One of the perks being removed from the corporate world is retirement plans as some companies find they can no longer afford to fund them. As executives grow older and their pay plan increases, the amount of money promised to be placed into a pension plan grows along with it. As companies seek ways to reduce expenses this is one of the methods being used.

Some companies will continue to maintain a 401K account for the worker, for instance, but will no longer provide a company contribution. With different industrial sectors having different levels of success, many executives simply accept this change, noting they are thankful to still have their job and paycheck. Even under contracted managers several have been forced to renegotiate their contract and lose the retirement plan benefits in exchange for keeping their job.

Executives may start to rethink their dedication to their employer and one of the options available to them is a home based business. Franchising may being to look attractive as they weigh the loss of their pension plan compared to the risk of opening a franchised business. They may also test the waters by sending their resumes out to other companies that may offer the option of telecommuting.

Working at home can be attractive to some, but others with additional home responsibilities may need the work environment to be productive and lack the appropriate space in their home. Working from home, on the other hand, gives them the opportunity to be more independent in accepting contract positions or a spot at another company that offers telecommuting as an alternative.

Network marketing is a solution many middle managers can investigate as their experience in the business world can help them succeed. Making the adjustment from traditional marketing efforts to networking on the internet can be an easy transition as working a home business may provide the necessary time to learn this new technique.

Becoming a consultant offers numerous job opportunities, especially for a home business and can replace high income careers once the loss of pension plans have been figured into the mix. Additionally, working a home based business can potentially provide the income necessary to make contributions into a private retirement plan. Since the employer contribution was discontinued at the old position, they will not lose additional funding since they were funding their own plan anyhow.

Offering experienced services in success coaching and leadership training, former executives can leave the stress and non-compensatory work for others who may lack the initiative or dedication to thrive in a home based business opportunity. It will take discipline to develop high income jobs on their own, but the opportunities are endless for an experienced professional.

With most pension plans, any contribution made by the employee or employer will become owned by the employee when they leave the company and to avoid any tax penalties most are transferred into private retirement plans which the individual can continue to make annual contributions. The cap on the tax benefits for retirement plan contributions remains the same regardless of how it is funded and if the new business opportunity is lucrative, the maximum contribution can still be made.

Some privately funding pension plans can also include investments in the stock market or other businesses that qualify under Internal Revenue Service Rules, allowing the fund to eventually become self-funded, provided the right investment can be made.

For those who believe their only parachute into retirement will be retirement plans funding by their employer, may find themselves struggling in later years. This struggle however, can be reduced by looking at a business opportunity as a chance to take control over their retirement future and fund their own pension plans.

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It wasnt even two decades ago that you had to worry about your retirement. You went to work, earned your money and lived your life. On payday your pay stub noted the amount of money that went into your pension plan. When it came time to retire, the money you never missed from your paychecks for years should now be coming to you monthly. Its because of this people are looking for business opportunities elsewhere. This is one reason that working at home is becoming so appealing. That, and the thought of not having an income once you are retired is a scary thought. Network marketing, or Multi Level Marketing, is one way around this, by building
yourself a residual income.

Network marketing arrangements are when an individual associates themselves with a company and works independently as a contractor. You are then compensated monetarily based on your product sales or services, whichever is offered, as well as from those whom youve brought into the business.

Multi Level Marketing (MLM) has gotten a bad reputation over the years. There are legitimate ones, but the internet is flooded with illegal ones claiming to be legitimate. It is up to you to research and find a legitimate company before you commit to anything.

Legitimate MLM businesses do not pay you to recruit or sign up other people. There are many online MLM businesses that offer a certain amount of money for each person you sign up, stay away from these ones. These are called pyramid or ponzi schemes, and they are illegal. A legitimate MLM company pays you on the sales of the companies products and or services, and maybe a small amount for your recruits. For it to be legitimate, the bulk of your money comes from your sales.

Finding a good and reliable network marketing business is possible. By putting in some hard work and dedication you can easily build yourself a successful residual home business. Find others that may be in your same situation and together you can help each other build a residual income that will continue to grow with the business. Some companies that you would not think of as a network marketing business are in fact just that. Anytime someone signs up under you and in turn you make a percentage of their earnings is a MLM business.

