401k Plan Loans - An Overview
Allowing loans within a 401k plan is allowed by law, but an employer is not required to do so. Many small business just can't afford the high cost of adding this feature to their plan. Even so, loans are a feature of most 401k plans. If offered, an employer must adhere to some very strict and detailed guidelines on making and administering them. The statutes governing plan loans place no specific restrictions on what the need or use will be for loans, except that the loans must be reasonably available to all participants.
But an employer can restrict the reasons for loans. Many only allow them for the following reasons: (1) to pay education expenses for yourself, spouse, or child; (2) to prevent eviction from your home; (3) to pay un-reimbursed medical expenses; or (4) to buy a first-time residence. The loan must be paid back over five years, although this can be extended for a home purchase. Usually the participant is allowed to borrow up to 50% of their vested account balance to a maximum of $50,000 (set by law). Because of the cost, many plans will also set a minimum amount and restrict the number of loans any participant may have outstanding at any one time.
Loan payments are generally be deducted from payroll checks and, if the participant is married, they may need their spouse's to consent to the loan. Funds obtains from a loan are not subject to income tax or the 10% early withdrawal penalty. If the participant should terminate employment, often any unpaid loan will be distributed to them as income. The amount will then be subject to income tax and may also be subject to 10% withdrawal penalty. A loan can't be rollover into an IRA.
There are generally four reasons given to avoid 401k loans if possible: * Lower investment return. According to the General Accounting Office, the interest rate you pay yourself on your plan loan is often less than the rate your plan funds would have otherwise earned, and you lose the benefits of compound interest. * Smaller contributions. Because you now have a loan payment, you may be tempted to reduce the amount you are contributing to the plan and thus reduce your long-term balance. * If you quit working or change jobs, you must pay back the loan right away.
It's not uncommon for plans to require full repayment of a loan within 60 days of termination of employment. If you don't repay, the loan is considered defaulted, and you are taxed on the outstanding balance, including excise taxes in many cases. * Repayment of principal and interest is made with after-tax dollars. By contrast, a home equity loan from a bank is often structured so that the interest you pay is tax-deductible. On a larger loan, this could add up to significant savings.
Go to www.401khelpcenter.com for more information on this and other 401k issues..
Louisiana Bankruptcy Lawyers
Although the laws of the state of Louisiana are different from the laws of the other states, bankruptcy is one area where there are more similarities than differences. This is because bankruptcy relief is under federal law, so the information in this context is pretty much the same in all the states.
But there is one glaring exception. It is about exemptions, the items that you do not lose by declaring yourself bankrupt. Under Louisiana Bankruptcy Law, the exempted items include IRA savings, which is a great exemption indeed.
So for a bankruptcy case pertaining to Louisiana, a better course would be to hire a lawyer who knows this aspect of the state law. Another aspect to be considered is that of time limitations. Although
Louisiana Bankruptcy Laws conform to the federal laws, the time limitations may require the engagement of a lawyer.
If you look keenly into the Louisiana Bankruptcy Law, you will find that the legal terminology used in the...
Ira > Louisiana Bankruptcy Lawyers
Take Advantage of End-of-Year Tax Breaks for the Self-Employed Physician and Healthcare Professional
There are lots of advantages to being self-employed that include quite a few tax breaks.
Even individuals who are just moonlighting on the side are allowed to set up a retirement plan for their own business and sock away a portion of the money earned into a pre-tax account.
According to Andrew Schwartz, CPA and founder of the MDTAXES Network of CPA's who specialize in providing tax and accounting services to healthcare professionals, "That holds true even for physicians and healthcare professionals who work for a hospital or clinic and are currently participating in that company's retirement plan."
Schwartz lists tax-savings situations for the self-employed as follows:? In 2004 self-employed individuals can contribute up to $18,000 into a SIMPLE
or up to $41,000 into a SEP or a Solo 401(k), depending on their income and whether they participate in a 401(k) plan or 403(b) plan through another employer. Self-employed individuals or Healthcare professionals...
