Posted by John Merchant on July 02, 2005 at 14:39:00:
I suspect “any mutual fund” representative might bridle at being used if the owner/beneficiary of that 401k plan wasn’t going to use that Mutual fund…and in fact their 401k plan docs might be drafted so you could only use their funds.
Far better to look in your yellow pp. under Pension or Retirement Planners and find a local or nearby “for fee” pension co. that sets these up for fee. These outfits normally don’t have any “products” of their own to try to sell you and don’t care what you invest in.
I called a local one recently and found their fees very reasonable…$1500 for setup and $1700 for annual reporting.
Keith,
If the only employees are you and your wife then you can set up an individual 401K. The IRS reporting requirements are minimal and you can shelter over $40K per year depending on your age. Any large mutual fund company can provide you with the paperwork that is simple to fill out. You act as the administrator of your own 401K plan. Once your assets in the plan reach over 100K then there is a form that you need to provide to the IRS every year. The mutual fund company can assist you with completing the form. This is the best retirement vehicle available for investors and you can shelter more money in it than a SEP-IRA, Keough, or SIMPLE IRA. Of course if you are making over $250K per year then I would suggest that you use the services of a pension planner who can set you up with a defined benefit plan where you can shelter even more. But for most investors the individual 401K works great.
Consult a CPA who specializes in retirement planning. I have set up a 401K and it has been tough, have a CPA who sdoes not specialize in this area and have had to do a lot of research myself to be sure I was doing the best thing. Do the math to make sure it is worth it. If you have specific questions that I may be able to help you with, email me. I will be out of reach over the long weekend, but can get back to you after.