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Home » Business And Finance Articles » Dont Look To Social Security For Retirement Get A 401k

Don't look to Social Security for Retirement: Get a 401(k)

The name is derived from the Internal Revenue Code established in 1978. It's presently administered by the government section called the Employee Benefits Security Administration, also known as the EBSA.

A 401(k) plan is a plan usually used for retirement and is funded by an employee contribution. Some companies will match the contributions up to 100% of the employee's contribution and yet some companies do not offer any matching funding. The BNSF Railroad is one of these such companies that does not offer even a $1 match for their employees.

The funds are contributed from the employee's paycheck BEFORE taxes. The fund will accumulate completely tax free until it is withdrawn. Most businesses or companies have these retirement plans in place or they can create them.

There are a lot of advantages of having a 401K plan:

1. Employees can contribute pre-tax money which helps reduce the tax owed from their paychecks.

2. Any company contributions are also tax free until withdrawn.

3. As the funds are compounding, you are attaining a good profit on your invested funds.

4. The money you have funded in the plan can be moved around from one company to another. This isn't available in a pension.

5. Your 401K is also protected from garnishments and is protected by pension laws because it is a personal investment plan. The only time it is not protected from garnishments is in domestic caes or cases of child support, but it IS protected from creditors.

6. You can borrow against your own 401(k) and the payments you make are put back into your own account along with the interest. The interest you pay on the loan is paid to you as well. You are actually borrowing the money from yourself and paying yourself back with interest. Most plans only allow you to borrow up to 50% of your fund account and only 2 loans at a time. You can borrow more than once if you find yourself in a financial hardship.

You should note that it is hard to get your contributions, (aside from a loan), before the age of 60 without paying a lot of penalty fees. The penalty fees can take a lot of the interest profit you may have received over the years. The plan is not insured by the Pension Benefit Gauranty Corporation, also known as the PBGC.

You do have many options for investing in your 401K plan. You will usually be investing in mutual funds. This helps protect you from having all your eggs in one basket. Mutual funds can consist of:

Money market funds

Treasuries

Stock funds

Bond funds

Since the 401K plan is a long term investment, it should be able to handle market fluctuations without damage to your fund. Since stocks usually outperform other types of investment this is a great option for retirement security.

And here is another random article you might be interested in...

3 Big Reasons To Attend A Live Small Business Workshop

It's unbelievable that people from all over the world attend an Online Marketing Workshop, hoping to improve their own small businesses.

Ever wondered why these people would leave the comfort of their own homes, as well as their families to cram into a meeting room with a bunch of strangers for two full days?

The answer...

They know they don't have all the answers and they also realize the benefits of attending a small business workshop.

Let me share with you 3 reasons you should attend a small business workshop for online marketing in your area, perhaps Dallas, Fort Worth or another city in Texas.

1. Dynamic Content

When I attend a well-organized workshop or seminar, I am astonished at the amount of content the speakers give in their talks. Last weekend, I came home with a notebook full of ideas and notes that I could implement immediately.

Many speakers freely share their online marketing strategy at business seminars. Since the speakers are entrepreneurs themselves, they know what the attendees need to start a small business or take their small business to the next level.

2. Contacts You Won't Make With E-Mail or the Phone

It is amazing to me how a weekend conference allows small business owners to network and find others to make joint ventures. When I eat lunch with other entrepreneurs, I usually always walk away with a new tip or a partner for a new project.

Just last weekend at lunch, I found a new way to promote a conference I am hosting and my husband found a partner for his new project. Networking is definitely a bonus when you attend business conferences.

When you rub shoulders with other entrepreneurs and small business owners, you make friends and contacts with people that "get it". Too often, those in the 9-5 job arena just don't understand the benefits you receive when you have your own business and they surely don't understand the freedom and control you gain when you are your own boss. Attending a small business workshop allows you time with others that do "get it".

3. Incredible Access to World-Renowned Speakers

Think about how difficult it would be to call a nationally known speaker and visit with him about your small business. These speakers freely share the strategy that made them successful in the first place.

Most speakers spend the break time in the hallway so you have full access to them and their knowledge. No more waiting for a returned phone call or e-mail. Just walk on up to them and ask your questions.

Bonus Tip: Attend a Small Business Workshop on Uncle Sam's Money

Most business workshops, seminars and conferences are tax-deductible. You will need to check with your CPA, but I suspect you can write-off your small business workshop as a tax deduction. Hey, what a great way to travel the country and improve your bottom line, all on Uncle Sam's tab.

Why get second hand information when you can attend a LIVE event with these experts and ask your own pertinent questions? Start looking for a small business workshop nearby...check the major cities - Dallas, Atlanta, Los Angeles or Fort Worth. You ought to find a workshop just for you, one that provides a plan and online strategy for your own business. Who knows, you might even find a low-cost seminar nearby.