[Hidden-tech] Personal 401k plans

[Doug Wheat]

I would echo Jan's comment that a solo 401k is advantageous IF you are able
to save a relatively large amount of money.  For many people the
combination of a SEP IRA and a traditional IRA enables them save as much as
they can on a tax-deferred basis.  You can contribute 20% of your
self-employment income to a SEP IRA up to $255,000 of income in 2013.  That
comes out to a maximum of $51,000. The limits go to 25% if you receive W-2
income.  In addition you can save $5,500 in a traditional or Roth IRA (plus
an extra $1,000 if you are over the age of 50).  So lets say you make
$100,000 and are under age 50.  Then you can save $20,000 in a SEP IRA and
$5,500 in a Traditional or Roth IRA for a total of $25,500 per year.  Thats
more than most people are willing/able to save at that level of income
which makes the extra work of a solo 401k unnecessary.

But there are situations where people are able to save more than 20% of
their income which makes the extra solo 401k very attractive.  One
situation is if you have a spouse that works but does not have a workplace
retirement plan.  Another might be if you have inherited money, or sold a
property and have money that you would like to invest in a tax deferred  or
tax-free basis.  Or maybe you make more than $255,000 or are simply a very
good saver.  The solo 401k will allow you to save 20% of your
self-employment income plus another $17,500 in 2013 ($23,000 if you are
over age 50).  Esssentially the 401k allows you to make contributions as an
employer and an employee.

There are lots of people locally that can help you set-up a solo 401k plan
but you can't have any employees other than family members.  Vanguard,
Fidelity, and T-rowe price are all good choices if you want to set things
up yourself.  One difference is that Vanguard allows you to contribute the
employee portion ($17,500) to a Roth 401k - that might make sense for some
people.

Doug Wheat
Family Wealth Managment
www.fwmgt.com


On Wed, May 29, 2013 at 7:04 PM, Jan Werner <jwerner at jwdp.com> wrote:

>    ** Be sure to fill out the survey/skills inventory in the member's area.
>    ** If you did, we all thank you.
>
>
> A 401K has the advantage of allowing you a larger deduction IF you have
> enough income to take advantage of that, but also costs more to manage.
> If you are not putting away more each year than allowed for the maximum
> IRA deduction, the IRA is the better choice.
>
> I had both Keogh and IRA accounts in various institutions that migrated
> to Vanguard over several years, for various reasons, and in every case,
> I found Vanguard to the better experience.  They have low fees and also
> provide excellent support services for individual investors.  You can
> freely move your money between an extremely wide variety of funds, so
> you can allocate your portfolio as you want without additional costs.
>
> Jan Werner
> ____________
>
> Don Lesser wrote:
> >     ** Be sure to fill out the survey/skills inventory in the member's
> area.
> >     ** If you did, we all thank you.
> >
> >
> > Hi Andy. We use a SIMPLE IRA through Vanguard. Vanguard has pretty low
> rates
> > and its funds seem to rank well. They have twice closed a fund just as I
> was
> > about to invest in it, which is no doubt a coincidence, but is the only
> > thing about which I object to working with them. The equation of fees vs
> > return can get complicated though for a programmer or Excel user, it
> might
> > prove an interesting task. If you have a significant chunk of money to
> work
> > with, a fee-only planner might prove useful. We have done programming
> work
> > for Eva Thomson of Thomson Financial Management and she is one of the few
> > planners we're worked for in the past 20 years that has impressed me.
> >
> > You could probably do a quick and dirty comparison of T. Rowe Price and
> > Vanguard in short order to see how they would stack up. My guess is that
> you
> > can shave some fees and get a higher return, but is it worth the time and
> > trouble if you're not interested in investing for its own sake?
> >
> > Don Lesser
> > Pioneer Training, Inc.
> > 139B Damon Road, Ste 8
> > Northampton, MA 01060
> > (413) 387-1040
> > (413) 586-0545 (fax)
> > dlesser at ptraining.com
> > www.ptraining.com
> >
> >
> > -----Original Message-----
> > From: hidden-discuss-bounces at lists.hidden-tech.net
> > [mailto:hidden-discuss-bounces at lists.hidden-tech.net] On Behalf Of Andy
> > Klapper
> > Sent: Tuesday, May 28, 2013 8:39 AM
> > To: hidden-discuss at lists.hidden-tech.net
> > Subject: [Hidden-tech] Personal 401k plans
> >
> >     ** Be sure to fill out the survey/skills inventory in the member's
> area.
> >     ** If you did, we all thank you.
> >
> >
> >
> >
> > _______________________________________________
> > Hidden-discuss mailing list - home page: http://www.hidden-tech.net
> > Hidden-discuss at lists.hidden-tech.net
> >
> > You are receiving this because you are on the Hidden-Tech Discussion
> list.
> > If you would like to change your list preferences, Go to the Members
> > page on the Hidden Tech Web site.
> > http://www.hidden-tech.net/members
> >
> >
> _______________________________________________
> Hidden-discuss mailing list - home page: http://www.hidden-tech.net
> Hidden-discuss at lists.hidden-tech.net
>
> You are receiving this because you are on the Hidden-Tech Discussion list.
> If you would like to change your list preferences, Go to the Members
> page on the Hidden Tech Web site.
> http://www.hidden-tech.net/members
>
-------------- next part --------------
An HTML attachment was scrubbed...
URL: http://lists.hidden-tech.net/pipermail/hidden-discuss/attachments/20130531/1cec90ad/attachment.html