The View 38002 02-2020_Feb The View 38002 | Page 4

theview
February 2020
Page 4
business
7 Tips
FINANCIAL FOCUS
Leaving Your Job? What Happens to Your
401K
This article was written by Edward Jones for use by your local Edward Jones
Financial Advisor.
As
a
business
owner, you
can’t afford
to
ignore
your
competition.
You can’t afford to
miss out on the trends
affecting your industry.
You can’t afford to alienate
customers. And here’s
one more item to add to
the list: You can’t afford
not to create a retirement
plan for yourself.
Of course, you might
think that, one day, you’ll
simply sell your business
and live off the
proceeds. But selling a
business isn’t always
simple, and there’s no
guarantee you’ll receive
enough to pay for a
comfortable retirement –
which is why you should
strongly consider creating
a retirement plan now.
Here are some of the
most widely used plans:
• SEP-IRA: You can
contribute up to 25 percent
of your compensation — as
much as
$56,000 in 2019 — to a
SEP-IRA.
Your
contributions
are
tax
deductible
and
your
earnings grow
tax-deferred
until
withdrawn. This plan
offers you significant
flexibility
in
making
contributions
for yourself and your
employees. Plus, as an
employer,
you
can
generally
deduct,
as
business
.com
expenses,
any
contributions you make on
behalf of your plan
participants.
• SIMPLE IRA: In
2019, you can put in up to
$13,000 — or $16,000 if
you’re 50 or older
— to a SIMPLE IRA.
As is the case with the SEP
-IRA, your earnings grow
tax deferred. You
can
match
your
employees’ contributions
dollar for dollar, up to 3
percent of compensation. If
you work for yourself,
you can combine employee
and
employer
contributions, so if you use
the
3 percent matching rule,
and you earn enough to
fully match employee
contributions, you can
put in up to $26,000 per
year (or $32,000 if you’re
50 or older). Alternatively,
you could
contribute 2 percent of
each eligible employee’s
compensation each year,
up to a maximum of
$5,600, regardless of
whether the employee
contributes. Contributions
to your employees are tax
deductible.
• “Owner-only” 401(k)
plan: If you have no
employees other than your
spouse, you can
establish an “owner-
only” 401(k) plan, which
functions similarly to a 401
(k) plan offered by a
large
employer.
Between salary deferral
and profit sharing, you can
contribute up to $56,000, in
pre-tax dollars, to your
owner-only 401(k), or
$62,000 if you’re 50 or
older. Like a SEP-IRA and
SIMPLE IRA, a 401(k)
provides the potential to
accumulate
tax-deferred
earnings. However,
you could choose to
open a Roth 401(k), which
can be funded with after-
tax dollars. With a Roth
401(k), your earnings
can
grow
tax-free,
provided you’ve had your
account at least five years
and you don’t start
taking withdrawals until
you’re at least 59-1/2.
Which plan is right for
you? The answer depends
on several factors, such as
whether you
have any employees and
how much money you can
contribute each year. But
all the plans
mentioned above are
generally easy to establish,
and the administrative
costs are usually
minimal.
Most
important, any one of them
can help you build some of
the resources you’ll need
to enjoy the retirement
lifestyle you’ve envisioned.
To select an appropriate
plan, you may want
to consult with your tax
and financial advisors.
In any case, don’t wait
too long. Time goes by
quickly, and when you
reach that day
when you’re a “former”
business owner, you’ll
want to be prepared.
By David B. Peel, Special to THE VIEW 38002
You may
be sur-
prised
that a
passenger
can
some-
times be partially held
responsible for his own
injuries when the driver
crashes the car he is in.
This is most commonly
found when there’s an
allegation that the driver
was intoxicated in the
past and the passenger
should’ve known that
when he got into the car.
Let’s consider 3 fact
patterns and what your
decision might be after
each one:
1. Passenger, hosting a
party, serves driver seven
shots of whiskey and two
beers before jumping in
with driver to go to a bar.
Driver hits tree when he
passes out. Passenger
paralyzed. Passenger’s
percent of fault for pas-
senger’s own injuries?
2. Passenger sees old
friend driving in a park-
ing lot, and they agreed to
drive to get tacos. Passen-
ger asks if driver has been
drinking and driver said
he had two beers earlier
in the afternoon and is
fine. Driver loses control
injuring passenger and
tests positive for intoxica-
tion. Passenger’s percent
of fault for passenger’s
own injuries?
3. Passenger gets into
car with driver to be taken
home because he cannot
drive. He passes out on
the way and driver later
swerves from the road
intoxicated and flips the
car, injuring passenger.
Passenger’s percent of
fault for passenger’s own
injuries?
In Tennessee and most
states now, we have
what’s called “modified
comparative negligence”
which means that like a
pie chart, responsibility
for injuries can be divided
among more than one
person or entity.
Cases such as the ones
above, which facts and
results may vary wildly.
But under comparative
negligence in Tennessee,
if the passenger was ever
held 50% at fault for their
own injuries, they could
not recover anything.
Let’s say they were held
25% at fault, then they
would get 75% of their
damages.
An interesting thought
is that police do fairly
extensive testing includ-
ing nystagmus observa-
tion, sobriety tests,
breathalyzers or blood
test, etc. to determine if
someone’s intoxicated.
What standard should the
passenger be held to who
may not have such train-
ing?
What do you think?
Mr. Peel seeks justice for
those injured in truck,
motorcycle, and car
crashes. He often ad-
dresses churches, clubs
and groups without
charge. Mr. Peel may be
reached through Peel-
LawFirm.com wherein
other articles may be
accessed.