Friday, December 10, 2004

[info] 401K advantage over IRA

I just found out an important difference between 401K and IRA today:

You can borrow money against your 401K account for free (you pay interest back to youself). But, you cannot do the same with IRA.

Why that is, I don't have a clue.

As of 2004, maximum loan amount is $50K or 50% of your account balance. Tax-free and penalty-free as long as you pay back online. InvestSafe has a good low-down on it.

Anyhow, being now self-employed, this allow me to open a "self-employed 401K". The even cooler thing about this, (according to documentation) is that I can move all my IRA assets to the 401K account, making them "more flexible money".

and, being flexible is hot!