Self-employed retirement plans in Webster Groves, MO. The flexibility involved with having your own business in Webster Groves, MO is one of the great things about working for yourself. But that freedom can come with limited stability, particularly in in regards to saving for retirement, employer-sponsored plans aren't an option. Only a fraction of self-employed individuals have a workplace retirement plan, but many would be wise to look into their options. In addition to a more comfortable retirement, working with a financial advisor to set up your self-employed retirement plan in Webster Groves, MO offers significant tax advantages that can help you improve your bottom line.
Only a handful of wealth management and retirement planning firms will understand the needs of the self-employed and small business owners more than Correct Capital. Our founder's father was a small business owner himself (you can discover more about our story on our website). We know that your business and retirement goals go beyond spreadsheets and percentages, and we are devoted to offering tailored solutions that reflect where you are and where you want to go. Continue reading to read more about your self-employed retirement plan options in Webster Groves, MO, or call Correct Capital at 877-930-4015 or fill out our online form to speak to a small business financial advisor today.
Schedule a Meeting With an Advisor Today
Correct Capital Wealth Management's office is physically located in St. Louis, MO, but we serve clients throughout the United States in both personal financial planning and corporate retirement plans.
Schedule a 15-Minute Introductory Call
More From Correct Capital Wealth Management
Explore how Correct Capital Wealth Management can help guide you toward smarter decisions, clearer goals, and lasting financial success.
Subscribe To Our Newsletter Listen To Our Podcast Watch Our YouTube Channel
What Self-Employed Retirement Plans Are There?
There are many retirement savings options available for self-employed individuals, and which is best for you depends on your unique situation. A Webster Groves, MO financial advisor can help you comprehend the pros and cons of each option and select that works best for you. Generally, your self-employed retirement plan options in Webster Groves, MO include:
Traditional or Roth IRA
Plan Overview: IRAs, or Individual Retirement Accounts, are investment accounts that provides individuals with tax advantages to save for retirement. In a traditional IRA, contributions are deducted from your taxable income, 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, distributions are penalty-free as long as 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 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 portion of of their annual income 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 fixed dollar sum or a percentage of annual income to employee accounts. SEP IRAs may be a good self-employed retirement plan for businesses that go through periods of variable income. SEP IRAs don't have expensive initial setup or administrative charges often associated with other retirement plans.
SEPs work like traditional IRAs, where payments are made with money you've yet to pay taxes on and distributions are taxed at your income at the time of withdrawal.
Eligibility: Self-employed individuals and any employer, can set up a SEP.
Contribution Limits: Contribution limits for employees in a SEP IRA are the lesser of:
- 25% of compensation, or
- $66,000
For self-employed people, the amount eligible to be contributed is based on 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 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 more savings than some other retirement savings plans, however the possibility of greater retirement savings is often offset by more limited investment options. In a solo 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 establish 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) which cannot exceed 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.
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 benefit to self-employed individuals after they've left the workforce. In contrast to 401(k)s or IRAs, a defined benefit plan doesn't oscillate because of investment returns, but allows self-employed people to have an exact dollar figure as their income in retirement. This plan is ideal for high-earning self-employed individuals who want to save a a substantial portion for retirement and want 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 an owner-only business or has less than five employees can open 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 want to save more than $66,000 (or $73,500 over age 50)
- Companies already contributing 3-4% who are willing to do more
- Companies who are sure of their 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 decided by an actuary based on your income, age, and retirement goals. Contribution limits are adjusted annually.
How a Financial Advisor Can Help Guide Your Self-Employed Retirement Plan in Webster Groves, MO
A financial advisor in Webster Groves, MO specialized in self-employed retirement plans can be indispensable for self-employed individuals. They have the experience to help you navigate the intricacies of retirement planning and implement a tailored strategy that aligns with your goals. A financial advisor will analyze your financial situation, understand your risk tolerance, and guide you in making informed decisions for yourself, both as a business owner and future retiree. Part of what we do for you includes:
- Help you pick a plan that best fits your needs and goals
- Customize 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 guidance as you continue on the road to retirement
- Maximize your retirement income by increasing your social security benefits
Self-Employed Retirement Plans in Webster Groves, MO: Correct Capital's Process
Webster Groves, MO business owners without the time, desire, or knowledge to handle their self-employed retirement plan themselves can become overwhelmed when looking at their options. At Correct Capital, our financial advisors handle the bulk of the retirement planning work for you, and endeavor to make meeting your business and retirement goals as simple 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 know 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 ask for more info, including how many employees you have (if any), 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 — 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 your savings can start growing immediately. As long as we work together, we'll meet with you and monitor your plan to ensure it stays suited to your needs.
Our financial advisors and retirement consultants are fiduciary advisors who have a legal and ethical obligation to do what's best for you and only you. We pride ourselves in providing clear communication and high-quality service to assist you achieve your self-employed retirement goals.
Other services we offer in Webster Groves, MO include:
Call Correct Capital for Your Webster Groves, MO Self-Employed Retirement Plan
Your business isn't "just a business" to you, and your Webster Groves, MO financial advisors need to offer more than just sound financial advice. Correct Capital takes pride in getting to know our clients and what makes them and their business tick to deliver customized self-employed retirement plans. We offer all our Webster Groves, 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 Webster Groves, MO, call Correct Capital today at 877-930-4015 or contact us through our website.
