query: Employer options when setting up 401k for employees

positive: If you were looking to maximize your ability to save in a qualified plan, why not setup a 401K plan in Company A and keep the SEP in B? Setup the 401K in A such that any employee can contribute 100% of their salary.  Then take a salary for around 19K/year (assuming under age 50), so you can contribute and have enough to cover SS taxes.   Then continue to move dividends to Company A, and continue the SEP in B.  This way if you are below age 50, you can contribute 54K (SEP limit) + 18K (IRA limit) + 5500 (ROTH income dependent) to a qualified plan.

negative: There are several things being mixed up in the questions being asked. The expense ratio charged by the mutual fund is built into the NAV per share of the fund, and you do not see the charge explicitly  mentioned as a deduction  on your 401k statement (or in the statement received from the mutual fund in a non-401k situation). The expense ratio is listed in the fund's prospectus, and should also have been made available to you in the literature about the new 401k plan that your employer is setting up. Mutual fund fees (for things like having a small balance, or for that matter, sales charges if any of the funds in the 401k are load funds, God forbid) are different. Some load mutual funds waive  the sales charge load for 401k participants, while some may not. Actually, it all depends on how hard the employer negotiates with the 401k administration company who handles all the paperwork and the mutual fund company with which the 401k administration company negotiates.  (In the 1980s, Fidelity Magellan (3% sales load) was a hot fund, but my employer managed to get it as an option in our plan with no sales load: it helped that my employer was large and could twist arms more easily than a mom-and-pop outfit or Solo 401k plan could). A long long time ago in a galaxy far far away, my first ever IRA contribution of $2000 into a  no-load mutual fund resulted in a $25 annual maintenance fee, but the law allowed the payment of this fee separately from the $2000 if the IRA owner wished to do so. (If not, the $25 would reduce the IRA balance (and no, this did  not count as a premature distribution from the IRA). Plan expenses are what the 401k administration company charges the employer for running the plan (and these expenses are not necessarily peanuts; a 401k plan is not something that needs just a spreadsheet -- there is lots of other paperwork that the employee never gets to see). In some cases, the employer pays the entire expense as a cost of doing business; in other cases, part is paid by the employer and the rest is passed on to the employees.  As far as I know, there is no mechanism for the employee to pay these expenses outside the 401k plan (that is, these expenses are (visibly) deducted from the 401k plan balance). Finally, with regard to the question asked: how are plan fees divided among the investment options? I don't believe that anyone other than the 401k plan administrator or the employer can answer this. Even if the employer simply adopts one of the pre-packaged plans offered by a big 401k administrator (many brokerages and mutual fund companies offer these), the exact numbers depend on which pre-packaged plan has been chosen. (I do think the answers the OP has received are rubbish).

negative: "While the other answers try to quantify the value of health care the question you ask is about employee vs contractor. The delta between those regarding benefits goes way beyond health care. In fact because almost every full time employee must have health care offered by their employer the option of  ""you can have X with healthcare, or Y with no healthcare"" is no longer an option. I have seen situations in the last few years where employees who had no need for healthcare coverage (retired military) were offered additional vacation days to compensate for their lower cost to the employer. For employee vs contractor what is different isn't just healthcare. It also includes holidays, vacation days, sick days, employer portion of social security, education benefits, and 401k. Insurance benefits include not just healthcare but also dental, vision, short term and long term disability, and life insurance. The rule of thumb to cover all these benefits that are lost when you are a contractor is an amount equal to your income. Of course some of these benefits  depend on single vs married and kids or not. But unless the rate they are paying the contractors is approaching twice the rate they are paying employees the contractor will be hard pressed to cover the missing benefits."

negative: Are you obligated to do what they ask? Probably not, with one big caveat discussed below. Your employer sent your money and their money after every paycheck to the 401K management company. Then after a while the 401K management company followed your instructions to roll it over into an IRA. Now the IRA management company has it. Pulling it out of the IRA would be very hard, and the IRA company would be required to report it to the IRS as a withdraw. Here is the caveat. If the extra funds you put in allowed you to exceed the annual contribution amount set by the law, or if it allowed you to put more than 100% of your income into the fund, then this would be an excess contribution, and you and your employer would have to resolve or face the excess contribution penalties. Though if the 401K company and HR allowed you to exceed the annual limit they have a much more complex problem with their payroll system. The bigger concern is why they want you to pull out your $27.50 and their $27.50. Unless you were hitting the maximum limit, your $27.50 could have been invested by adjusting the percentage taken out of each check.  You could have picked a percentage to reach a goal. That money is yours because you contributed it and unless you exceed the IRS set limits it is still pre-tax retirement money. The return of matching funds may be harder to calculate. The returns for 2013 were very good. Each $1.06 of matching funds each paycheck purchased a fraction of some investment. That investment went up and down, ok mostly up, if it was invested in the broad market. I guess you should be glad they aren't asking for more due to the increase in value.  It would be very hard to calculate what happened if you have moved it around since then. Which of course you did when you moved it into an IRA. If the average employee was also given a $55 gift last year, then the suggestion to the employer is that the tax complexity you and your fellow employees face would exceed the cost of the extra funds. They should chalk it up to an expensive lesson and move on.

negative: It is not necessarily proportional. 401k are all unique per the plan and how they are set up. It is impossible to find any two exactly alike. You should have separate buckets of the money types. Pre tax, after tax, roth, employer contribution,etc... If the plan is good you may have a Source Specific Withdraw option which allows you to take only roth or pretax at your choosing. They should track the growth of each bucket separately. It does indeed appear complicated but just think of it as different buckets of cash store in the same vault. Most people end up rolling over the 401k into an ira when they retire for flexibility to get out from under the plan rules. When you do this you will create a roth ira and a traditional ira. Then you can pick and choose when you want to take what type of money.

negative: A 401k is pretty good, but it's not magic. Personally, I'd consider a 30k salary with a 401k and a 2k employer match less valuable than a 36k salary, let alone a 48k salary. If worried about retirement savings simply set up that IRA and put in the full 5.5k allowance.

