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On Sun, 04 May 97 23:17:56 -0600, MrJones wrote:
<<Hi all!

I am about to start in a small startup. Unfortunately, it has no equivalent of a 401K plan as yet. I am trying to determine what to do with my 401K money!

>> I can outline some options, but they all require the cooperation of your company. One advantage of a start-up is that the decision makers should be very cooperative on matters such as this (plus they'll benefit too). Here's what I remember from having gone through this twice in the last 3 years (but rules change and I'm no expert):

First, you can get your company to establish a 401(k). It may well cost the company $1500/yr or more in administration costs so the conventional wisdom is that it's not the best choice for companies with less than 10-15 people. The rules that must be followed to avoid 'discrimination' against lower paid employees are very ugly and can lead to limits on how much 'highly compensated' employees can put into the plan. I think that this may be the only option if you want to borrow against it.

Second, the government just set up a new small company retirement plan option this year called SIMPLE. There is likely to be no administrative cost to the company. It works a lot like an IRA but with a limit of $6000/yr(?)contribution.

Third is the Simplified Employee Pension (SEP). This also works like an IRA but with a limit of $9500/yr (?) or 15% of your salary. The catch here is that only the company can make these contributions and therefore must be of equal percentages for all employees. Hey, give everyone a 15% pay cut and save it for retirement.

Last year a plan called Salary Reduction SEP (SAR-SEP) exited too, but it may have been replaced by the SIMPLE plan.

There's NO REASON why your company shouldn't set up one of these plans. All the major no load mutual fund companies have specialists in these areas and will be very glad to send you A LOT of info. Educate yourself a little and then bring it up at work. Of course your local stockbroker or insurance salesman can help too, but they are VERY DEVIOUS about finding ways to direct some of your savings into their pockets...for example, a 'mortality charge' on the plan assets is just the insurance salesman's term for snake oil. Remember your Foolish lessons about minimizing costs.

Good luck. I hope this helps.
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