Small Business 401 (K) Provider Guideline Now Has A Valuation Of Close To $500 Million’ The Pros And Cons Of 401k Rollovers CARES Act Liberalizes 401(K) WithdrawalsProvisions For Loans Or Withdrawals From 401(K) Plans Have Been Relaxed For 2020. You Can Now Borrow Up To $100,000 Or 100% Of Your Balance And Pay It Back Over Time. Previously You Could Borrow …Read More… Coronavirus Withdrawals From An IRA Or 401(K): Who Can …The Rules For Tapping Your IRA Or 401(K) In 2020 ] Here’s A Summary Of The Rules Regarding Distributions From Retirement Accounts If You’ve Been Affected By Covid-19:Read More… IRS Makes It Easier To Make Retirement Account Withdrawals …The Law Also Permits Individuals To Take Up To $100,000 As Distributions From Their IRAs Or 401(K) Plans In Calendar Year 2020. This $100,000 Limit Is A Cap Across All Retirement Accounts, Not …Read More… How The CARES Act Eases Retirement Account Rules During …The CARES Act Allows Eligible Participants In Certain Tax-Advantaged Retirement Plans — Including 401(K)S, 403(B)S, 457s, And Traditional IRAs — To Take An Early Distribution Of Up To $100,000 …Read More… Withdrawing From Retirement Savings: Is Four Percent A …And Indeed, In A Recent Blog Post By Wade Pfau, A Widely Respected Retirement Researcher, He Estimated That If You Use The Original Methodology In Today’s Interest Environment, The 4% Withdrawal …Read More… How To Use Your 401k/IRA During The Pandemic: COVID-19 …There Also Are Changes To The Rules For Borrowing Against Retirement Accounts. For Someone Who Qualifies Under The Above Requirements, The Loan Limit Increases To Up To 100% Of His Or Her Account …Read More… 401(K) Early Withdrawals Will Be Easier: Be Careful!Getty. Taking Money Out Of Your Employer’s 401(K) Plan While You’re Still On Its Payroll Is About To Get Easier. The Federal Government’s New Rules About “Economic Hardship” Withdrawals …Read More… Congress Suspends Required Minimum Distributions For 401(K …The Bipartisan COVID-19 Stimulus Bill Just Signed By President Trump Includes Welcome Tax Relief For Retirees: The Required Minimum Distribution Rules For Individual Retirement Accounts And 401(K …Read More… IRS Issues FAQs On COVID-19-Related IRA And 401(K) Loans …Getty. Update June 19: IRS Expands Eligibility For IRA & 401(K) Loans & Distributions In Formal Guidance. The Internal Revenue Service Has Issued A Series Of Questions And Answers Regarding The …Read More… Retirement Basics: What Is The 4% Rule? – Forbes AdvisorThe 4% Rule Assumes A Rigid Withdrawal Rate Throughout Retirement. Retirees Take Out 4% In The First Year Of Retirement. After That, They Adjust Their Annual Withdrawals By The Rate Of Inflation …Read MoreIn the COVID Economy more than ever it can be significant how worker Salary Pacages are structured. Employer wage budgets are finite and employees’ after tax disposable incomes are rarely sufficient to meet living expenses.

Instead of HR setting wages by applying Industry Standards and common practice attention should be given to an Employee’s liftetime benefit of their employment.

The Retirement Crisis in America makes it imperative that total emoluments, including employment benefits provided by employers is adequate for workers not only while in a job but also when their worker days have ended.

In order for Employers to ensure this most wage packages need restructuring – starting – with a look at the numbers and assessing the merits of the allocation to after tax take home money and the amount going to Employee Benefits, particularly the Retirement Programs for workers.

While HR may be regarded as responsible for setting wage package parameters they might not be expected to have the knowledge and skills needed to be able to come up with the most financialy efficient wage plans. For instance a 401k Scheme which maximizes Personal Contributions by workers and Matching Contri utions by the employer even when designed by licenced Financial Advisers in most cases suboptimises the economic benefits for workers. The results show up when industry averages are looked at – with only 7% of workers wages being contributed to 401 retirement plans.

This is despite IRS Rules allowing maximum contribution by Workers of $19,500 & the same amount allowed as a Matching Employer Contribution in 2021. When a licensed Financial Planner is involved rarely do they recommend maximization of 401k funding – which thus means their clients retirement nest egg is less than what it could be.

The principal reasons are the financial adviser can not do math, are not capable of Economic Analysis and lack an understanding of cash flow management possibilities.

Here is some simple Math:To make calculations easy working through the last $20,000 of earnings and say the contribution permitted to a worker’s 401k is $20,000 *(above the $19,500 maximum) after tax disposable income for a worker would be close to $12,000 – they lose almost 40% of their wage to Income Tax and FICA.


Thus the after tax cost of a Maximum Personal 401k contribution is $12,000

The difference between the $12,000 and $20,000 is a Tax Free $8,000 – the ROI is 8000 over 12,000 = 33% (Government Guanteed Return). A complication is witholding due to FIC A – which produces a tax rebate of only $4,000 to $5000. So on a Cash Flow basis ROI is closer to 25%

However that can be enhanced by leveraging – borrowing @ 5% from themselves;

The next part of the 401k investment process is a Matching Employer Contribution – of $20,000 (again fudging the numbers by $500 to make calculation easy)
The program we utilise involves a worker giving up $12,000 of their wage to facilitate the employer making a full $20,000 Matching Contribution without cost to the employer

The ROI in that instance is 33%. However with leverage obtainable by borrowing against the total of 401k investments of $40,000 a total of approximately $20,000 is obtainable; although only $12,000 of borrowing is needed after tax The ROI with an interest rate of 5% is close to 19000/300 X 100%

The $8,000 remainder can be added to the $4,000 tax rebate stemming from the Worker’s Personal 401k Contribution in addition supplemented by the savings an employer and worker both make on FICA (which no longer is payable. In this scenario tnere may be a short fall of under $1,000 which a portion of fund earnings should cover in the early years