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A 401k Plan For Business Owners

 
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Old 10-17-2011, 10:46 PM   #1
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A 401k Plan For Business Owners


OK here's the deal I want to set-up a 401k plan for my-self. I am the owner (president) of the corporation and my employees already have pensions and 401k plans set through the union. So I don't need to set up anything for them.

Anybody in the same boat as I am? What plans would you recommend? I haven't had time to read to much about it but from I have read most plans are tailored for companies which also offer to employees.

I haven't talked to any retirement advisers yet, that's my next step. I just wanted to see what plans other contractors had so I can ask about those as well.

Thanks for looking and have a nice day.
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Old 10-17-2011, 10:53 PM   #2
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Re: A 401k Plan For Business Owners


Ill ask my wife what mine was, some kind of 457 or 401k, but I started putting my monthly payment from that to my daughters college fund. Not enough for both. Rent houses and storage units I guess lol. Ill ask how she set mine up and get back to you

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Old 10-18-2011, 03:22 PM   #3
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Re: A 401k Plan For Business Owners


401k may not be the very best decision if you are a small business. If you have a plan for the business and you the owner make up 20% or $20k or something ($20 was the magic number) or more of the funds in that plan your taxation rate may vary. Look into a roth IRA. Since as you said the employees won't be in it, you may make up 100% of the account and be in big trouble come tax time. I suspect this is what most financial advisors/planners will tell you.

I was just telling the wife this afternoon that this is something I plan to do next year. I am in debt right now but making tremendous progress. Next year once the debt is paid off, I will open a Roth IRA for myself. The Roth IRA is something suggested to me by not just one, but multiple financial advisors.

Hopefully I can unload this dead beat rental property next year too and buy something better.
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Old 10-18-2011, 07:49 PM   #4
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Re: A 401k Plan For Business Owners


Problem is that maxing out a Roth for each spouse is not enough To retire from what I can tell.
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Old 10-20-2011, 04:23 PM   #5
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Re: A 401k Plan For Business Owners


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Problem is that maxing out a Roth for each spouse is not enough To retire from what I can tell.
That's why it's great, don't put all your eggs in one basket. Precious metals were the place to be 10 years ago... You'd have tripled almost quadrupled your money. However if you buy precious metals now, I predict a drop at some point in the future before they go up.

Point being, diversification. IRA, Real Estate, Metals, CD's, Life Insurance. If one goes up, and one goes down, you're ok. If all your money is in one basket and that basket breaks, you will NEVER retire.


Life insurance is an EXCELLENT investment. I have two policies. One expires in 28 years. When it expires I get all my money which I paid in premiums back. No interest though. But hell when I am 58 years old I will bet getting a check for $55k. Sure $55k won't be as much then as it is now, but it'll still be a healthy sum. And the best part is the business pays for it.... though it is considered taxable income however.


I'm not an expert I think everyone should consult a good licensed financial advisor. I'm just telling you what I think are fairly safe investments.



Here, to pull this thread off track... Does anyone else but me consider and treat their business like an investment? It is, well it can be, if you treat it like one. When you are ready to retire, will your business be worth any good faith? Or will your business be worth only the value of your broken down trucks and equipment? I have two businesses and am trying to build both into investments worthy of good will.
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Old 10-20-2011, 04:41 PM   #6
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Re: A 401k Plan For Business Owners


Look into a Simple IRA. I just got back from a chat with my investment advisor. Our 401k with our HBA just closed up and I was looking into starting something else. I still have some research to do, but it looks like this will work well.

I for one do not like life insurance as an investment. If you do the research and understand the math, you will probably feel the same. The commissions on those are very high and that is why they get pushed. Buy some cheap term insurance if you are young and invest the rest.
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Old 10-20-2011, 06:50 PM   #7
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Re: A 401k Plan For Business Owners


I did the research and I do understand the math. What makes it great is i will die one day and if I die before I turn 58, my family gets ALOT of money. If I die after I turn 58, I get some of that money back. It's win win.

