Is My Business to Small for a 401(k)?

Image via WikipediaI stop in at Forbes.com from time to time to see if Steve Forbes is making any money and check out the headlines. This time I see they have added a new blog called "Down the Road". It's written by Stuart Robertson, general manager and principal at ShareBuilder Advisors, LLC, a subsidiary of ING DIRECT. Stuarts blog will cover ideas that can help small and mid-size businesses save for retirement and save on taxes too. 

His latest post concerns the common myths associated with 401(k)'s for small business. He estimates only 15-20 percent of small businesses have a retirement plan. He says there is a general perception of these retirement plans that are mostly wrong.

Myth #1 As a small business, we don’t have enough employees: Actually, any size business can have a 401(k), even the self-employed. Any owner-only business can qualify for a type of 401(k) often referred to as an Individual 401(k) or Solo 401(k).

Myth #2 We can’t afford to offer a company match: No worries as matching is not required when offering a 401(k) plan. Not matching can reduce the amount higher earning employees including the owner can contribute to their 401(k) account (below the $16,500 2011 limit), but that’s about it. Still, matching is making its way back as many larger companies are re-adding matches as the economy picks up.

Myth #3 The tax benefits just aren’t that big of a deal: In reality, the tax benefits of a 401(k) can significantly improve a business owner’s tax situation. There are several unique advantages that can make a real difference. Let’s break them down:

• Saving limits are higher versus most any other retirement tax advantaged option. In 2011, individuals can contribute up to $16,500 tax-deferred as an employee ($22,000 if 50+ years of age) plus receive employer contributions up to $49,000 limit or $54,500 if you are 50+. These limits are inclusive of both employee and employer contributions.
• When a small business starts its first 401(k) plan, the business can receive a $500 IRS tax credit each year for the first three years (assumes you have less than 100 employees and $1,000 or more in costs. Sorry, solo(k) plans don’t qualify for this credit);
• Any employer contributions to a 401(k) (match or profit share) is deductible for the business; and

Myth#4 401(k)s are too hard to administer: Setting up a 401(k) plan is now probably easier to setup than your voice mail. How does 20 minutes of online setup and 5-10 minutes each payroll thereafter sound? Online and paper-free is not only easier, but also simpler to manage.

Myth# 5 01(k)s are just too darn expensive: Not any more. Companies can get set-up at a fraction of the cost from what they might think. Couple that with the tax credits offered by the government mentioned earlier and the tax-deferred savings that can help pad your nest egg and the plan nearly pays for itself.


There are probably other myths to conquer but these are enough to conclude that a 401(k) is right for your small company. If you have one for one company please relate the experience to us.

Related articles

• Retirement Plan Options for Small Businesses (thinkup.waldenu.edu)
• You: Pensions at Risk, States Consider Plans Like 401(k) (nytimes.com)
• 401(k) Savings: Up, But Not Enough (abcnews.go.com)
• Tips to Keep Your Retirement Plan on Track (abcnews.go.com)

Why is My Saving Account Paying Me Such Low Interest?

While preparing my taxes I was gathering my interest 1099's from my bank. I noticed that I was getting a very low rate of interest on my savings account. I remember just a few years ago when I was receiving 4 % interest on a few CD's I had. Now, banks pay somewhere around 1% interest on a CD.

Why is my interest rate so low?

Banks take our deposits and lend the money out in the form of mortgages, car loans, and personal loans. Their gross profit is the difference between the loan rate and the rate they pay depositors on saving instruments. For many years this was a small amount on average. Today the margin is much larger. In 2007 a 12 month CD yield was 4%, now the best rate you can get is 1%. A Mortgage interest rate at that time was 5%. The bank's margins, were then less.

Since the financial crisis the Federal Reserve has set interest rates at nearly nothing. Banks are able to borrow the nearly free money and loan it out at 5% and higher. The banks are under no pressure to raise the rates they are paying depositors, because of the Federal Reserve policies of low interest.