negative: You can also roll money from prior 401ks into current 401ks. Call the administrator of the 401k you prefer (i.e., Fidelity/Schwab, whoever the financial institution is). Explain you don't work there anymore and ask if you can roll money into it. Some plans allow this and some don't. So either, 1) You  can roll all your prior 401ks into your current 401k. 2) You might be able to roll all prior 401ks into the prior 401k of your choice if they will accept contributions after you've left. You can't move the amount in your current employer's 401k until you separate or hit a certain age. 3) Like mentioned above, you can roll all prior 401ks into an IRA at any financial institution that will let you set up an IRA. Process: -Call the financial institutions you want to move the money from. Tell them you want a direct rollover. Have them write the check to the financial institution you are rolling into with your name mentioned but not the beneficiary (i.e., check written to Schwab FBO: John Doe account #12345) Tax implications: -If you are rolling from a pre-tax 401k to a pre-tax 401k or IRA, and the money goes directly from institution to institution, you are not liable for taxes. You can also roll from a Roth type (already taxed) account into another Roth type account with no tax implications. If they write a check to YOU and you don't put the money in an IRA or 401k within 60 days you will pay ~20% tax and a 10% early withdrawal penalty. That's why it's best to transfer from institution to institution. 401k vs IRA: -This is a personal decision. You could move all your prior 401ks into an IRA you set up for yourself. Generally the limitations of a 401k are the lack of funds to invest in that fit your retirement strategy, or high expense ratios. Be sure to investigate the fees you would pay for trades in an IRA (401k are almost always free) and the expense ratio for funds in your 401k vs funds you might invest in at a broker for your IRA. Best of both: -You can roll all your 401ks into a single 401k and still set up an IRA or Roth IRA (if your income qualifies) that you can contribute to separately. This could give you flexibility in fund choices if your 401k fees tend to be cheaper while keeping the bulk of your nest egg in low cost mutual funds through an employer account. Last advice: Even if you don't like the options in your current 401k, make sure you are contributing at least enough to get any employer match.

negative: AFAIK, individual 401k accounts are supposed to be funded from self-employment earnings, not from rollovers from 401k plans of previous employers. So, check with your accountant before making opening an individual 401k account and getting your previous 401k plan to re-issue the checks to be payable to your individual 401k account. You might also want to ask about whether loans are permitted from individual 401k accounts (my guess is they are not because the possibility of abuse of the privilege is too high since the employer and employee are the same individual).  In any case, loans against 401k plans are generally not a good idea, and many people on this forum have blogged about this matter.

negative: I can only address this part of it: For instance with a 10k net income, 9293 is the limit for 401k from employee. How is this calculated? I believe this limit is total for all sources too, which I'm confused about. How it's calculated is that when you are self-employed you also pay the employer portion of the FICA taxes.  This comes off above the line and is not considered income.  The 401k contribution limit takes this into account.

negative: Congratulations on your raise! Is my employer allowed to impose their own limit on my contributions   that's different from the IRS limit? No. Is it something they can limit at will, or are they required to allow   me to contribute up to the IRS limit? The employer cannot limit you, you can contribute up to the IRS limit. Your mistake is in thinking that the IRS limit is 17K for everyone. That is not so. You're affected by the HCE rules (Highly Compensated Employees). These rules define certain employees as HCE (if their salary is significantly higher than that of the rest of the employees), and limit the ability of the HCE's to deposit money into 401k, based on the deposits made by the rest of the employees. Basically it means that while the overall maximum is indeed 17K, your personal (and other HCE's in your company) is lowered down because those who are not HCE's in the company don't deposit to 401k enough. You can read more details and technical explanation about the HCE rules in this article and in this blog post.

negative: Be sure to consider the difference between Roth 401K and standard 401K. The Roth 401K is taxed as income then put into your account. So the money you put into the Roth 401K is taxed as income for the current year, however, any interest you accumulate over the years is not taxed when you withdraw the money.  So to break it down: You may also want to look into Self Directed 401K, which can be either standard or Roth. Check if your employer supports this type of account. But if you're self employed or 1099 it may be a good option.

negative: Honestly, get a ln employment lawyer, preferably one with a MBA. If you're having to ask these questions, and considering giving away equity, get proper business legal advice. I've seen several lucrative companies torn apart because things were sloppy when it was originally set up. Also remember employees don't need equity to spur them on; that what a paycheck and meaningful employment is for. And certainly don't give anything from the outset.

negative: "Highly Compensated Employee Rules Aim to Make 401k's Fair would be the piece that I suspect you are missing here.  I remember hearing of this rule when I worked in the US and can understand why it exists.  A key quote from the article: You wouldn't think the prospect of getting money from an employer   would be nerve-wracking. But those jittery co-workers are highly   compensated employees (HCEs) concerned that they will receive a refund   of excess 401k contributions because their plan failed its   discrimination test. A refund means they will owe more income tax for   the current tax year. Geersk (a pseudonym), who is also an HCE, is in   information services and manages the computers that process his firm's   401k plan. 401(k) - Wikipedia reference on this:  To help ensure that companies extend their 401(k) plans to low-paid   employees, an IRS rule limits the maximum deferral by the company's   ""highly compensated"" employees, based on the average deferral by the   company's non-highly compensated employees. If the less compensated   employees are allowed to save more for retirement, then the executives   are allowed to save more for retirement. This provision is enforced   via ""non-discrimination testing"". Non-discrimination testing takes the   deferral rates of ""highly compensated employees"" (HCEs) and compares   them to non-highly compensated employees (NHCEs). An HCE in 2008 is   defined as an employee with compensation of greater than $100,000 in   2007 or an employee that owned more than 5% of the business at any   time during the year or the preceding year.[13] In addition to the   $100,000 limit for determining HCEs, employers can elect to limit the   top-paid group of employees to the top 20% of employees ranked by   compensation.[13] That is for plans whose first day of the plan year   is in calendar year 2007, we look to each employee's prior year gross   compensation (also known as 'Medicare wages') and those who earned   more than $100,000 are HCEs. Most testing done now in 2009 will be for   the 2008 plan year and compare employees' 2007 plan year gross   compensation to the $100,000 threshold for 2007 to determine who is   HCE and who is a NHCE. The threshold was $110,000 in 2010 and it did   not change for 2011. The average deferral percentage (ADP) of all HCEs, as a group, can be   no more than 2 percentage points greater (or 125% of, whichever is   more) than the NHCEs, as a group. This is known as the ADP test. When   a plan fails the ADP test, it essentially has two options to come into   compliance. It can have a return of excess done to the HCEs to bring   their ADP to a lower, passing, level. Or it can process a ""qualified   non-elective contribution"" (QNEC) to some or all of the NHCEs to raise   their ADP to a passing level. The return of excess requires the plan   to send a taxable distribution to the HCEs (or reclassify regular   contributions as catch-up contributions subject to the annual catch-up   limit for those HCEs over 50) by March 15 of the year following the   failed test. A QNEC must be an immediately vested contribution. The annual contribution percentage (ACP) test is similarly performed   but also includes employer matching and employee after-tax   contributions. ACPs do not use the simple 2% threshold, and include   other provisions which can allow the plan to ""shift"" excess passing   rates from the ADP over to the ACP. A failed ACP test is likewise   addressed through return of excess, or a QNEC or qualified match   (QMAC). There are a number of ""safe harbor"" provisions that can allow a   company to be exempted from the ADP test. This includes making a ""safe   harbor"" employer contribution to employees' accounts. Safe harbor   contributions can take the form of a match (generally totaling 4% of   pay) or a non-elective profit sharing (totaling 3% of pay). Safe   harbor 401(k) contributions must be 100% vested at all times with   immediate eligibility for employees. There are other administrative   requirements within the safe harbor, such as requiring the employer to   notify all eligible employees of the opportunity to participate in the   plan, and restricting the employer from suspending participants for   any reason other than due to a hardship withdrawal."