For what it is worth I have more than one life insurance policy, term and term return. So even after I turn 58, I am still covered, just not for as much. Term return is the same principal as a tax return. It is a no interest loan to the insurance company. It FOCES you to save. Not only do you need a retirement investment, but you also need life insurance. So as a part of your portfolio combine the two. I am in no way suggesting this is the end all be all investment. I am saying it's one more investment you should consider. I couldn't retire on it but I don't see the down side to having a term return policy as a part of my portfolio.


Diversification.




Also for what it is worth. I don't trust paper. Paper is worthless based on the stock market. I prefer tangibles. I prefer real estate, precious metals, and guns but I have more than one basket and some of my eggs are in paper, as much as I hate it history shows you can make money in the stock market until the zombie apocalypse happens in December 2012 Then all your paper investments will be worthless, but your gold and ammo will still be of value.
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Old 10-20-2011, 07:19 PM   #8
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Re: A 401k Plan For Business Owners


I use a SEP but I am not sure if you would be able to with you having employees with 401K's. I would ask your accountant though since it is a really good retirement vehicle. I agree that I would not use insurance for investment. There are so many other things out there that are lower cost. Now granted insurance does serve a purpose, I am not sure it is best used for investment. Just from personal experience is all I am saying. I do have a term policy just so if I do go, all of the bills would be paid off.
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Old 10-29-2011, 04:16 AM   #9
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Re: A 401k Plan For Business Owners


Quote:
Originally Posted by Warren View Post
Look into a Simple IRA. I just got back from a chat with my investment advisor. Our 401k with our HBA just closed up and I was looking into starting something else. I still have some research to do, but it looks like this will work well.

I for one do not like life insurance as an investment. If you do the research and understand the math, you will probably feel the same. The commissions on those are very high and that is why they get pushed. Buy some cheap term insurance if you are young and invest the rest.
Is there any tax benefits with IRAs? Similar to regular 401Ks?
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Old 10-29-2011, 10:13 AM   #10
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Re: A 401k Plan For Business Owners


Watch the video of the 401K fallout.

http://www.philsgang.com/freevideos.aspx
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Old 10-31-2011, 06:08 PM   #11
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Re: A 401k Plan For Business Owners


Still have not talked to a Pro but based on my research so far the SEP IRA seems to be the best way to go.
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Old 10-31-2011, 06:24 PM   #12
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Re: A 401k Plan For Business Owners


IRA's give you the same deduction that a 401k does. Depending on your income, a Roth IRA may e a better fit. You don't get a tax deduction now, but the earnings are tax exempt after age 55 I believe.
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Old 10-31-2011, 07:42 PM   #13
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Re: A 401k Plan For Business Owners


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IRA's give you the same deduction that a 401k does. Depending on your income, a Roth IRA may e a better fit. You don't get a tax deduction now, but the earnings are tax exempt after age 55 I believe.
It's 59.5 and at least 5 years after the IRA was established.

The SEP IRA, Traditional IRA, and 401k can all work for you. There is an exemption for employees who participate in collective bargaining so those employees wouldn't be counted which just leaves you from the sound of it. I think the most important feature of the plan you choose is who it's with, eg. Vanguard, American Funds, etc.. The two biggest differences are that with a Roth IRA you don't have forced distributions at 70.5 which can be really helpful and with a 401k you can borrow from the fund and repay it with a penalty(interest) depending on the plan.

Most people I know max out their Roth IRA and then pick the next vehicle depending on their needs.
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Old 11-01-2011, 01:12 PM   #14
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Re: A 401k Plan For Business Owners


I'm not sure of the details, I let our financial person (my Wife) take care of that end of things. But we use some type of 401K with a company matching. The two of us max it out each year. From what I remember, this allowed us the maximum amount we could invest combined with the maximum tax benefit. We also offer it to eligible employees as a nice fringe benefit.

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