Subscribing to my site guarantees you don't miss any new content. Choose either E-Mail Feed or RSS Feed. Thanks for visiting!

If you’re self employed and feeling kind of down because you think your retirement options are limited to a SEP or a SIMPLE IRA… I’ve got good news for you… you can create your very own Solo 401(k)!

Similar in every way to it’s larger, more complicated, weighed down, traditional corporate 401(k) cousin, minus all the administrative headaches.

How does that sound? Hopefully, pretty good!

The 1 person 401(k) goes by a few different names, but is most commonly referred to as the Solo 401(k) or individual 401(k). Although the plan is designed for the individual business owner (or self employed), it is technically available to the spouse of the owner and any shareholder or partner in the business, as well.

A Solo 401(k) is simple and straight forward

Setting up a Solo 401(k) makes a lot of sense for sole proprietors, owners of an S Corp, C Corp or partnership. It would not make sense if you had employees or were thinking of hiring any employees in the near future. It’s specifically designed for you (and your spouse or partner) ONLY!

Continue Reading “The Benefits of Owning a Solo 401(k)”

There is a never ending debate about where you should direct your retirement contributions - into a traditional 401k, Roth 401k, a little of each? a portion into a regular taxable account?

I know this to be true because I’m constantly getting involved in this debate, sometimes on my blog, sometimes elsewhere. Here’s a Roth 401K vs Traditional 401K thread over on All Financial Matters (from yesterday) - that I commented on this morning - dealing with this subject. (Please keep in mind, there are some well informed people chiming in.)

Roth 401k retirement plan option

With the growing popularity of the Roth 401K plan, you get yet another option in the universe of possibilities; as if American investors weren’t confused enough with all their choices. Keep in mind, the income limitations that make investors ineligible for a Roth IRA do not exist with a Roth 401K contribution.

Left scratching your head

It seems to me, when it comes to planning the future, people don’t know where to begin. It’s the same type of overwhelming feeling you get when walking down the cereal aisle of the super market. It almost makes you want to turn around. I know I put the blinders on and just think Lucky Charms, find the Lucky Charms, lol.

Continue Reading “‘My Two Cents’ On Your 401k Retirement Plan Options”

The vast majority of Americans still make their salary reduction contributions to traditional 401K’s. This is mainly due to the fact that you weren’t even allowed to make a Roth contribution into a 401K until 2006.

If you participated in a 401K plan, prior to 2006, your only choice was to make a traditional pre-tax contribution to a 401K. Sadly, it still is the only choice for the vast majority of Americans.

Many employers have been slow to amend existing 401K plans that would give employees the choice of making a Roth contribution; a lot of employers don’t want to deal with the extra work and administrative responsibilities that come with making the changes to an existing 401K plan. So, they put it on the back burner, at the end of the TO DO LIST, which is what’s happened over the past 2 years.

For my money, if your employer is one of the few offering a Roth 401K contribution alternative, it’s a good sign for you as an employee. It tells me the employer is proactive and cares about the future(s) of those that work there.

Continue Reading “8 Things You Need To Know About a Roth 401K for 2008″

Over the next week or so I’m going to be taking a closer look at 401K plans.

I’ll be focusing slightly more on the Roth 401K (as opposed to a regular 401K), since few people I come across are familiar with it. Today we start with the basics.

A 401K plan is a salary reduction plan that allows employees to defer a portion of their salary (through payroll deductions) towards retirement. For 2008, employees are limited to salary reduction contributions of $15,500. For employees over the age of 50, the law now permits “catch up” contributions of an additional $5,000 for 2008.

Keep in mind, the above paragraph describes the general characteristics of any 401K. The way your salary reduction contribution is treated (from a tax standpoint) is what determines whether it’s a regular 401K contribution or a Roth 401K contribution.

Continue Reading “Regular 401K vs Roth 401K - The Basics”