Self-employed retirement plans in Wentzville, MO. The flexibility involved with running your own business in Wentzville, MO is a wonderful advantage to being self-employed. But that freedom can be accompanied by a lack of security, especially in in regards to saving for retirement, employer-sponsored plans aren't an option. Barely more than 10% of self-employed individuals have retirement plans they save with, but many would be wise to explore their options. In addition to setting you up for the retirement of your dreams, partnering with a financial advisor to get started and maintain your self-employed retirement plan in Wentzville, MO offers significant tax advantages that can help you improve your bottom line.
Few wealth management and retirement planning firms will understand the needs of the self-employed and small business owners as well as Correct Capital. Our founder's father was a small business owner himself (you can discover more about our story on our website). We have a deep understanding that your business and retirement aspirations extend far beyond figures and numbers, and we are committed to providing customized solutions that reflect where you are and where you want to go. Continue reading to learn more about your self-employed retirement plan options in Wentzville, 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 many retirement savings plans available for self-employed individuals, each with its own set of benefits and considerations. A Wentzville, MO financial advisor can help you comprehend the advantages and disadvantages of each option and choose the most suitable one for your specific needs. Generally, your self-employed retirement plan options in Wentzville, 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, contributions are deducted from your taxable income, and any gains on investments grow tax-deferred, but distributions in retirement are subject to income tax. On the other hand, Roth IRA deposits are made with after-tax income, but you pay no taxes on withdrawals or investment gains. In both a traditional an a Roth IRA, withdrawals are penalty-free 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, 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 share of of the money they make from their self-employment. Contributions can only be made by an employer, so, as a self-employed individual, you (the employee) would not be able to contribute more than the 25% you (the employer) already contributed. If you have employees, you must contribute an equal amount to their plans. You may choose to contribute either a fixed dollar sum or a percentage of wages to employee accounts. SEP IRAs may be a suitable self-employed retirement plan for businesses that go through cycles of high revenue and low revenue. SEP IRAs don't have expensive initial setup or administrative charges other retirement plans do.
SEPs work like traditional IRAs, where deposits are made with pre-tax money 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 whichever is the least out of:
- 25% of compensation, or
For self-employed people, the annual contribution limit is based on a specific formula.
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 more savings than SEPs or IRAs, however the possibility of greater retirement savings is 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 sole proprietors 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 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.
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 an assured benefit to self-employed individuals once they've retired. As opposed to 401(k)s or IRAs, a defined benefit plan doesn't go up and down based on 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 significant sum for retirement and want 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 an owner-only business or has less than five employees can establish an individual defined benefit plan, but it's typically only recommended 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 contribute more than $66,000 (or $73,500 over age 50)
- Companies already contributing 3-4% who are want 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 didn't save as much
Contribution Limits: The contribution limit must be decided 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 Wentzville, MO
A financial advisor in Wentzville, MO specialized in self-employed retirement plans can be indispensable for self-employed individuals. They have the know-how to help you understand the complexities of retirement planning and design a tailored strategy that aligns with your goals. A financial planner will analyze where your finances currently are, understand your risk tolerance, and help you make sound 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
- Personalize the plan to your needs even further
- Adopt a written plan in accordance with 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 support into and through retirement
- Maximize your retirement income by increasing your social security benefits
Self-Employed Retirement Plans in Wentzville, MO: Correct Capital's Process
Wentzville, MO business owners who don't have the time, desire, 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 strive to make achieving the golden years of your dreams as easy as possible for you. We can help you get set up with your self-employed retirement plan in four simple steps:
- Schedule a Call — We only need 20 minutes for one of our advisors to understand if we're the best firm to help you reach your goals. This short introduction lets us get a feel for your needs with no obligation on your part.
- 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 finances, and your retirement goals. 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 the specifics of your plan to ensure you understand it.
- Implementation and Monitoring — Once we've enacted your plan, we'll put everything in place so your savings can start growing immediately. Throughout your time partnering with us, we'll meet with you and adjust your plan so it stays consistent with your needs.
Our financial planners and retirement consultants are fiduciary advisors who have a legal and moral obligation to do what's in your best interest. We pride ourselves in providing straightforward communication and excellent service to help you reach your self-employed retirement goals.
Other services we offer in Wentzville, MO include:
- Succession Planning
- 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
Call Correct Capital for Your Wentzville, MO Self-Employed Retirement Plan
Your business isn't "just a business" to you, and your Wentzville, MO financial advisors need to provide you with more than simply sage financial advice. Correct Capital enjoys getting to know our clients and what makes them and their business tick to deliver personalized self-employed retirement plans. We give all our Wentzville, MO clients our 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 Wentzville, MO, call Correct Capital today at 314-930-401(k) or fill out our online form.