If it is a legitimate business then work hard and help it expand. MLM type businesses can grow exponentially, which in turn means that your residual income can be limitless. Research is the key, but dont get involved with the ones that require you to purchase a bulk amount of product first. All that will happen is you will be stuck with a garage full of a product you cant sell, a smaller bank account and an angry spouse. If the product is sellable they wouldnt try and pawn it off on you.

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Once deposited in the special savings account, the funds in the 401k are then invested into many different types of mutual funds, bonds, and stocks. The great thing about a 401k retirement plan is that all of these investments are completely free of taxes until the time comes for you to withdraw your money from the 401k account.

Beginning in the early part of the 1980s congress created the 401k retirement plan to allow people to begin saving money before they retire from their employment. It works as something of a financial net, ready for you when the time arrives.

There are several advantages with a 401k other than simply being a tax-exempt method of savings. Your employer may also have a match program. With this program, your employer would match part of your contribution into 401k. This means that whatever you contribute to your 401k, your employer will match a portion of it each pay period. Additionally, some employers raise the amount of their contribution when you have worked for them a certain number of years.

Another exciting aspect of 401k is that you have the option to determine where your funds will go when it is invested. To some, this is important and gives them the opportunity to maximize their retirement savings.

Furthermore, 401k has portability. If you should ever change jobs, you have many different options available in regard to your 401k. One of these options is to simply leave your 401k with your previous employer. This is the easiest option. However, you should be aware that the plan administrators could charge you for maintaining the account records. Another option is to roll the 401k over to the new employers plan. This will allow you to continue to deposit money into your 401k to add to the money you have already earned and saved.

You may also be able to rollover the 401k into an IRA. This is a great option, especially if employers only offer limited investments. You would have greater control over where your money is invested. Last, you could opt to completely cash the 401k out. This option has a few drawbacks. When you cash out your 401k plan, you must pay the taxes on that money and you could also be accessed a penalty for early withdrawal.

It is extremely important that you fully understand all of your options. Weigh the results of each one prior to making any decision about your 401k. Being educated, practical and informed before making your decision will help benefit your 401k and retirement in the long run.

Permission is granted to reprint this article as long as no changes are made, and the entire resource box is included.

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With a Thrift Savings Plan (TSP), the government’s version of a 401(K) it is a little bit different. Like the 401(K), you can take out a loan for 50% of your balance. The differences are that you have 2 different types of loans to choose from and you are forced to pay it back.

The two different types of loans are either personal or for a primary residence. The personal loan has to be paid back within 5 years and the loan for your primary residence has to be paid within 15 years. It must be the primary residence.

There are a couple of things I like about this. I can take out the personal loan and still use it for a residence that is not my primary. And, all I have to do is fill out a one-page form and send it online or fax it, and I will have a check in 10-14 days. I looked into taking out a home equity line of credit (HELOC) and the amount of forms was ridiculous, credit checks, and about $8,000 in fees.

I also like the low interest rate. It is currently at 4% (30 Jan, 2008) which was 2 percentage points lower than the HELOC. I will be borrowing the money from myself and paying myself back with a 4% premium.

The key to this type of loan with the government retirement program is that, once I take the loan, the payments will automatically be deducted from my paycheck the next pay period. This will be the forced self-control. I have to pay it back, it is a payroll deduction.

I do have to pay a $50 fee for processing the paperwork. That is minor compared to $8,000 for the HELOC.

Granted, you want to look at other ways of borrowing money and compare the present and future costs of all plans. As of June 2006, there were 750,000 outstanding loans totaling more than 5 billion dollars.

So, I am not the only one borrowing money for a house, college, or some other major project. I may lose a little in tax advantages, my TSP fund will be cut in half for a while, and it will take a few years to get my retirement fund back to “normal”.

Borrowing from a 401(K), without being forced to pay it back, is the reason that most financial planners say that borrowing from your retirement fund is a loan of last resort.

The automatic payroll deduction to my retirement account was the key that convinced me that I would borrow from my TSP. The low interest rate and simple application helped too.