The federal banking regulators say that doing this is a way of helping banks beef up their balance sheets. They want the banks to raise capital to cushion against losses. Bank's earnings are on the rise. The financial sector earned an average $3.39 a share in the fourth quarter of 2010 vs. $1.54 in the fourth quarter of 2009. In 2007, they were earning in the $10-per-share range. I believe for the foreseeable future we are going to enjoy many more years of 1% interest at our banks.

Related articles

• How can it be that savings account interest is so little? And interest on loans is so much? It doesn't make sense to me! (johnskelton077.wordpress.com)
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Energy Rebates on Appliances, Especially Hot Water Heaters

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Utilizing $300 million in stimulus-funded rebates on energy-efficient appliances, consumers have bought more than half a million washers, dryers, refrigerators and other appliances. Yet despite rebates of up to $425 offered, less than 3% of those consumers bought water heaters, often considered the second-largest energy hog in the home.

That's one reason the rebate program isn't meeting the US Department of Energy's projected energy savings. Only 88% of the rebates have been spent, generating $27.5 million in annual fuel and water savings – substantially less than the projected $84 million.

The government originally projected that 19% of energy savings would come from water heater replacements, but by June 30, that number was only 5%. The national program ends in February 2012, although it has already closed in 24 states. Experts offer a number of explanations for the low numbers so far:

Weather. In most states, the rebate program launched in March or April, giving a boost to sales of cooling appliances like refrigerators and air conditioners. The Department of Energy notes that climate is a driving factor in appliance purchases.

Visibility. Most people don't think about their water heaters – until they break down. Unless there's a puddle on the floor, a new water heater isn't a consideration for most consumers. Homeowner awareness of the warning signs of a failing water heater could help to drive the purchase of more energy-efficient appliances, before disasters strike.

Distribution. Most people directly purchase their refrigerators, washers, dryers, and dishwashers from retail stores. However, replacement water heaters are often chosen by plumbers. As individual states study the best ways to make use of remaining funds, many are communicating more actively with plumbing contractors.

State rules. The federal government allowed each state to craft its own rules for the program, based on local needs. Of all states and territories, only 29 offered specific rebates on water heaters.

The $814 billion stimulus program was designed with multiple goals, of which energy savings were just one. If you plan to purchase a new appliance – especially a water heater – prior to the program's 2012 expiration, research the costs and benefits of various energy-efficient machines. If your state is still participating, there are big savings to be reaped if you avail yourself of the Department of Energy's rebate program.

This guest post was brought your way by CareOne Credit - glad to assist you with any debt consolidation needs you may have."?

Financial Infidelity | 3 Steps to Help You Come Clean

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When one spouse keeps secrets from the other the stress and tension can eat a marriage up. You know something is wrong, but can't put your finger on it. Communication is down and a marriage could hang in the balance.

The secrets don't have to be earth shattering like drug or drinking problems. But according to statistics almost one-third of Americans lie to their spouses about money. Whether it's secret bank accounts, mounting debt, or falling earnings, there’s something shameful that’s being hidden.

It's not uncommon that there's secret stashes, there’s debt, there are even addictions or mistresses. And we’re afraid and don’t want conflict, and so we rationalize that for the peace of the relationship, we should say nothing.

It may be easier to not come clean with your spouse in the short term because you may feel you can work it out on your own. In some instances, it will work out and you will have avoided a close shave. But usually it doesn't work out that way, the problem becomes overwhelming and blows up in your face. You will have destroyed mutual trust and surely destroyed the relationship forever.

Why not come clean now before the lies go critical and wipe out your family. Here are a few ways to start the conversation going.

Find the right time.

You should find the right time when things are quiet and you have time to discuss it. In a humble way you have to state the problem completely and ask for forgiveness. Then be ready for feelings of betrayal and hurt to show. Getting through those feelings will be hard, but you must be patient and let them work their way out. Showing regret and a repentant attitude will help.

Show your credit record.

Showing black and white evidence of the extent of your misbehavior will only help the healing process. Seeing your credit report shows your need to be honest. Doing this now will only head off future problems. Imagine if you were able to keep things a secret and you spouse found out later when you were applying for a loan and a stranger revealed this to them.

Focus on the positives.

