Self-employed retirement plans in Weldon Spring, MO. The freedom of running your own business in Weldon Spring, 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, employer-sponsored plans aren't an option. Only a fraction of self-employed people have a workplace retirement plan, but many would be wise to look into what plans are available. In addition to setting you up for the golden years of your dreams, working with a financial advisor to get started and maintain your self-employed retirement plan in Weldon Spring, MO offers tax benefits that can help drive you and your business towards success.
Few financial advisory 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 tailored solutions that fit your goals. Continue reading to discover more about your self-employed retirement plan options in Weldon Spring, MO, or call Correct Capital at 877-930-4015 or fill out our online form to speak to a small business financial advisor today.
Types of Self-Employed Retirement Plans
There are several retirement savings plans available for self-employed individuals, and which is best for you depends on your unique situation. A Weldon Spring, MO financial advisor can help you comprehend the advantages and disadvantages of each option and choose that works best for you. Generally, your self-employed retirement plan options in Weldon Spring, MO are comprised of:
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, deposits 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 payments are made with money you've already paid taxes on, but qualified withdrawals in retirement, including earnings, are tax-free. In both a traditional an a Roth IRA, withdrawals can be made without penalty 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, 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 percentage of of the money they make from their 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 must contribute an equal amount to their pensions. You may choose to contribute a flat-dollar amount or a percentage of wages to employee accounts. SEP IRAs may be a good self-employed retirement plan for businesses that experience 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 deposits are made with money you haven't paid taxes on and withdrawals are taxed as income.
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 the lesser of:
- 25% of compensation, or
- $66,000
For self-employed people, the maximum amount you can contribute in a given year is based on 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 whose only employee is 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 increased savings opportunities than SEPs or IRAs, however the possibility of greater retirement savings is often offset by more limited investment options. In an individual 401(k) plan, you can make either traditional or Roth deferrals, which each feature 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 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 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 monthly figure to self-employed individuals once they've retired. In contrast to other types of retirement plans, 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 significant sum for retirement and are willing to add substantial contributions. Contributions are tax deferred and withdrawals are taxed as income in retirement.
Eligibility: Any self-employed individual who runs a business where they're the only owner or has less than five employees can establish 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 desire to save 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 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 annually.
How a Financial Advisor Can Help Guide Your Self-Employed Retirement Plan in Weldon Spring, MO
A financial advisor in Weldon Spring, MO specialized in self-employed retirement plans can be an invaluable resource for self-employed individuals. They have the knowledge to help you understand the intricacies of retirement planning and design a personalized approach that gets you where you want to go. A financial advisor will analyze where your finances currently are, understand your risk tolerance, and guide you in making informed decisions for yourself, both as employer and future retiree. Part of what we do for you includes:
- Help you choose 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
- 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 maximizing your social security benefits
Self-Employed Retirement Plans in Weldon Spring, MO: Correct Capital's Process
Weldon Spring, MO business owners who don't want to invest the time, interest, and skill set to manage their own self-employed retirement plan can become overwhelmed with the different options available to them. At Correct Capital, our retirement consultants 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 establish and maintain 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 know if we're a good fit for you and your business. This short introduction allows us to understand what you're looking for with no major time investment 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 custom 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 you're comfortable with it.
- Implementation and Monitoring — Once we've agreed on your plan, we'll put everything in place so you can start saving. Throughout our relationship, we'll keep you up-to-date with how things are going and adjust your plan to ensure it stays suited to your needs.
Our financial advisors and retirement consultants are fiduciary advisors who have a legal and moral obligation to do what's best for you and only you. We are proud to provide straightforward communication and high-quality service to help you attain your self-employed retirement goals.
Other services we offer in Weldon Spring, MO include:
- Succession Planning
- Fiduciary Financial Advisor
- Company 401(k) Plans
- ESOP Advisor
- 401(k) For Small Business
Call Correct Capital for Your Weldon Spring, MO Self-Employed Retirement Plan
Your business isn't "just a business" to you, and your Weldon Spring, MO financial advisors need to provide you with more than merely sound financial advice. Correct Capital enjoys getting to know our clients and their business to deliver personalized self-employed retirement plans. We give all our Weldon Spring, 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 Weldon Spring, MO, speak to a member of our team today at 877-930-4015 or contact us online.
