Self-employed retirement plans in Wildwood, MO. The freedom of having your own business in Wildwood, MO is a fantastic aspect of working for yourself. But more leeway can be accompanied by uncertainty, especially in in regards to saving for retirement, you don't have an employer who will set up a plan for you. Only 13% of self-employed people have retirement plans they save with, 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 tax benefits 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. In fact, we were inspired by a small business owner, our founder's father (you can learn more about our story here). We know that your business and retirement aspirations extend far beyond mere monetary figures, and we are dedicated to providing customized plans that reflect where you are and where you want to go. Read on to discover more about your self-employed retirement plan options in Wildwood, MO, or call Correct Capital at 314-930-401(k) or contact us online to speak to a member of our advisory team now.
What Self-Employed Retirement Plans Are There?
There are many retirement savings options that the self-employed can set up, and which is best for you depends on your unique situation. A Wildwood, MO financial advisor can help you grasp the advantages and disadvantages of each option and select the most suitable one for your circumstances. Generally, your self-employed retirement plan options in Wildwood, MO include:
Traditional or Roth IRA
Plan Overview: IRAs, or Individual Retirement Accounts, are investment accounts that allows you to set aside money for the future, with special tax considerations. If you deposit to a traditional IRA, contributions are typically tax-deductible, and investment earnings grow tax-deferred, but withdrawals in retirement are taxed as regular income. In contrast, Roth IRA deposits are made with money you've already paid taxes on, but you pay no taxes on withdrawals or earnings. In both accounts, withdrawals can be made without extra fees 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 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, 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 good self-employed retirement plan if your business goes through fluctuating income periods. SEP IRAs don't have the high upfront costs or administrative expenses often associated with other retirement plans.
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 set up 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 based on a special 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 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 add funds as an employee and on your own behalf as the employer. This offers greater potential for savings than some other retirement savings plans, however the possibility of greater retirement savings is often counterbalanced by more limited investment options. In a one-participant 401(k) plan, you can make either traditional or Roth deferrals, which each enjoy the same tax advantages as their IRA contribution counterparts.
Eligibility: Only self-employed individuals and their spouses have access to individual 401(k)s.
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) 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.
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 a fixed monthly figure to self-employed individuals after they've left the workforce. In contrast to 401(k)s or IRAs, a defined benefit plan doesn't fluctuate because of investment returns, 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 a business with no employees besides the owner or has less than five employees can open 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. Typically, good candidates for defined benefit plans are:
- Partners or owners who want to save 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 "catch up" or accelerate the retirement savings
Contribution Limits: The contribution limit must be decided by an actuary who calculates for your income, age, and retirement goals. Contribution limits change annually.
Why You Need a Financial Advisor for Your Self-Employed Retirement Plan in Wildwood, MO
A financial advisor in Wildwood, MO specialized in self-employed retirement plans can be a crucial partner for self-employed individuals. They have the expertise to help you navigate the complexities of retirement planning and implement a personalized approach that gets you where you want to go. A financial advisor will analyze where your finances currently are, help you figure out your risk tolerance, and help you make sound decisions about saving and investing for retirement. 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 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 maximizing your social security benefits
Self-Employed Retirement Plans in Wildwood, MO: Correct Capital's Process
Wildwood, 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 stressed when looking at their options. At Correct Capital, our retirement consultants handle the lion's share of your retirement planning for you, and endeavor to make achieving your retirement goals as easy as possible for you. We can help you establish and maintain your self-employed retirement plan in four simple steps:
- Schedule a Call — We only need a short 20-minute call for a member of our advisor team to understand if we're a good fit for you and your business. This short introduction allows us to get a feel for what you're looking for with no major time investment on your part.
- Gather Information — If we both decide to move forward, we'll ask for 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 details of your plan to ensure understand how it best correlates to your needs.
- Implementation and Monitoring — Once we've agreed on your plan, we'll put everything in place so your savings can start growing immediately. Throughout our relationship, we'll meet with you and monitor your plan to ensure it stays suited to your needs.
Our financial planners and retirement consultants are fiduciary advisors who are legally and morally obligated to do what's best for you and only you. We are proud to provide clear communication and high-quality service to assist you reach your self-employed retirement goals.
Other services we offer in Wildwood, 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 Wildwood, MO Self-Employed Retirement Plan
Your business isn't simply an enterprise to you, and your Wildwood, MO financial advisors need to provide you with more than merely sage financial advice. Correct Capital takes pride in getting to know our clients and their business to deliver customized self-employed retirement plans. We give all our Wildwood, 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 Wildwood, MO, speak to a member of our team today at 314-930-401(k) or fill out our online form.