Company 401k Plans
- litab16
- Sinewave
- swheeler
- swheeler
- Rick_Meigs
- 401khelpcenter
- rasputin13
- SteveT
- Notsure101
- Q_out
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» litab16 - Individual or Solo 401(k) plans
If you are a small business owner and your only employees are you and/or your spouse, you are eligible for the new kid on the block – the Individual or Solo 401(k). In fact, using this tool you can contribute up to $40,000 or 100% of compensation. If you are over 50, you can also add catch-up contributions, which are $1,000 for 2002 and $2,000 for 2003. So a person 50 or older can actually contribute up to $42,000 in 2003.Contributions are made in two ways:
As the employer: up to 25% of compensation.
As the employee (salary deferral) up to $11,000
The combined contribution as employer and employee cannot exceed the $40,000 maximum, unless you are 50 or over. You can roll money from other retirement or pension plans into this account including money from IRA, SEP, TSP, 457 and Keogh accounts. While these other types of accounts don’t allow you to borrow, you can borrow from a 401(k) up to $50,000 or 50 percent, whichever is less. Borrowing on a 401(k) is risky though because if you can’t repay the money you face both taxes and penalties for early withdrawal.
While companies pay at least $500 annually for administrative fees for their 401(k), the fees for individual 401(k)s charged by many mutual fund companies are $100 annually. The mutual funds provide the canned documents needed to establish this account. If you do take a loan, there is usually an additional $100 fee. Once your assets top $100,000 there will be a charge of $250 to file necessary IRS forms. You can avoid the $250 fee by filing out those forms yourself.
If you want to find out more details, check with your mutual fund company. Here is a sample of one company's information (this is definitely not a recommendation for or against using this company - only intended as a sample.
-- posted by litab16
» Sinewave - Is This True?
Another excerpt from one of the bear sites I use for information...Our President, thru a backdoor maneuver, is encouraging thousands of companies with hugely under funded pension plans, to use cash balance plans, which will rob almost all Americans with pensions of two-thirds of their retirement. Listen, because this is very important. George Bush is attempting to sell you out. The US Treasury has proposed rules that would end a three-year moratorium on conversions to a complicated cash balance plan for pensions. Older workers will get and have gotten royally screwed by such a program. If the Treasury, that is George Bush and transnational elitist corporations, among others, were allowed to get to cash balance plans pensions for older worker, they would be slashed by 63%. This will truly be a disaster for workers and their families and should not be allowed to happen. The rules have to be passed by the IRS but that’s a formality. Cash balance is a type of defined benefit plan. Under traditional formulas, pension benefits are calculated as a percentage of wages multiplied by years of service. Thus a 20-year employee would get 30% of his final salary in monthly benefits at age 65. All the money contributed to the plan comes from the employer. In a cash balance plan, the employer also makes all pension contributions, but the workers pension benefit, which can be paid in a lump sum or a monthly stipend, depends on how much the employer contributes every year and the rate of return earned on the account, much like a 401(K). The plan is portable, allowing workers to carry their pensions from one employer to another. Thus far about 700 corporations have converted to cash balance and it is estimated the switch has cost eight million retired workers $334 billion in promised benefits. Cash balance conversions stop the continued accrual of pension benefits for older employees. They get the old pension say to 50, but from 50 to 65 years old they get the lesser cash balance programs’ lower results. Our friend and benefactor, George Bush, interprets pension law in such a way that cash balance plan conversions would not be in violation of age discrimination laws. We have no protection under the law. Our system of jurisprudence no longer works. This is another national disgrace visited upon American workers by omnipotent fascist government. You must contact your elected representatives and put a stop to this.
[...I really dislike what I see going on in our own country... Regardless of one's political affiliation...it's important we voice our concerns to our elected representatives. After all, they're suppose to be working for us...dammit!...]
-- posted by Sinewave
» swheeler - Re: Bundled vs. Unbundled 401(k) plans
In response to message posted by mnovak13:You should ask your prospective provider if they feel the unbundled product adds value. In many cases it does not. Most bundled plans can provide you with a high level of back office service and the cost for that service is often less than that of the local TPA. And as you stated, you only have to contact one party instead of multiple parties.
-- posted by swheeler
» swheeler - How can I get to $40k contribution limit?
In response to message posted by TZ57:I make over $200k. I'm contributing the max 12,000, have the catchup of 2,000 (I'm over 50), I'm receiving a 50% match on my 6% - $6,000. Can I also integrate social security and get 5.7% on $113K. That still doesn't get me to $40k. Any suggestions?
-- posted by swheeler
» 401khelpcenter - Re: Individual or Solo 401(k) plans
In response to message posted by litab16:You can find lots of information on solo(k)'s including a free list of providers in the Small Business Channel of 401khelpcenter.com. All free and not strings attached.
-- posted by 401khelpcenter
» rasputin13 - Company acquisition
--So here's the deal. Our for-profit company is likely to be acquired by a not-for-profit organization. My question is this: What is likely to happen to our 401k monies? I really like our plan with Vanguard. The new organization's plan offers funds with Valic, Lincoln National and Merrill Lynch. Something was said by a representative of the new organization (an HR person with limited information) about a 403b. Any thoughts on this situation?
-- posted by rasputin13
» SteveT - Re: Company acquisition
In response to message posted by rasputin13:Off the top of my head these are some of the possibilities. 1) You enroll in the new plan and roll your current account balance into the new plan and try to see if you can get them to add your old funds through Vanguard to the plan. Become an activist. 2)You roll the money from your old plan into your IRA and proceed with the new plan, warts and all.
403b refers to part of the IRS code same thing for 401k and 457. For the most part it is legal dotting "I"'s and crossing "T"'s. Before the retirement plan overhaul a couple years ago the 403b and 457 plans were harder to be flexible with distributions/rollovers, but they got that straightned out. For now all you can do is wait until you get the full scoop. Lita I am sure could give you more details.
-- posted by SteveT
» Notsure101 - 401K issue
I have been enrolled in Company plan for several years. I cannot seem to get my statement on a regular quarterly basis. Every time I ask where they are I get a story. I have not seen a statement for the last two quarters of this year. Another co-worker wanted to drop out because he was not getting statements either and was told by HR Accounting Clerk they could not help him. Does anyone know if there is a law that statements should be given to employees regularly? I have sent messages to upper management with no response. What else can I do?-- posted by Notsure101
» Q_out - Re: 401K issue
In response to message posted by Notsure101:If I were in that situation, I'd be giving first priority to putting $3,000 per year in an IRA ($3,500 per year if 50 years old or older) and another $3,000 or $3,500 if my spouse had the income.
Traditional IRAs are fully deductable if your adjusted gross income is under $40,000 single or $60,000 married and you or your spouse participates in an employer-sponsored retirement plan. Roth eligiblity begins to phase out at income levels of $95,000 single and $150,000 married filing jointly.
One of the signs of a well-managed retirement plan is timely and understandable statements.
<img src="/files/mysites/qout/bhoestarts.gif" width=53 height=34 align="left">
Q_out
DISCLAIMER: My words and observations are general in nature, and are not meant as specific investment advice. Individuals should consult with their own advisors for specific investment advice.
-- posted by Q_out
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