Self-employed retirement plans in Wildwood, MO. The freedom of running your own business in Wildwood, MO is a fantastic aspect of being self-employed. But more leeway can come with a lack of security, particularly in when it comes to saving for retirement, as you don't have access to any employer plans. Only 13% of self-employed people have a workplace retirement plan, but many would be better off exploring what plans are available. In addition to setting you up for the golden years of your dreams, partnering with a financial advisor to set up your self-employed retirement plan in Wildwood, 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 than Correct Capital. Our founder's father was a small business owner himself (you can learn more about our story here). We know that your business and retirement goals extend far beyond just profit, and we are committed to providing customized solutions that fit where you are and where you want to go. Read on to learn more about your self-employed retirement plan options in Wildwood, MO, or call Correct Capital at 877-930-4015 or contact us online to speak to a small business financial advisor now.
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Types of Self-Employed Retirement Plans
There are a few different retirement savings plans that the self-employed can contribute to, each with its own set of advantages and considerations. A Wildwood, MO financial advisor can help you understand the advantages and disadvantages of each option and select that helps both your short- and long-term goals. Generally, your self-employed retirement plan options in Wildwood, MO include:
Traditional or Roth IRA
Plan Overview: IRAs, or Individual Retirement Arrangements, are personal savings plans that provides individuals with tax advantages to save for retirement. If you deposit to a traditional IRA, contributions are typically tax-deductible, and any gains on investments grow tax-deferred, but withdrawals in retirement are taxed as if it were income. On the other hand, Roth IRA contributions are made with after-tax income, but qualified distributions in retirement, including earnings, are tax-free. In both accounts, withdrawals are penalty-free if 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, 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. 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 would have to contribute the same amount for them as you do for yourself. You can either contribute a flat-dollar amount or a percentage of wages to employee accounts. SEP IRAs may be a good self-employed retirement plan if your business goes 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 contributions are made with pre-tax money and withdrawals are taxed at your income at the time of distribution.
Eligibility: Any employer, including the self-employed, can set up a SEP.
Contribution Limits: Contribution limits for employees in a SEP IRA are whichever is the least out of:
- 25% of compensation, or
- $66,000
For the self-employed individual, the annual contribution limit is decided by a unique 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 businesses with no employees or who only employ a spouse. Solo 401(k)s function in the same same way as employer-sponsored 401(k) plans, and you can add funds as both an employer or employee with pre-tax money. This offers greater potential for savings than SEPs or IRAs, however the additional opportunities for saving are often offset by having less investment options available. In a one-participant 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 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 an assured monthly figure to self-employed individuals once they've retired. As opposed to other types of retirement plans, a defined benefit plan doesn't fluctuate based on investment gains, but allows self-employed people to have an exact dollar figure as their income in retirement. This plan is best suited 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 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 establish an individual defined benefit plan, but it's typically not a great idea unless you're over 50 and earn at least $250,000 a year. 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 couldn'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 change each year.
How a Financial Advisor Can Help Guide Your Self-Employed Retirement Plan in Wildwood, MO
A financial advisor in Wildwood, MO specialized in self-employed retirement plans can be indispensable for self-employed individuals. They have the experience to help you understand the complexities of retirement planning and create a tailored strategy that gets you where you want to go. A financial advisor will evaluate 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
- Personalize the plan to your needs even further
- Adopt a written plan in accordance with IRS rules
- 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 as you continue on the road to retirement
- Increase your retirement income by increasing your social security benefits
Self-Employed Retirement Plans in Wildwood, MO: Correct Capital's Process
Wildwood, MO business owners who don't have the time, interest, or knowledge to handle their self-employed retirement plan themselves can become stressed when looking at their options. At Correct Capital, our retirement consultants handle the bulk of the retirement planning work on your behalf, and attempt to make meeting your business and retirement aspirations as simple as possible for you. 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 a short 20-minute call for a member of our advisor team to understand if we're suitable for you and your business. This brief introduction lets us get a feel for your needs with no obligation on your part.
- Gather Information — If we both decide to move forward, 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 — 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. As long as we work together, we'll meet with you and adjust your plan so it stays consistent with 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 clear communication and top-notch service to assist you reach your self-employed retirement goals.
Other services we offer in Wildwood, MO include:
Call Correct Capital for Your Wildwood, MO Self-Employed Retirement Plan
Your business isn't "just a business" to you, and your Wildwood, MO financial advisors need to offer more than merely wise 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 Wildwood, MO clients the same 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 Wildwood, MO, call Correct Capital today at 877-930-4015 or fill out our online form.