negative: It doesn't make a difference if you will be keeping it in the 401K or transferring it to an IRA, it is still retirement money that you plan on investing for decades.  Pre-Enron many employees invested significant amounts of their retirement funds with the employer. One of the risks was that if a single stock was down at the wrong time, you were hurt if you needed to sell.  If you are going from an S&P 500 in the 401K to an S&P 500 in the IRA, it doesn't matter if the the market is up or down, the two funds will be pretty much in synch.

negative: "This seems to depend on what kind of corporation you have set up. If you're set up as a sole proprietor, then the Solo 401k contributions, whether employee or employer, will be deducted from your gross income.  Thus they don't reduce it. If you're set up as an S-Corp, then the employer contributions, similar to large employer contributions, will be deducted from wages, and won't show up in Box 1 on your W-2, so they would reduce your gross income.  (Note, employee contributions also would go away from Box 1, but would still be in Box 3 and 5 for FICA/payroll tax purposes). This is nicely discussed in detail here. The IRS page that discusses this in more (harder to understand) detail is here. Separately, I think a discussion of ""Gross Income"" is merited, as it has a special definition for sole proprietorships. The IRS defines it in publication 501 as: Gross income.    Gross income is all income you receive in the form of money, goods, property, and services that is not exempt from tax. If you are married and live with your spouse in a community property state, half of any income defined by state law as community income may be considered yours. For a list of community property states, see Community property states under Married Filing Separately, later. Self-employed persons.    If you are self-employed in a business that provides services (where products are not a factor), your gross income from that business is the gross receipts. If you are self-employed in a business involving manufacturing, merchandising, or mining, your gross income from that business is the total sales minus the cost of goods sold. In either case, you must add any income from investments and from incidental or outside operations or sources. So I think that regardless of 401(k) contributions, your gross income is your gross receipts (if you're a contractor, it's probably the total listed on your 1099(s))."

negative: Why do they hate teen workers, people with serious disabilities, and those who never had an opportunity to complete high school?  Every employee must produce goods and/or services at least equal to the cost of their employment.    Edit to add that people in these situations CAN and DO contribute to their employer and society.  They also benefit from employment.  When the bar is set artificially high, they lose the opportunity to do so.

negative: "Hahaha, that sounds good but in real life pensions are almost never fully funded and almost never fully funded when starting off. That is why the post office is almost always losing money. They're required by law to pre-pay some crazy number like 70% of pension and retiree obligations up front which sucks up all resources.  When a employee opens a pension plan their employer starts contributing a target amount dependent on the stated benefits and the actuarial projections. The market doesn't always go up and the actuaries are not always correct with lifespans either.  You take the risk of losing that pension if you work for a bad company, same as if you invest in an employee stock option plan. You can usually take a lump-sum payout, but who would do that when you can get ""guaranteed"" money."

negative: Here's the best explanation I found relating to why your T4 box 39 might not have an amount filled in, even when box 38 has one: Department of Finance – Explanatory Notes Relating to the Income Tax Act [...]. It's a long document, but here's the part I believe relevant, with my emphasis: Employee Stock Options ITA 110(1)   [...]   Paragraph 110(1)(d) is amended to include a requirement that the   employee [...] exercise the employee’s rights under the stock   option agreement and acquire the securities underlying the agreement   in order for the deduction in computing taxable income to be   available [...] ensures that   only one deduction is available in respect of an employment benefit. In other words, if employee stock option rights are surrendered to an   employer for cash or an in-kind payment, then (subject to new   subsections 110(1.1) and (1.2)) the employer may deduct the payment   but the employee cannot claim the stock option deduction. Conversely,   where an employer issues securities pursuant to an employee’s exercise   of stock options, the employer can not deduct an amount in respect of   the issuance, but the employee may be eligible to claim a deduction   under paragraph 110(1)(d). Did you receive real shares based on your participation in the ESPP, or did you get a cash payment for the net value of shares you would have been issued under the plan? From what I can tell, if you opted for a cash payment (or if your plan only allows for such), then the part I emphasized comes into play. Essentially, if conditions were such that your employer could claim a deduction on their corporate income tax return for the compensation paid to you as part of the plan, then you are not also able to claim a similar deduction on your personal income tax return. The money received in that manner is effectively taxed in your hands the same as any bonus employment income would be; i.e. it isn't afforded tax treatment equivalent to capital gains income. Your employer and/or ESPP administrator are best able to confirm the conditions which led to no amount in your box 39, but at least based on above you can see there are legitimate cases where box 38 would have an amount while box 39 doesn't.

