The 401k has but one drawback. You can’t get the money out right away. If you take out the money before you reach the age of 59 and six months, you will be slapped with a 10-percent penalty, and it will be taxed as regular income. Don’t let this scare you. This is don’t touch money anyway. Plus, you have your three months of emergency living expenses in your money market account.
You can borrow against the plan at any time. In the unlikely event that you do have to withdraw and pay the penalty, Chances are the tax deductions and the tax-deferred financial freedom reverse mortgage growth will still make contributing a smart move.
If you work for a small company, your company may have a Savings Incentive Match Plan for Employees. SIMPLEs allow annual contributions of up to $7,000. SIMPLEs aren’t exactly 401ks, but, for the most part, they are similar.
If you are self-employed, you won’t have a 401k, but there are other retirement plans available to you. The two most common plans are the Keogh and SEP through a financial freedom reverse mortgage. The Keogh allows you to save the most money, but it requires a good deal of paperwork. The SEP or Simplified Employee Pension is easier to set up, but you may not be able to save as much as the Keogh.
If you have employees, both plans require you to include your employees in the plan. This caveat may make it sensible for a business owner not to set up a plan at all. Since each financial freedom reverse mortgage plan has their ups and downs, and affects not only you but also your entire business, it is best to speak with a tax advisor before starting one.
You may not have any employee-sponsored retirement plan. That’s okay, just max out your Individual Retirement Account or IRA, which is a tax-friendly account available to just about anyone.
Retirement plans vary from company to company, so it’s worth a trek down to your human resources department. Please do this trek soon, as in tomorrow. Remember, the earlier you start, the more money you’ll wind up with. When you enter the cubicle maze of the human resources department, the person you’re looking for is the plan administrator.
The plan administrator knows all about your company’s plan. She may be an actually employee of your company or, if you work for a small company, the plan administrator probably works for an outside firm that handles retirement accounts. Either way, HR will know where the plan administrator hangs out.
You want to find out how much you can contribute to the plan. Amounts vary from company to company and can depend on your salary. You want to find out when you can start contributing. Some companies may want you to work for them for a little while before taking advantage of the plan. If you’re under 21, you’ll have to wait until you can buy alcohol before contributing to a 401k.
Adesegun Akitoye
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