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I would like to take this opportunity to encourage you to seek the guidance and advice of a professional financial planner. The resources and knowledge that a competent financial advisor can share with you will be invaluable when it becomes time to make the decision that will affect how your retirement savings are put to work for your retirement. We go to a mechanic for mechanical advice (at least I do) so it only makes sense that we would go someone who has trained in financial matters for financial advice.

Getting back to business, when it comes to financial retirement planning you should find that both IRAs and 401 (k) plans have strengths and weaknesses. There are also limitations as to how beneficial they can be when used in combination with one another as well as their own limitations. Every benefit that aids you in taxes and retirement should be considered carefully before leaping.

Let’s first look at the 401 (k) plan. This is a plan that offers a few benefits that are much preferable to many over other retirement plans. The first thing you might want to consider is that you can invest up to 15% of your salary or a maximum of $15,000 per year (as of 2006). Of course that is assuming that your employer doesn’t have limits on how much you can invest. The money invested in your 401 (k) account is pre tax money so it lowers the amount of taxes you are paying out of each paycheck. Many people also find that because the money is taken from their checks before it arrives it is far less painless to part with. As someone who has closely watched taxes, FICA, and Fido get my money for years I can say that it is no less painful for me but some find it comforting and that is a real benefit. Finally and perhaps the most important thing to consider is that many employers will match a percentage of your contribution up to a certain amount each check. As an employee this is a boost to your investment that is well deserved and hard earned. I hope you appreciate the implications it has on your future earnings. You should keep in mind that the penalties for accessing these funds early are harsh indeed in order to discourage this practice from occurring. Take care that you do not over-invest in these funds to the point that you will need to access them in times other than dire emergencies.

IRAs are another creature all together. You will find much stricter limitations on IRAs than on 401 (k) plans beginning with the fact that if your employer offers a 401 (k) you must make very little money in order to qualify for the tax deductions that this particular retirement fund generally allows. The maximum yearly contribution for your IRA will be $4,000 or 100% of your annual income; whichever is greater up until the age of 49. Once you’ve reached the age of 50 you can invest an additional $1,000 to your fund. The other major drawback when it comes to an IRA is the fact that you must begin receiving payments at the age of 70.5 from your account. You will also be heavily penalized if you make an early withdrawal from these funds.

Whether you choose a 401 (k) plan, a Traditional IRA, or both for your financial retirement investments, I hope you will take the time to discuss the benefits and disadvantages of each with your financial advisor before making your final decision.

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Well, ready or not, here we come!

The 401(k) plan makes it easy and convenient for you to save money for retirement. Once you enroll, your contributions are automatically deducted from your paycheck before you even get to see it. This forces a strict savings discipline on you usually an absolute necessity if you’re not good at looking to the future. Since you are planning to pass through the retirement stage of your life in style instead of as a pauper (and it’s hard to foresee this and save when you receive a full pay-check), this is a real advantage that will help make your retirement as comfortable as possible. If you’re using this plan, you may even retire at age 55 and gain full access to your money, penalty-free! This, in part, is a semblance of the sheer beauty of the plan. Aren’t we poetic?!

Do remember that your contributions deducted from the paycheck are tax-deferred, thereby decreasing your current income tax. (That news calls for a pat on our back!) However, there is a limit to how much you may contribute to a 401(k). This limit is set by the Congress and set forth in the Internal Revenue Code. Your employer, too, may limit your contributions to a percentage of your salary, depending on how much he really likes you. Additionally, he may also choose to match all or a part of your contribution. (Yes, it’s time for you to go through your company’s policies regarding the plan if you haven’t already!) It’s also time to polish those rusty apple polishing skills pun intended!

Most 401(k) plans provide you with a range of investment options, including stock funds, bond funds, balanced funds, international funds, and company stock. You may decide (on your own) how your contributions are distributed among the plan’s offerings by considering your long-term financial objectives, your tolerance for risk, and how close you are to retirement age. We do not advise you to fear risky investments since those are the ones making the greatest amount of money. Others may think differently and suggest that a more conservative allocation strategy is ideal as you get older. Don’t pay too much attention to those behind the times financial advisors; they’re all ageist!

