The Individual 401k - BIG Business Benefits For The Home BusinessWritten by Lamaute Capital, Inc.
Major mutual fund and investment management companies now offer self employed individuals 401k plans that are easy to install and administer at very low cost. What's more independent contractors and small business owners can borrow part of their retirement savings tax-free and penalty free by taking advantage of a loan provision in these new plans. Depending on who's offering them, these individual plans are sold under different trademarked names such as (solo 401k, uni-k plan, personal(k), one person 401k, mini-401k, solo-owner 401k, etc.,.) Small business owners can establish an individual 401k and transfer their IRA, 401k, 403b, or other qualified retirement funds into this new retirement plan. Once funds are in plan, owners can borrow 50% of their 401k account balance up to $50,000 tax-free and penalty free provided they pay back loan. Any business owner with no employees other than co-owners or spouses can establish an individual 401 k plan. It doesn't matter if you are a startup or been in business for years. Your may work as an independent contractor with 1099 income, freelancer, sole proprietor, or in a partnership, Limited Liability Company (LLC), or corporation. . It is fairly common for employees of large companies to have option to borrow from their 401(k). But before 2002, small business owners were not allowed same privilege. Instead, owners needing to tap their retirement funds for whatever reasons had to take cash distributions from their IRAs or other retirement accounts. This required them to pay federal and state taxes on distributions, plus generally a 10% penalty if they were under age 59 ½. They also lost chance to put money back into their retirement accounts.
| | Investing as a sport?Written by David Leonhardt
I said last week that money doesn't generally buy happiness, but lack of it can buy absolute misery. This, by way, is not just my personal observation. It is conclusion of some of most respected happiness researchers (Yes, there is such a thing -- read my book.)The trouble is that we have to pay attention to money more when we lack it than when we have it. This doesn't seem fair, but Lord works in mysterious ways. Most people are invested in stock market, either directly or through mutual funds, pension plans or some other vehicle. So it is hard not to be part of Panic Crowd. But I ,in all my financial wisdom, have two golden rules to offer. These may not make you rich, but they will keep you happy. Number One: Place your investments in safest vehicles possible (Do as I say, not as I do!) and forget about them. When next recession ends, take inventory and see that you still have investments. Most of us don't get a rush out of watching our investments plunge or yo-yo up and down. Most people are happier when they forget they even have investments. Number Two: If you are one of those people with a terminal case of Itchy Trading Finger, then you probably would not be happy ignoring your investments. Place aside what you need for long term, such as retirement if your heart lasts that long. Don't play with this money. Don't touch it. Trade only with "extra" money. The rest of you are asking, "What's that?", but Itchy Trading Fingers know what I'm talking about. They view stock trading as a sport. In fact, stock trading is a sport. Much more than, say, hunting. Think about it. In a sport, two equal opponents square off against one another. "Let best one one win." Each faces same challenges. Each is armed with same weapons. Each has an equal chance of feeling thrill of victory and agony of defeat (unless, of course, you happen to be Tampa Bay Devil Rays).
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