negative: "There are a few sites out there that can give you some reasoning behind the request. LegalZoom, for instance.  To quote the LZ doc in case the link dies: Employee vs. Independent Contractor If a worker is an employee, the employer is responsible for paying   Social Security, unemployment insurance, Medicare, and possibly other   costs like workers' compensation insurance for the employee; at the   end of the tax year, the employer is responsible for compiling all   necessary payroll reports, including W-2 forms. If a worker is an independent contractor, the employer is not   responsible for any of the above taxes or payments, and the only added   paperwork is the issuing of a 1099 to the independent contractor at   the end of the tax year, if he or she has made more than $600 with the   employer. As Kent suggested, you should speak with an attorney (really you need one if setting up an LLC). There are a lot of companies out there these days that try to classify people as contractors rather than full-time employees as it gets them out of paying benefits and dealing with taxes. This is being heavily cracked down on, and several ""contractor"" employees are winning lawsuits to get full-time status.  If you are truly acting as a contractor, then setting up an LLC can help with a few items such as taxes and protection on certain business aspects (see comments below regarding this). It's easy and relatively cheap (cost me about $250 with extra legal advice tacked on). If you are reporting directly to a manager with the company, or really working in any way that isn't consistent with the definition of a contractor, then I'd turn down the offer and ask to be made a FT employee.  Additional information: https://www.sba.gov/content/hire-contractor-or-employee"

negative: "The only way to know the specific explanation in your situation is to ask your employer. Different companies do it differently, and they will have their reasons for that difference. I've asked ""But why is it that way?"" enough times to feel confident in telling you it's rarely an arbitrary decision.  In the case of your employer's policy, I can think of a number of reasons why they would limit match earnings per paycheck: Vesting, in a sense - Much as stock options have vesting requirements where you have to work for a certain amount of time to receive the options, this policy works as a sort of vesting mechanism for your employer matching funds. Without it, you could rapidly accumulate your full annual match amount in a few pay periods at the beginning of the year, and then immediately leave for employment elsewhere. You gain 100% of the annual match for only 1-2 months of work, while the employees who remain there all year work 12 months to gain the same 100%. Dollar Cost Averaging - By purchasing the same investment vehicle at different prices over time, you can reduce the impact of volatility on your earnings. For the same reason that 401k plans usually restrict you to a limited selection of mutual funds - namely, the implicit assumption is that you probably have little to no clue about investing - they also do other strategic things to encourage employees to invest (at least somewhat) wisely. By spacing their matching fund out over time, they encourage you to space your contributions over time, and they thereby indirectly force you to practice a sensible strategy of dollar cost averaging. Dollar Cost Averaging, seen from another angle - Mutual funds are the 18-wheeler trucks of the investment super-highway. They carry a lot of cargo, but they are difficult to start, stop, or steer quickly. For the same reasons that DCA is smart for you, it's also smart for a fund. The money is easier to manage and invest according to the goals of the fund if the investments trickle in over time and there are no sudden radical changes. Imagine if every employer that does matching allowed the full maximum match to be earned on the first paycheck of the year - the mutual funds in 401ks would get big balloons of money in January followed by a drastically lower investment for the rest of the year. And that would create volatility. Plan Administration Fees - Your employer has to pay the company managing the 401k for their services. It is likely that their agreement with the management company requires them to pay on a monthly basis, so it potentially makes things convenient for the accounting people on both ends if there's a steady monthly flow of money in and out. (Whether this point is at all relevant is very much dependent on how your company's agreement is structured, and how well the folks handling payroll and accounting understand it.) The Bottom Line - Your employer (let us hope) makes profits. And they pay expenses. And companies, for a variety of financial reasons, prefer to spread their profits and expenses as evenly over the year as they can. There are a lot of ways they achieve this - for example, a seasonal business might offer an annual payment plan to spread their seasonal revenue over the year. Likewise, the matching funds they are paying to you the employees are coming out of their bottom line. And the company would rather not have the majority of those funds being disbursed in a single quarter. They want a nice, even distribution. So once again it behooves them to create a 401k system that supports that objective. To Sum Up Ultimately, those 401k matching funds are a carrot. And that carrot manipulates you the employee into behaving in a way that is good for your employer, good for your investment management company, and good for your own investment success. Unless you are one of the rare birds who can outperform a dollar-cost-averaged investment in a low-cost index fund, there's very little to chafe at about this arrangement. If you are that rare bird, then your investment earning power likely outstrips the value of your annual matching monies significantly, in which case it isn't even worth thinking about."

negative: IRA and 401k are investment accounts. 401k accounts may be limited in what you're allowed to invest in more than the IRA, but still - these are investment accounts. The money you deposit in them - is invested, per your instructions.  What happens to it is up to you. When you leave your job, if you have some unvested match balance in the 401k, it may be refunded back to your employer, but your own contributions are always vested.

negative: The answer likely depends a bit on which state you are in, but this should be true for most states.  I don't know anything about Pennsylvania specifically unfortunately. The Affordable Care Act created the SHOP marketplace, which allows small businesses to effectively form larger groups for group coverage purposes.  SHOP stands for Small Business Health Options Program, and requires only one common-law employee on payroll. This would effectively allow you to offer group coverage without having a group.  Talk to your tax accountant for more details, as this is still very new and not necessarily well understood. There are some other options, all of which I would highly suggest talking to a tax accountant about as well.  HRAs (health reimbursement accounts) allow the employer to set aside pre-tax funds for the employee to use for approved medical expenses; they're often managed by a benefits company (say, Wageworks, Conexis, etc.).  That would allow your employee to potentially pick a higher deductible health plan which offers poorer coverage on the individual marketplace (with after-tax dollars) and then supplement with your HRA. There are also the concept of Employer Payment Plans, where the employer reimburses the employee for their insurance premiums, but those are not compatible with the ACA for the most part - although there seems to be a lot of disagreement as to whether it's possible to have something effectively the same work, see for example this page versus this for example.

