NEW YORK (CNNMoney.com) — Withdrawals from 401(k) retirement saving plans saw their biggest spike in over ten years, Fidelity Investments said on Friday, in the latest sign of a dismal economy.
Fidelity reported that 62,000 Fidelity participants made hardship withdrawals from their 401(k) workplace plans during the second quarter. That’s up from 45,000 participants during the prior quarter, a 37% increase. That means that 2.2% of Fidelity customers took a hardship withdrawal in the second quarter……
Unbeknownst to the majority of 401(k) owners, they could have created a banking system that would have allowed them to withdraw funds, determine their own payback schedule, and not have to worry about the potential tax consequences if the person were to lose their job, were unable to pay the loan back, or switched jobs and could not “roll” that loan to his/her new employer. Remember if you take a loan from a 401(k) and don’t pay it back or lose your job, you now have a tax liability and potentially a penalty if you are under 59 ½ years old.
There is a 401(k) alternative, creating your own banking system, to access funds, determine your own payback schedule, and if you have to change jobs or lose your job it won’t have a tax affect on the loan. Keep in mind that even within our own banking systems we want and need to pay back the loans, but they can be paid on our terms…..not theirs.
Better yet, within your own banking system you are paying YOURSELF back, which can be a substantial difference over time in creating wealth.
To learn more go to: www.becomeyourownbank.com
–Dan Thompson
Guest Post by Alicia Eberle
Two common forms of insurance companies – mutually owned and publicly traded
There are two common forms of insurance companies: 1) mutually owned, and 2) publicly traded.So why does a life insurance company’s ownership structure matter to a policyowner – to you?
When choosing a life insurance company, it’s important to know how a company is run. While both a mutually owned company and a publicly traded company can provide you with life insurance protection, the company’s ownership structure is one factor that can help guide you as to which company is right for you.
Key considerations
By asking the following questions, at a high level, you may learn the differences in how a company is run and what drives its business strategy:
• When making decisions, who comes first – policy owners? Shareholders?
• Does your insurance company have the financial strength to always keep your needs
a top priority?
• Will you be able to take some role in the decision making process of your
insurance company by exercising certain voting rights?
Mutually owned insurance companies
A mutual company is owned by and accountable to its members and participating policyowners,not stockholders. Mutual companies have no shareholders; instead, policyowners and members are often described as sharing in its ownership. Members who are insured under certain policies issued by a mutual insurance company may be eligible to vote for its board of directors and, those who also own the policy, may be eligible to share in dividends the company may declare.
Of course, dividends for a given policy are influenced by such factors as policy series, issue age,policy duration, policy loan rate, smoking status, changes in experience, and are not guaranteed.Publicly traded insurance companies
A publicly traded company must balance the interests of its policyowners with the earnings expectations of its shareholders. Shareholders typically judge a company’s performance based on a number of factors, including projected earnings for the next quarter or the next year, which might conflict with the long-term interests of policyowners. Knowing how a company is run may be one factor to help you decide which works best for you. Learn more about prospective companies before deciding which company is the right choice.
© 2010 Massachusetts Mutual Life Insurance Company.
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Guest Post by Alicia Eberle @ http://investmentspeak.blogspot.com/