Regardless of your allocation strategy, it is critical to closely monitor the progress of your 401(k) plan. The plan is required by law to provide you with an annual statement in order to assist you with the management. Many plans will also provide you with quarterly statements, online access, and toll-free numbers offering 24/7 access to your current balance.

Each 401(k) plan also specifies when and how often you can make changes to your investments. While some plans permit you to make daily changes, others allow a limited number of transactions per year. At any rate, you are responsible for checking up on your plan’s performance and making allocation changes whenever deemed appropriate. Please make sure you’re not smashed on the day you decide to make those changes!

Certain 401(k) plans also allow you to access your savings in case of a financial emergency before reaching the age of eligibility. This access may come through a loan (with interest) or a hardship withdrawal. In case of a hardship withdrawal you will have to pay ordinary income tax on the amount withdrawn and pay a 10% penalty to the government if you don’t meet one of the following exceptions: (1) purchasing a principal residence; (2) avoiding eviction from your present residence; (3) paying tuition for yourself, your spouse, children or dependents; (4) funeral expenses for a family member; and (5) medical expenses exceeding 7.5% of your AGI.

Oh and we lied when we said that the 401(k) plan always permits you to make penalty-free withdrawals if you retire at age 55. While it is true that you may make such withdrawals at this particular age, it is also correct that certain 401(k) plans only allow you penalty-free access to your savings at age 59.5 years. Again, it is for you to choose the plan that meets your needs. Just remember that by April 1 following the year in which you turn 70.5 years old or retire (whichever is later), it is obligatory to begin withdrawing from your 401(k). So let’s hope you will have so much money coming in that you won’t have to withdraw before turning 70.5! Yes, were also finding it a little odd that we have to refer to ages in decimals (who says seventy point five ?!) But that’s how it goes, my friend!

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You should contribute as much as you can to your 401(k). Don’t overextend yourself, but you don’t want to waste the opportunity to deposit tax free, tax deferred money and have it matched. The amount the company matches you for is free money. Don’t let it go.

In 2005, the maximum before tax annual contribution that an employee can make is $14,000. If the employee is over 50 years of age, he or she can contribute $16,000. The limit is set to increase by $1,000 in 2006.

Your 401(k) is simply an account; you chose the investments within the account. There is usually an array of mutual funds presented to you, but you must decide the allocations. There is no one to advice you when it comes to role fees and expenses that will affect your overall returns.

First, decide how much risk you are willing to assume. How much volatility within the portfolio can you stand?

If you are in your 20’s and early 30’s you have the time to be aggressive with your investments. The time factor allows you to recover from slumps in the stock market. As you age, your investments should become more conservative to protect your earnings.

Many 401(k) plans have tools, such as online calculators and worksheets, which help you in determining how much risk you should accept. The best tool is often to seek the advice of a competent financial planner. It is worth it to hire a planner to evaluate your assets and earning ability if the end result is a comfortable retirement.

If you find that you are in need of money, most plans will allow you to borrow up to 50% of your vested balance, but not over $50,000. You usually have to repay the money with interest within five years. The interest payments go into your account, so you are paying yourself the interest. There are downsides, though.

The money you have withdrawn as a loan isn’t appreciating. The original contributions were made with pre-tax dollars, but the money you payback is after-tax. If you don’t pay back the money it will be considered a normal distribution, and taxed and penalized.

If you leave the company, in most cases you will want to take your 401(k) with you. You can role it over into another company’s 401(k) plan program or into your own IRA at a brokerage. With an IRA, you will have more control over your account, and better investment options.

Whatever you do with your IRA, make sure that you follow all procedures to the point. You don’t want to accidentally withdraw your money and have to pay the taxes and penalties. This is a very costly mistake.

If you are an entrepreneur, you can open an individual 401(k). This gives you the option of investing thousands of dollars more than in other kinds of self-employment retirement accounts. An individual, or solo, 401(k) is available to businesses that only have the owner and spouse as employees. This means that if you work for someone else and have a business on the side, you can open an individual 401(k).

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