Investment & Financial Articles
Title: The Individual 401k - BIG Business Benefits For The Home Business
Author: Lamaute Capital, Inc.
Article:
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 the funds are in the
plan, owners can borrow 50% of their 401k account balance up to
$50,000 tax-free and penalty free provided they pay back the
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 the option to borrow
from their 401(k). But before 2002, small business owners were
not allowed the 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 the
distributions, plus generally a 10% penalty if they were under
age 59 ½. They also lost the chance to put the money back into
their retirement accounts.
Borrowing from an IRA is still prohibited. But one can
consolidate his individual retirement accounts into a 401 k and
borrow from the 401k.
However, the individual 401 k is more than just a good tool to
borrow money. It also lets you contribute more towards your
retirement. You can make tax-deductible contributions to this
plan at levels more generous than other retirement plans such as
the SEP, SIMPLE, profit sharing and money purchase plans.
Every year millions of Americans start new businesses and take
cash distributions from their retirement accounts to keep them
solvent until the business gets going. In the process these
entrepreneurs forfeit a large chunk of their retirement money to
taxes and penalties. From now including a 401 k search will
probably become routine whenever small business owners look to
set up a retirement plan. With all of its features, the
individual 401(k) is bound to be a serious contender when it
comes to choosing a small business retirement plan.
About the author:
Daniel Lamaute, CEO of Lamaute Capital specializes in helping
people get the most benefit from their retirement investments.
Take cash payments from your retirement funds the smart way. Get
your FREE SOLO-OWNER 401K INFORMATION KIT. Kit includes a
prospectus with detailed information about the plan,
investments, sales charges and expenses. Visit
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