Your company doesn’t offer a 401k, no problem

Skip this if you are only interested in 401k’s

401k investment puzzle helpMany of you by now are asking me “What about us guys that aren’t offered a 401k by our company.” And others who run their own small business are asking the same thing. No problem, our trusty old government knew a while back that they wouldn’t hold true to their obligations on social security (I’m just over 30 and do not anticipate getting a dime back that they are taking from me now – and you should think the same way), and there’s nothing you can do to stop them from taking your money, unless you’re Amish or part of a religion that is exempt from this requirement). So, the government gave us citizens a break on our taxes, so we could do it on our own. For those of you who don’t have a 401k option, you can invest in a few similar plans to the 401k, they are as follows:

  • 403b-just like a 401k, but this is for government and non profit companies (like hospitals and schools).
  • Keogh plan: This is for people who run their own business, it is their own benefit plan (just like company pension plans).
  • IRA or Individual retirement account (also known as a traditional IRA) – the government allows you a certain maximum amount of money you can contribute (this money will be invested before you pay taxes on it-so it will be taxed at retirement, making this a smart decision if you have lower income when you are retired – which most of us will). The 2008 limits are $5,000 if you are under 49, and $6,000 if you are over 50. You can invest in brokerage firms (places that are licensed to sell stocks), or banks and such.
  • Roth IRA or a Roth Individual Retirement account – same as an IRA, except you pay the taxes now instead of at retirement.
  • Invest on your own in stocks and bonds

For the small business owner interested in looking into the benefits of offering a 401k for your employees as a recruitment and retention tool check out: ShareBuilder401k, Wells Fargo, ADP. It’s usually completely free to get a quote, and there are numerous tax benefits for your company (even if it is only for you).

Keep going! The next lesson is; Getting down to the details. This lesson talk about how my 401k plan is setup and general rules that can be used to setup your plan (deciding your asset mix).

Don’t have time to carry on now? Come back at your leisure, but don’t wait too long, every dollar wasted is a dollar not working for you. Also, consider signing up for my daily updates sent right to your in-box. Don’t worry, I hate spammers too.

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