement, including investment gains, are tax-free. In both accounts, withdrawals can be made without extra fees if 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, 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. 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 must contribute an equal amount to their pensions. You may choose to contribute a flat-dollar amount or a percentage of annual income to employee accounts. SEP IRAs may be an excellent self-employed retirement plan if your business goes through 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 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: 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 the self-employed individual, the amount eligible to be contributed is based on 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 sole proprietors or those who only employ a spouse. Solo 401(k)s work about the same as 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 some other retirement savings plans, however the additional opportunities for saving are often offset by having less investment options available. In an individual 401(k) plan, you can make either traditional deferrals (with pre-tax money) or Roth deferrals (with after-tax money).
Eligibility: Only business owners 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 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 provides a a fixed benefit to self-employed individuals after they've left the workforce. As opposed to other types of retirement plans, a defined benefit plan doesn't go up and down because of 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 large amount for retirement and are willing to make substantial contributions. Contributions are tax deferred and contributions are taxed as income in retirement.
Eligibility: Any self-employed individual who runs an owner-only business 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 well into the six figures. Those interested in defined benefit plans tend to be:
- Partners or owners who want 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 desire to "catch up" or accelerate the retirement savings
Contribution Limits: The contribution limit must be decided by an actuary who calculates for your income, age, and retirement goals. Contribution limits are adjusted every year.
Why You Need a Financial Advisor for 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 know-how to help you understand the complexities of retirement planning and create a customized plan that acts as a roadmap through your financial future. A financial advisor will analyze where your finances currently are, understand your risk tolerance, and help you make smart decisions for yourself, both as employer and future retiree. 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 into and through retirement
- Maximize your retirement income by maximizing your social security benefits
Self-Employed Retirement Plans in Warson Woods, MO: Correct Capital's Process
Warson Woods, MO business owners who don't have the time, interest, or knowledge to handle their self-employed retirement plan themselves can become burdened when looking at their options. At Correct Capital, our retirement consultants handle the lion's share of your retirement planning for you, and attempt to make achieving your business and 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:
- Schedule a Call — We only need 20 minutes for one of our advisors to understand if we're a good fit for you and your business. This brief introduction allows us to understand what you're looking for with no obligation on your part.
- Gather Information — If we seem like a good fit, we'll request information, including how many employees you have (if any), your current finances, and what kind of retirement you want to have. 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 go over your plan in detail to ensure understand how it best correlates to your needs.
- Implementation and Monitoring — Once we've agreed on your plan, we'll put everything in place so you can start saving. As long as we work together, 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 straightforward communication and top-notch service to help you reach your self-employed retirement goals.
Other services we offer in Warson Woods, 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 Warson Woods, MO Self-Employed Retirement Plan
Your business isn't "just a business" to you, and your Warson Woods, MO financial advisors need to provide you with more than merely wise financial advice. Correct Capital enjoys getting to know our clients and their business to deliver personalized self-employed retirement plans. We give all our Warson Woods, MO clients our 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 314-930-401(k) or fill out our online form.