negative: The general rule with stock options is that it's best to wait until expiration to exercise them.  The rationale depends on a few factors and there are exceptions. Reasons to wait: There would be cases to exercise early: Tax implications should be checked with a professional advisor specific to your situation. In the employee stock option plans that I have personally seen, you get regular income tax assessed between exercise price and current price at the time you exercise.  Your tax basis is then set to the current price.  You also pay capital gains tax when you eventually sell, which will be long or short term based on the time that you held the stock. (The time that you held the options does not count.)  I believe that other plans may be set up differently.

negative: "This is common. He worked there for 2 years under this scheme, so I'm guessing he was cool with it. Lawsuits pop up when they get mad at management. (*""I worked 70 hours a week for 2 years and they pass me up on the promotion? Hell no, lawsuit time.""*)  These mutually beneficial arrangements are almost always agreed on by employer and employee. Employees need hours, employers do not want to pay overtime."

negative: Alright, team!   I found answers to part 1) and part 2) that I've quote below, but still need help with 3).  The facts in the article below seem to point to the ability for the LLC to contribute profit sharing of up to 25% of the wages it paid SE tax on.  What part of the SE tax is that?  I assume the spirit of the law is to only allow the 25% on the taxable portion of the income, but given that I would have crossed the SS portion of SE tax, I am not 100%.  (From http://www.sensefinancial.com/services/solo401k/solo-401k-contribution/) Sole Proprietorship Employee Deferral The owner of a sole proprietorship who is under the age of 50 may make   employee deferral contributions of as much as $17,500 to a Solo 401(k)   plan for 2013 (Those 50 and older can tack on a $5,500 annual catch-up   contribution, bringing their annual deferral contribution to as much   as $23,000). Solo 401k contribution deadline rules dictate that plan   participant must formally elect to make an employee deferral   contribution by Dec. 31. However, the actual contribution can be made   up until the tax-filing deadline.  Pretax and/or after-tax (Roth)   funds can be used to make employee deferral contributions. Profit Sharing Contribution A sole proprietorship may make annual profit-sharing contributions to   a Solo 401(k) plan on behalf of the business owner and spouse.   Internal Revenue Code Section 401(a)(3) states that employer   contributions are limited to 25 percent of the business entity’s   income subject to self-employment tax. Schedule C sole-proprietors   must base their maximum contribution on earned income, an additional   calculation that lowers their maximum contribution to 20 percent of   earned income. IRS Publication 560 contains a step-by-step worksheet   for this calculation. In general, compensation can be defined as your   net earnings from self-employment activity.  This definition takes   into account the following eligible tax deductions: (1) the deduction   for half of self-employment tax and (2) the deduction for   contributions on your behalf to the Solo 401(k) plan.  A business   entity’s Solo 401(k) contributions for profit sharing component must   be made by its tax-filing deadline. Single Member LLC Employee Deferral The owner of a single member LLC who is under the age of 50 may make   employee deferral contributions of as much as $17,500 to a Solo 401(k)   plan for 2013 (Those 50 and older can tack on a $5,500 annual catch-up   contribution, bringing their annual deferral contribution to as much   as $23,000). Solo 401k contribution deadline rules dictate that plan   participant must formally elect to make an employee deferral   contribution by Dec. 31. However, the actual contribution can be made   up until the tax-filing deadline.  Pretax and/or after-tax (Roth)   funds can be used to make employee deferral contributions. Profit Sharing Contribution A single member LLC business may make annual profit-sharing   contributions to a Solo 401(k) plan on behalf of the business owner   and spouse. Internal Revenue Code Section 401(a)(3) states that   employer contributions are limited to 25 percent of the business   entity’s income subject to self-employment tax. Schedule C   sole-proprietors must base their maximum contribution on earned   income, an additional calculation that lowers their maximum   contribution to 20 percent of earned income. IRS Publication 560   contains a step-by-step worksheet for this calculation. In general,   compensation can be defined as your net earnings from self-employment   activity. This definition takes into account the following eligible   tax deductions: (i) the deduction for half of self-employment tax and   (ii) the deduction for contributions on your behalf to the Solo   401(k).  A single member LLC’s Solo 401(k) contributions for profit   sharing component must be made by its tax-filing deadline.

negative: "Yeah...I was a libertarian until they said they want to end the Federal Reserve. I'm more of a conservative.   Your point (that a minimum wage at a major metropolitan area is often not a ""livable"" wage) is irrelevant. Wages are a  fee given to employees for their work. The way an employee earns a high wage is by providing value that is greater than that wage. If the value an employee brings to an employer is less than the wage he's paid, an employer will lay off that individual because the employee *costs* the employer money. Therefore, setting a minimum wage simply means you ban certain individuals (usually first time workers or otherwise unskilled) from the workforce because they currently do not have the skills and/or experience to justify that wage. Furthermore, the higher you set the minimum wage, the more people you deprive of jobs."

negative: Take some of the commentary on home buying forums with a grain of salt. I too have read some of the commentary on these forums such as myFICO, Trulia, or Zillow and rarely is the right advice given or proper followup done. Typical 401k withdrawals for home purchase would not be considered a hardship. However, most employer 401k plans will allow you to take a loan for 401k as long as you provide suitable documentation: HUD-1 statement, Real Estate Contract, Good Faith Estimate, or some other form of suitable documentation as described by the plan administrator.  For instance, I just took a 401k loan to pay for closing costs and I had to provide only the real estate contract. Could I not follow through with the contract? Sure, but what if I am found out for fraud? Then the plan administrator would probably end up turning the distribution into a taxable distribution. I wouldn't go to jail in this hypothetical situation - I am only stealing from myself. But the law states that certain loan situations are not liable for tax as long as that situation still exists. In the home loan situation, my employer allows for a low interest, 10 year loan. My employer also allows for a pre-approved loan for any purpose. This would be a low interest, 5 year loan.  There is also the option to not do a loan at all. But normally that is only allowed after you have exhausted all your loan options and the government makes it intentionally harsh (30% penalty at least) to discourage people from dumping their tax free haven 401k accounts. That all being said, many plans offer no prepayment penalty. So like my employer has for us, I can pay it all back in full whenever I want or make micropayments every month. Otherwise, it comes out of my pay stub biweekly. So if it were to fall through, I could just put it all back like it never happened. Though with my plan, there is a cooling off period of 7 days before I can take another loan. Keep in mind that if you leave your employer then the full amount becomes a taxable distribution unless you pay it back within a certain period of time after leaving the employer.  Whether this fits your financial situation is up to you, but a loan is definitely preferred over a partial or full withdrawal since you are paying yourself back for your rightly earned retirement which is just as important.