Exposing a lie that's yours is an embarrassing gut wrenching experience. Sure it's hard for a while but think of the future benefits of being honest. Even the deceiver will feel a ton of pressure relieved when the lie comes out. When both of you are involved and on the same page with money your relationship will flourish.

Reader: Have you ever kept a financial secret from your spouse?

Related articles

• Why all the financial infidelity? (divorcetalk.wordpress.com)
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• The other kind of cheating in a marriage ()

Making Money Online is Possible - Learn How You can Do it

If your like me you are always looking for ways to make a little more money. Working on-line is a way and sometimes the only way most people have. It's a great way to to supplement your income and you can do it after hours or anytime you want. One way I am looking into is, writing articles.

Writing articles for people is a great way to earn income online, writing content for people is much easier than you may think it is. There are a few websites where people can join for free, and write content, and get paid per article they write. Using these kinds of websites is a great way make a few dollars and itch that writing bug. Below are two websites that you can try to write for.

The first website is Textbroker.com, but this website only accepts writers who are American citizens. The second website accepts writers from other countries, as well as citizens of the USA, and that website is Zemandi.com. Textbroker pays its' authors a little bit more money. For average writers they pay between $4.50 and $6.50 per 400 word articles. For better writers and longer articles the pay is more.



If your schedule is quite hectic or you don't think this is worth the amount of time needed, this isn't for you. But if you need to supplement your income and don't have more profitable options you should give this a try. 

If you could write an article in 1 hour, at $5.00 per article, for 20 days a month, you could earn $100 per month. It's not chicken feed. Contrast that to selling something on Ebay, with all the work of listing, packing, shipping, and acquiring the item. Can you make $100 on Ebay per month?

I have joined both Zemandi and Textbroker. If your thinking that you may not be a good enough writer to join these site and have acceptable articles, don't believe it. Most people with average intelligence can write decent articles. Most of the blogs you and I read everyday are written by average people with average ability. You could be a great writer and don't even know it.

Click Here for a Guide to Being a Freelancer

If you are good at writing, and have excellent grammar skills then writing for the website Wisegeek could be for you. Wisegeek is a website that people go to when they need answers to questions. People who want to write for Wisegeek need to fill out an application to write for them, and if they are accepted, they can be paid between $10-$14 an article. Wisegeek requires a more proficient writer with some professional background.

WordsofWorth.com and WritersAccess.com are two more websites that are kind of like Textbroker and Zemandi. These two websites allows writers to choose articles and receive a flat rate for the articles that they submit.

DigitalJournal.com is a website that allows people to be citizen journalists. If accepted then they can submit news articles and make a few dollars.

This is something I am going to try. Check this out for yourself and let me know how it goes for you.

Selling Your Car - Get the Highest Price - Go to Clearbook.com

When I wanted to sell my car I would always go to KelleyBlueBook.com and Edmunds.com to see what my car was selling for. It seemed complete and accurate. You could see the wholesale, retail, and private sale prices of what cars were going for. Though I couldn't figure out how they got the data for private sales. 

Well there is a new website on the block that is offering the same thing. It's called Clearbook.com. It combs millions of used car listings on the Web and analyzes that data to provide consumers with an indication of how much a particular used vehicle (down to the year, make, model, mileage and condition) is worth.

So what's the difference between Clearbook.com and the others? Clearbook.com entire process occurs on one page. The others have page after page loading in between every option. It seemed very Web 2.0 while the others felt clunky and old style. Listed in order of speed and ease of use. First is Clearbook.com followed by Autotrader.com, KBB.com, and nadaguides.com.

I put in my info for a Ford Excursion my Dad has been wanting to sell and the prices seemed to jive with the other websites numbers. Though there is some variation site to site.

Future versions of the tool will also incorporate actual transaction prices and wholesale prices of the vehicle to provide a broader price context for the user. Clearbook.com hopes the new tool will help it create a robust database of pricing information that will ultimately help it release a trade-in service for consumers down the road.

Reader: what have you experiences been with these kind of websites?

Related articles

• How to Save Money at the Car Dealership (bucks.blogs.nytimes.com)
• Selling a $10K car - do I have to accept cash? (ask.metafilter.com)
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