Ira > Take Advantage of End-of-Year Tax Breaks for the Self-Employed Physician and Healthcare Professional
Entrust Administration, Inc. Launches New Web Site Bringing Truly Self Directed Plans? Closer to Home
In addition to its wealth of educational material, www.iraplus.com offers the ability to select and open an account with one of Entrust's nationwide local offices. Opening an account could not be simpler. All the necessary forms are available online together with detailed, yet easy-to-follow instructions. And both customers and non-customers may access the local and national event calendars, newsletters and questions and answer board."As we continue to grow the website allows us to continually share our resources, experience and expertise with an ever expanding audience of smart investors who want to take control of their investments," commented Hubert Bromma, President and CEO of Entrust.
Lisa Moren, Marketing Director for Entrust added,
"The expansion of our CE courses for real estate professionals, CPA and CFPs has allowed us to educate the industry in the use of Entrusts World of Choices?.
"Visitors also...
Entrust Administration, Inc. Launches New Web Site Bringing Truly Self Directed Plans? Closer to Home
Ira > Entrust Administration, Inc. Launches New Web Site Bringing Truly Self Directed Plans? Closer to Home
Estate Planning and Insurance Concerns When You Divorce
If you are getting a divorce from your spouse, you have a lot of planning to do.
You will need to name your own beneficiaries, organize your divided assets, and
set up your individual estate. It is important that you meet with a qualified attorney to discuss the specifics
of planning your estate to ensure that your wishes are carried out as you desire. You need to be well versed in the most strategic methods of dividing your joint estate so that you do not end up paying all of the taxes while he or she enjoys the benefits of your assets. I have outlined some important information for you to be aware of when planning
your estate after your divorce.
Please keep in mind that divorces lend themselves
to new structures for individuals. You will want to meet with a qualified attorney
to discuss how to best protect your new estate. Assigning Your Beneficiary
During your marriage, chances are your spouse was the...
Ira > Estate Planning and Insurance Concerns When You Divorce
INTELLIGENT INVESTING
Talk at the "cooler" about investing, is usually around Stocks.Although I make money in Commodities, there is a "safe" way -that banks and investment houses use, but they won't tell You!How about a product that returns 12 - 42%, is 100% insured andbacked by the assets of the wealthiest institutions on the planet.Your banker takes your "CD" money and invests in this vehicle. Now you can turn the tables with this special insurance contract.Earn ROR equivalent to, or exceeding, the equity markets!Without any market risk or risk to principal - Guaranteed!!!Its called a Viatical Settlement - and here is how it works.Viatical Settlement - the sale of a life insurance policy at adiscounted rate to a group of investors by a person who is inthe advanced stages of a terminal illness.The Investors hold the policy and receive the full face value ofthe policy at maturity. A win-win situation. The "viator" is ableto enjoy the cash proceeds of his policy while still alive, andthe investor receives...
INTELLIGENT INVESTING
Ira > INTELLIGENT INVESTING
HSA for America Publishes Issue 6 of Maximize Your HSA
(ContentDesk) October 31, 2005 -- HSA for America has published Issue 6 of Maximize Your HSA. We feel it is important to help our clients get the maximum value from their health savings account, says Wiley Long, President of HSA for America.
Because HSA-qualified health insurance plans have high deductibles, charges for doctor visits, prescription drugs, and other medical expenses are typically paid for from the health savings account.
By knowing how to keep these expenses to a minimum, and what expenses can be paid for from a health savings account, an HSA owner can save hundreds or thousands of dollars. Maximize Your HSA is published monthly, and distributed via email.
Previous issues have covered ways to keep health insurance premiums low, how to pay for dental expenses from an HSA, and when over-the-counter medicines or nutritional supplements can be...
Ira > HSA for America Publishes Issue 6 of Maximize Your HSA