negative: Once upon a time, money rolled over from a 401k or 403b plan into an IRA could not be rolled into another 401k or 403b unless the IRA account was properly titled as a Rollover IRA (instead of Traditional IRA - Roth IRAs were still in the future) and the money kept separate (not commingled) with contributions to Traditional IRAs. Much of that has fallen by the way side as the rules have become more relaxed.  Also the desire to roll over  money into a 401k plan at one's new job has decreased too --  far too many employer-sponsored retirement plans have large management fees and the investments are rarely the best available: one can generally do better  keeping ex-401k money outside a new 401k, though of course new  contributions from salary earned at the new employer perforce must be put into the employer's 401k. While consolidating one's IRA accounts at one brokerage or one fund family certainly saves on the paperwork, it is worth keeping in mind that putting all one's eggs in one basket might not be the best idea, especially for those concerned that an employee might, like Matilda, take me money and run Venezuela. Another issue is that while one may have diversified investments at the brokerage or fund family, the entire IRA must have the same set of beneficiaries: one cannot leave the money invested in GM stock (or Fund A) to one person and the money invested in Ford stock (or Fund B) to  another if one so desires.  Thinking far ahead into the future, if one is interested in making charitable bequests, it is the best strategy tax-wise to make these bequests from tax-deferred monies rather than from post-tax money. Since IRAs pass outside the will, one can keep separate IRA accounts with different companies, with, say, the Vanguard IRA having primary beneficiary United Way and the Fidelity IRA having primary beneficiary the American Cancer Society, etc. to achieve the appropriate charitable bequests.

negative: There are lots of sub-parts to your question. Let's takle them one at a time. Should I worry about an IRA at this age? Absolutely! Or at least some form of retirement account. When you are young is the BEST time to start putting money into a retirement account because you have so much time for it to grow. Compounding interest is a magical thing. Even if you can only afford to put a very small amount in the account, do it!  You will have to put a heck of a lot less money into the account over your working career if you start now. Is there a certain amount  you need for the IRA deduction? No. Essentially with a traditional IRA you can just subtract the amount you deposited (up to the contribution limit) from your income when calculating your taxes.  What kind of IRA should I get? I suggest a ROTH IRA, but be warned that with that kind you get the tax breaks when you retire, not now. If you think taxes will be higher in 40 years or so, then the Roth is a clear winner.  Traditional IRA: Tax deduction this year for contribution; investment   plus gains are taxed as income when   you take the money out at retirement. Roth IRA: Investment amount is taxed in the year you put it in; no   taxes on investment amount or gains   when you take it out at retirement. Given the long horizon that you will be investing, the money is likely going to at least double. So the total amount you are taxed on over your lifetime would probably be less with the ROTH even if tax rates remain the same. Is the 401K a better option? If they offer a match (most do) then it is a no-brainer, the employer 401K always comes out on top because they are basically paying you extra to put money into savings.  If there is no match, I suggest a Roth because company 401K plans usually have hidden fees that are much higher than you are going to pay for setting up your own IRA or Roth IRA with a broker.

negative: They might be concerned with having to charge sales tax in California if they have a single employee in California, creating a nexus situation with CA. If that's the case, or even if there is some other issue, you might be able to switch from being a W2 employee to being a 1099 independent contractor. There's a host of additional issues this could cause, but it alleviate the nexus problem (if THAT is the problem). Here's a terrible solution you can bring up, but shouldn't do under any circumstances: offer to set up a mailing address in an allowed State, and give your company plausible deniability with regards to your legal residence. Obviously, this is a terrible idea, but exploring that option with your employer would help you suss out what the actual objection is. Ultimately, anything said here about the reason is just conjecture. You need to talk to the decision maker(s) about the real reason behind the denial. Then you can talk through solutions. Also - don't forget that you can get another job. If you are serious about a future with your girlfriend, you should put that relationship ahead of your current employment comfort and security. If you are willing to walk away from your position, you are in a much better situation to negotiate.

negative: "The error in the example is here: ""Now, if you contribute 5% to a Roth 401(k), your employer would match your after-tax 5% contribution. If the tax rate is 25%, that would be 5% of $60,000, which is $3,000. However, that $3,000 is put in to a traditional 401(k), so it is taxed when withdrawn. Assuming the tax rate is still 25% when you withdraw, you are only getting $2,250. Essentially you are giving up $750 of free money in this case."" You set your contribution to Roth 401k as a function of the gross, 80,000.  You choose 5% and contribute 4000 Your employer matches 4000. At the end of the year, your taxable income to the IRS is 80000, and you pay 30% or 24000.  You have 80K-4K-24K to live on, or 52K If you chose the alternate regular 401k,then you contribute 4K, your income to the IRS is (80-4=) 76k, and you pay 30%, 22.8K in tax.  You have 80-4-22.8 or 53.2K to live on. Or, to come at it the other way, you have 4000*30% =1200 extra tax reduction in your income this year.   If the extra income in 401k versus extra current year tax in Roth IRA means you have to reduce less, like 2800K to the roth so you maintain a 53.2K lifestyle, then yes, the Roth IRA match is reduced.  If you have the cash flow to prepay the current year tax and maximum-match contribution, you will get the full match based on your gross income."

negative: What you want is a cashless transaction. It's part of the normal process. My employer gives me 1000 options at $1, I never need to come up with the money, the shares are bought and sold in one set of transactions, and if the stock is worth $10, I see $9000 less tax withholding, hit the account. No need for me to come up with that $1000.

