Month: October 2018

You May Use Your 401k Plan To Build A Real Estate Empire

A 401k is a plan that allows employees to defer income earned pre-tax to be held and invested, sometimes with a match contribution by an employer.

The employee is allowed to contribute up to 20% of their annual income with a maximum of $18,500 to a 401k with a potential employer match of up to 8% of the income.

These funds can be used strictly for investing or could be used as a part of a profit sharing plan where the employee shares in the profit of their company.

A 401k plan is self-directed putting the employee in the driver’s seat when it comes to how the funds are invested.

Be Careful When Making Early Withdrawals From Your 401k Plan

Current tax law places a stiff penalty of 10% on Early Withdrawals From 401k retirement plans. Nevertheless, there are some special circumstances under which owners of 401k plans can withdraw or receive an early distribution from these funds without incurring any penalty at all.

These instances include buying a home for the first time, hardship cases, and using it to fund the expenses of getting a higher education.

The ideal situation is that these retirement plans are not touched until it is time to retire, but that is not always possible. Emergencies do occur, and at this time having a ready source of liquid funds to draw from can help get out of an otherwise disastrous time.

It was the Federal government that set in place pension plans like the 401k or IRA, and doing so has encouraged many families to start saving for the future.