Transferring Balances from Other Plans into 401ks

Can I move my funds from other qualified retirement plans into my newly set up 401k? Jeremy Sommers, Idaho, runs a day care.

You can move your funds from other qualified retirement plans like IRAs, 403b or others into your newly set up 401K plan. Once the transfer is complete, the funds in your 401K can be used just as you would your direct contributions to this plan. For instance, you can borrow funds up to $50,000 based on the accumulated balance in the account.

In fact, the 401K is now becoming the preferred retirement benefit plan for many small businesses across theU.S.A.The revisions made to the Economic Growth and Tax Relief Reconciliation Act of 2001 have made this retirement plan far more flexible and beneficial when you compare it with the other options. The high contribution limits combined with the fact that you save pre- tax dollars makes this plan a great tax planning tool for small owner- only businesses as well as those with limited number of employees. You can even choose to set up a 401K plan if you employ your spouse in your business.

Remember that there may be slightly different conditions to be met for owner- only business 401Ks and those that employ other people. Make sure you understand the differences when you are drawing up the plan document.

Businesses that hire employees often use a ready- to- use 401K suite like the one offered at http://low-cost-401k.com/ to make the plan administration simple. You too can choose a package like this one to make tracking, updating and managing the various 401K assets of your employees hassle free.

About Elliot Earl, Director, Pension Trade Association
Director, Pension Trade Association Founded in 1982, the Pension Trade Association [California Domestic Nonprofit Corporation #C1629080] is dedicated to helping workers save for their retirement through expanded coverage of 401k -type defined contribution pension plans.

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