negative: "Yes you can do the withdraw if you turned 55 during the year you separated from service. http://www.401khelpcenter.com/401k_education/Early_Dist_Options.html#.VdMrqPlVhBc Leaving Your Job On or After Age 55 The age 59½ distribution rule says any 401k participant may begin to withdraw money from his or her plan after reaching the age of 59½ without having to pay a 10 percent early withdrawal penalty. There is an exception to that rule, however, which allows an employee who retires, quits or is fired at age 55 to withdraw without penalty from their 401k (the ""rule of 55""). There are three key points early retirees need to know. First, this exception applies if you leave your job at any time during the calendar year in which you turn 55, or later, according to IRS Publication 575. Second, if you still have money in the plan of a former employer and assuming you weren't at least age 55 when you left that employer, you'll have to wait until age 59½ to start taking withdrawals without penalty. Better yet, get any old 401k's rolled into your current 401k before you retire from your current job so that you will have access to these funds penalty free. Third, this exception only applies to funds withdrawn from a 401k. IRAs operate until different rules, so if you retire and roll money into an IRA from your 401k before age 59½, you will lose this exception on those dollars."


query: Are stories of turning a few thousands into millions by trading stocks real?

positive: "If they could really do this, do you really think they would be wasting their time offering this course? You are being lied to. (Or more accurately: It's certainly possible to gamble and get lucky, but those gambles are  more likely to result in your rapidly  losing your money than in your rapidly gaining value.) It is possible to make money in the market. But ""market rate of return"" has historically averaged around  8%. That won't make you rich by itself, but it's better return than you can get from banks... at higher risk, please note. There are places in the market where, by accepting more risk of losing your money, you can improve on that 8%. For me the risk and effort are too much for the potential additional gains, but de gustibus."

positive: "Consider this thought experiment: Take 10 million people and give them each $3,000. Every day they each   purchase a random stock with all of their money. The next day they   flip a coin and if it's heads they do nothing, and if it's tails they   sell it and purchase another random stock. Repeat everyday for 5   years. After 5 years, you'll probably have many people that lost all of their money due to the fees they paid for each trade they made. A lot of people will have lost a little or won a little. Some people will have doubled or tripled their money, or even better. A very small number of people will have made ""millions"". Some of those small number of people that made millions will likely go on to write books and sell seminars on how to make money in the stock market."

positive: 10k in taser stock at $1.00 per share made those who held into the hundreds per share made millions.  But think about the likelihood of you owning a $1 stock and holding it past $10.00. They (taser millionaires) were both crazy and lucky.  A direct answer, better off buying a lottery ticket. Stocks are for growing wealth not gaining wealth imho. Of course there are outliers though.  To the point in the other answer, if it was repeatable the people teaching the tricks (if they worked) would make much more if they followed their own advice if it worked.  Also, if everyone tells you how good gold is to buy that just means they are selling to get out. If it was that good they would be buying and not saying anything about it.

positive: The short answer is yes, it is possible to do what these classes claim, however, it is highly unlikely. For every person they can show you that got rich using whatever so called method they are teaching, there are hundreds of people that didn't that they aren't telling you about. What I would recommend is invest in a well diversified portfolio. If you have a higher tolerance for risk then you can make some of that portfolio out of higher risk/reward investments. Maybe you pick the next Apple or Google or Netflix or whatever but that portion of your portfolio should be money that you can afford to lose in case you pick duds.

positive: "Warren Buffett pointed out that if you set 1 million monkeys to flipping coins, after ten flips, one monkey in about 1,000 (1,024) actually, would have a ""perfect"" track record of 10 heads. If you can double your money every three to five years (basically, the outer limit of what is humanly possible), you can turn $1,000 into $1 million in 30-50 years. But your chances of doing this are maybe those of that one in 1,000 monkeys. There are people that believe that if Warren Buffett were starting out today, ""today's version"" could not beat the historical version. One of the ""believers"" is Warren Buffett himself (if you read between the lines of his writings). What the promoters do is to use the benefit of hindsight to show that if someone had done such-and-such trades on such-and-such days, they would have turned a few thousand into a million in a few short years. That's ""easy"" in hindsight, but then challenge them to do it in real time!"

positive: "I did once read a book titled ""How I made a million dollars on the stock market"". It sounded realistic enough to be a true story. The author made it clear on the first page that (a) this was due to some exceptional circumstances, (b) that he would never again be able to pull off something like this, and (c) you would never be able to pull of something like this, except with extreme luck.  (The situation was small company A with a majority shareholder, other small company B tries to gain control by buying all the shares, the majority shareholder of A trying to prevent this by buying as many shares as possible, share price shooting up ridiculously, ""smart"" traders selling uncovered shorts to benefit when the price inevitably drops, the book author buying $5,000 worth of shares because they were going up, and then one enormous short squeeze catching out the traders. And he claimed having sold his shares for over a million - before the price dropped back to normal).  Clearly not a matter of ""playing your cards right"", but of having an enormous amount of luck."

positive: I made upwards of 3M from 200K by trading stocks, which I made from a business that I invested 20K in.  HOWEVER, DO NOT use trading stocks as a source of income, you're gambling with your precious cash. There are safer alternatives.

positive: "It's possible to make money in the market - even millions if you ""play your cards right"". Taking the course being offered can be educational but highly unlikely to increase your chances of making millions. Experience and knowledge of the game will make you money. The stock market is a game."

positive: you'll need 25k to start or 2k in multiple accounts, that way you have access to margin, and don't have to worry about Pattern day trading limits. Be right more than you are wrong. Go up look for 3x potential up vs down risk. Compound daily.  you can't double a penny every day every day for a month it becomes to difficult. but you can do 1%/day or maybe better. 2k compounded 1% every day becomes 75k at the end of a year (but you'll likely have to take weekends off, or look for other markets)

negative: Pump-and-dump scams are indeed very real, but the scale of a single scam isn't anywhere near the type of heist you see in movies like Trading Places. Usually, the scammer will buy a few hundred dollars of a penny stock for some obscure small business, then they'll spam every address they have with advice that this business is about to announce a huge breakthrough that will make it the next Microsoft. A few dozen people bite, buy up a few thousand shares each (remember the shares are trading for pennies), then when the rise in demand pushes up the price enough for the scammer to make a decent buck, he cashes out, the price falls based on the resulting glut of stock, and the victims lose their money. Thus a few red flags shake out that would-be investors should be wary of:

negative: This can arise with very thinly traded stocks for large blocks of shares. If the market only has a few thousand dollars available at between 8.37 and 12.5 the price is largely meaningless for people who want to invest in hundreds of thousands/millions of dollars worth, as the quoted price can't get them anywhere near the number of shares they want. How liquid is the stock in question?

