Business 401k Plans

In today’s tight financing environment, many individuals consider the option of selling a portion of their 401(k) investments for necessary cash.  You can withdraw money from a 401(k) retirement account at any time, but you will be charged a penalty for withdrawing money before the age of 59 1/2.  This early withdraw penalty is usually 10% of monies withdrawn.

In addition to early withdrawal penalties, depending on the type of 401(k) retirement plan you have, you may owe taxes at thed time of withdrawal on any gains (or profits) you have earned from your investments in the account.   

One should consider penalties  incured from early withdrawal verses necessary capital needs before proceeding.

In the wake of the colapse of Bear Sterns (just weeks ago ranked as one of the top U.S. Banks) employees of Bear Stears saw the value of their stock in Bear Sterns drop for $70 a share to $10 a share in just one week.  One in reminded of the  retirement losses incurred by thousands of Enron employees. 

I bring this up because too often, employees tend to trust their 401(k) retirement investments in the company where they are employeed.  Although you may feel inclined to invest in your company, remenber to diversify your 401(k) investments  by investing in other securities or mutual funds with a strong performance background.   A general rule is to never invest more than 20% of investing capital in one entity.