Money Buzz 2/03
A 401(k) option for entrepreneurs, getting capital from an IRA and more
Gimme a "K"!
Thought that starting your company meant missing out on the pros of 401(k) retirement plans? Not anymore. There's now a 401(k) option for entrepreneurs. "Until now, small-business owners have had to rely on simplified employee pension plans (SEPs)," says Jim Thigpen, president of Atlanta-based Monarch Financial Services. "But last year they created a new 401(k) plan that allows people to put in more than they could through a SEP."
The new plan is also easy to administer and relatively inexpensive to open. While SEPs enable self-employed people to contribute just 13 percent of their income, the new 401(k)-sometimes referred to as a Uni-K-allows contributions up to 25 percent. Both plans have similar annual caps, which means that for individuals with incomes of more than $160,000, allowable contributions are equal, but Uni-K holders can borrow against their holdings, something you can't do with a SEP.
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