The only effective way to control and conquer your tax and financial issues is to review them throughout the year. And what better way to kick off the new year than to tidy up your financial and tax house. Here are some tips to get you started. (more…)
Posts Tagged ‘financial’
Avoid These Retirement Planning Mistakes
Retirement can creep up on you. One day you’re climbing the corporate ladder or building a client base for your business. Next thing you know, you’re in your 50s or 60s. Thoughts of spending your days playing golf, pursuing a favorite hobby, or traveling to far-flung regions start calling you away from the daily grind. (more…)
Is Borrowing From Your 401(k) A Smart Financial Move?
In recent years, as banks have tightened credit requirements and home equity has dwindled, many people are contemplating the ready source of cash in their 401(k) retirement accounts. (more…)
Tax Tip Tuesday! Borrowing From Your 401(k) Can Be Taxing
Both a borrower and a lender be. With apologies to Shakespeare, when you borrow from your 401(k), you become both a borrower and a lender. Whether that’s a good idea depends on your personal financial situation – and in the process of making the decision about lending money to yourself, you may have questions regarding the tax consequences.
For instance, though you probably know the initial borrowing has no federal income tax effect, you might be wondering whether the interest you pay will be deductible. In general, the answer is no. That’s true even when you use 401(k) loan proceeds for your home.
Ordinary loan repayments are not taxable events, either. That is, you don’t have to pick up the interest you repay into your account as taxable income. And, though you’re increasing your 401(k) account with the principal portion of each payment, that amount is not considered a contribution. You can still make pre-tax contributions up to the annual limit ($16,500 for a traditional 401(k) during 2011, plus an additional $5,500 when you’re age 50 or older).
What if you default on the 401(k) loan? The balance of your loan is considered a distribution to you, and you’ll have to report it as ordinary income on your federal tax return. In addition, when you’re under age 59½, a 10% early-withdrawal penalty typically applies.
Being both a borrower and a lender can lead to results Shakespeare never imagined. Give us a call to make sure you have the whole story.
Is A Business Plan Still Necessary?
There is a heated debate regarding the merits of writing a detailed business plan. The gist of the debate is whether or not there is a benefit (financial and overall) to writing a detailed business plan, or whether this has become a dated concept and a fledgling business can thrive without one. (more…)
Being Smart About Loans
Most businesses operate to some extent on borrowed money, but borrowing too much means you’re paying more in interest than you need to. Borrowing too little means you’re under financed and won’t have enough capital to accomplish what you want to do. (more…)
