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 uncertainty, especially in terms of saving for retirement, as you don't have access to any employer plans. Only a fraction of self-employed individuals 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, working with a financial advisor to set up your self-employed retirement plan in Webster Groves, MO offers tax benefits that can help free up much-needed funds for your business.
Not many wealth management and retirement planning firms know what it's like to be self-employed or a small business owner than Correct Capital. In fact, we were inspired by a self-employed individual, our founder's father (you can read more about our story here). We have a deep understanding that your business and retirement goals transcend mere monetary figures, and we are devoted to offering tailored solutions that fit where you are and where you want to go. Continue reading to discover more about your self-employed retirement plan options in Webster Groves, 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 at your convenience.
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 Webster Groves, MO financial advisor can help you comprehend the advantages and disadvantages of each option and select the most suitable one for your situation. Typically, your self-employed retirement plan options in Webster Groves, MO include:
Traditional or Roth IRA
Plan Overview: IRAs, or Individual Retirement Arrangements, are investment accounts that provides individuals with tax advantages to save for retirement. If you deposit to a traditional IRA, deposits are deducted from your taxable income, and any gains on investments grow tax-deferred, but withdrawals in retirement are taxed as regular income. In contrast, Roth IRA contributions are made with money you've already paid taxes on, but you pay no taxes on withdrawals or investment gains. In both a traditional an a Roth IRA, 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 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 their net earnings 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, they must receive the same amount you do. 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 fluctuating income periods. SEP IRAs don't have expensive initial setup or administrative charges other retirement plans do.
SEPs work like traditional IRAs, where contributions are made with money you haven't paid taxes on and withdrawals are taxed at your income at the time of withdrawal.
Eligibility: Any employer, including the self-employed, can establish a SEP.
Contribution Limits: Contribution limits for employees in a SEP IRA are the lesser of:
- 25% of compensation, or
For self-employed people, the maximum amount you can contribute in a given year 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 businesses with no employees or whose only employee is a spouse. Solo 401(k)s function in the same same way as employer-sponsored 401(k) plans, and you can add funds as an employee and on your own behalf as the employer. This offers greater potential for savings than SEPs or IRAs, however the possibility of greater retirement savings is often counteracted 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 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 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) 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. In contrast to the defined contribution plans mentioned above, a defined benefit plan doesn't oscillate because of 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 significant contributions. Contributions are tax deferred and withdrawals 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 establish an individual defined benefit plan, but it's typically not a great idea unless you're over 50 and earn well into the six figures. Typically, good candidates for defined benefit plans are:
- 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 change annually.
The Importance of a Financial Advisor for Your Self-Employed Retirement Plan in Webster Groves, MO
A financial advisor in Webster Groves, MO specialized in self-employed retirement plans can be an invaluable resource for self-employed individuals. They have the know-how to help you navigate the complexities of retirement planning and create a tailored strategy that gets you where you want to go. A financial advisor will assess where your finances currently are, 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 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
- Maximize your retirement income by maximizing your social security benefits
Self-Employed Retirement Plans in Webster Groves, MO: Correct Capital's Process
Webster Groves, MO business owners without the time, inclination, or knowledge to handle their self-employed retirement plan themselves can become overwhelmed with the different options available to them. At Correct Capital, our financial advisors handle the bulk of the retirement planning work on your behalf, and attempt to make achieving the golden years of your dreams as simple as we possibly can. We can help you get set up with your self-employed retirement plan in a straightforward four-step process:
- Schedule a Call — It only takes 20 minutes 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 what you're looking for with no obligation for you.
- Gather Information — If we seem like a good fit, we'll request information, including the number of employees in your business (if applicable), your current financial situation, and what kind of retirement you want to have. This allows us to put together a custom plan suited specifically for your needs.
- Review Your Plan — Once we've compiled your plan, 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 enacted your plan, we'll put everything in place so you can start saving. Throughout our relationship, we'll meet with you and adjust your plan to ensure it stays suited to your needs.
Our financial advisors and retirement consultants are fiduciary advisors who are legally and ethically obligated to do what's in your best interest. We are proud to provide straightforward communication and high-quality service to help you achieve your self-employed retirement goals.
Other services we offer in Webster Groves, 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 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 provide you with 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 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, speak to a member of our team today at 314-930-401(k) or fill out our online form.