Loans from Self-Employed 401(k) for Small Business Owners |
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By Daniel Lamaute
Perhaps one of the greatest challenges of small business owners is raising capital. To raise cash many entrepreneurs mortgage their house, raid their retirement account, max out on credit cards, and beg family and friends. Fortunately, the Tax Relief Act of 2001 gives a big tax break to the cash-strapped small business owners who decide to tap their retirement money by using a Self-Employed 401(k) loan.
"Rather than taking a distribution from their IRA or 401K to keep the business alive - and pay a big penalty to the IRS - small business owners can take a tax-free loan from a Self-Employed 401(k) plan and keep their hard earned money working for them. This new plan offers small business owners all the benefits of a big company 401K without the administrative expense and complexity," says Daniel Lamaute, CEO of Lamaute Capital, www.investsafe.com.
It doesn't matter if you started your business last week or several years ago. Any single business owner, an independent contractor with 1099 income, freelancer, sole proprietor, partnership, Limited Liability Company (LLC) or
corporation, can enjoy the full benefits of the Self-Employed 401K.
- You can roll over assets from other plans or IRA’s into your Self-Employed 401(k).
- You may contribute up to $40,000 to the plan.
- Your contributions are fully-tax deductible and are based on compensation or earned income.
- You can take a loan that is tax-free and penalty free from your Self-Employed 401(k) providing the loan is paid back – loan maximum $50,000, depending on the account balance.
Each Self-Employed 401(k) must be set up no later than December 31, 2003 to be eligible for tax deductions for 2003 contributions. Visit www.investsafe.com to request a free information kit on the Small Business 401(k) loan. |