negative: It this a real situation or is it a made up example? Because for a stock that has a last traded priced of $5 or $6 and volume traded over $4M (i.e. it seems to be quite liquid), it is hardly likely that the difference from bid to ask would be as large as $1 (maybe for a stock that has volume of 4 to 5 thousand, but not for one having volume of 4 to 5 million). In regards to your question, if you were short selling the order would go in exactly the same as if you were selling a stock you owned. So your order would be on the ask side and would need to be matched up with a price on the bid side for there to be a trade.

negative: "The simple answer could be that one or more ""people"" decided to buy. By ""people,"" I don't mean individual buyers of 100 shares like you or me, but typically large institutional investors like Fidelity, who might buy millions of shares at a time. Or if you're talking about a human person, perhaps someone like Warren Buffett. In a ""thinly"" traded small cap stock that typically trades a few hundred shares in a day, an order for ""thousands"" could significantly move the price. This is one situation where more or less ""average"" people could move a single stock."

negative: In general, liquidity is a good thing, because it means it is easy for you to buy or sell a stock.   Since high liquidity stocks have a lot of trading, the bid-ask spreads tend to be pretty low.  That means you can go into the market and trade easily and cheaply at just about any time.  For low liquidity stocks, the bid-ask spreads can get pretty high, so it can make it hard or expensive to get into or out of your trades. On the flip side, everyone pays attention to high liquidity stocks, so it's harder to get an edge in your trading.  For a company like Microsoft there are 30-50 full time analysts that cover them, thousands of professional traders and millions of investors in general all reading the same new articles and looking through the same financials as you.  But in low liquidity stocks, there probably aren't any analysts, a few professional traders and maybe a few thousand total investors, so it can be easier to find a good buy (or sell). In general, high liquidity doesn't mean that everyone is selling or everyone is buy, it just means everyone is trading.

negative: "The crazy thing about this is that $30 million in annual salary and compensation really isn't the end of the story for rich guys.  I worked for a REIT a few years back and the guy that founded that REIT made a few million in salary a year.  I thought the number seemed a bit low for his lifestyle.  He had many properties in the US for his own personal use (around 6-8 BIG homes).  He also had a garage that was insane.  He had over 25 very expensive cars.  My co-workers would say ""Nick is airing out his garage"" when he drove one to work every day for a month without driving the same vehicle twice in one month.  It turns out he owned 30 million shares of stock that paid him $1.00 per share per year.  So while his annual compensation was ""only"" a few million per year, his dividend income was many, many, times that.  Think about that next time you see a CEO's annual income and you think that it really isn't as much as you expect."

negative: I wrote a simple monopoly simulation a few years back. The simulation handicapped one player for a set number of turns and then released the handicap eventually. Long story short, the initially handicapped player almost never recovered except when I handocapped the other players, bonussed the initially handicapped player and they had lucky turns. I ran this simulation tens of thousands of times.  The reality is that there is a strong deterministic element to social and economic structures from generation to generation which require exceptional policy interventions or extraordinary players/people to overcome.

negative: You’re missing the point it’s also an investment. People buy them and never sell them. People also lose them. Reducing supply. The fbi seizes them. Pretty sure the ceo of overstock said they will long term hold. If it’s true they turned thousands into hundreds of millions.

negative: "Your inference in #1 is incorrect.  The million dollars he has contributed is going to be part of the assets of the fund.  This is common practice and is a way for the founder to express confidence that the fund will make money.  He wants you to come up with a model that he can then use to trade those assets.  Presumably he will give you some money if he uses your model and it works. Regarding #2, there are lots of ways of getting data.  Sometimes you can buy it directly from the exchange.  You can also buy from vendors like tickdata.com.  There are lots of such vendors.  Since he makes a big deal about saying it's expensive, I'm assuming he is talking about data at relatively high frequency (not daily, which would be cheap).  Stock data is still not bad.  Complete US data would be a few thousand dollars (maybe 20K at the most).  For someone sitting at home with no capital, that's a lot of money, but for a hedge fund it's nothing. As an institutional investor, your broker will give you a data feed that will provide all prices in real time (but not historically).  If he's been in operation a while, he could have just saved the prices as they came out of the pipe.  I don't think that's the case here, though, based on how young he is and how little money is involved. In short, he paid for some data and has ""encrypted"" it in such a way that he can legally share it for free.  Supposedly his method preserves the structure so that you could write a trading model based on the encrypted data and it would work on real data.  Once you have a good trading model, you sell it to him and he will use it to trade his million dollars and whatever other money he is able to gather."

negative: You may simply be asking why stocks 'gap up' or 'gap down' when the stock market opens. This is because the price adjusts to news that occurred while the exchanges were closed overnight. Perhaps Asian stocks crashed, or perhaps a news story was released in the New York Times about some major company. There are thousands of factors that affect market sentiment, and the big gaps that happen at the open of every trading day is the price of the stocks catching up to those factors.

negative: Source? I have seen success stories constantly, and the company has donated tens of thousands of dollars of product to employees who lost homes in the recent disasters. And thats only a small part of how Amazon treats their employees. A simple google search would reveal even more, including details on the tuition assistance and employee assistance programs which Amazon spends millions to run.

negative: "It's one thing to piss off a few million ""regular"" people.   Piss off a couple thousand rich people and you're in real trouble.   Just imagine if there are any politician's details in that high income mix?  What if there's information that's on that CD that isn't in their financial disclosure?  ----  Side note:   People still use CDs?"

negative: I feel like when your assets are mostly stock, then your every minute is basically fluctuating by the hundreds of millions and on a ~~good~~  active trading day you could be up or down a few billions.

negative: The trick is real time. I like to wake up in the morning, turn on my computer and see at a glance the gain or loss data on each of my stock and bond at that moment.   Companies like Ameritrde offer them, but you have to enroll and trade stock in them.

negative: "Penny stocks are for the real gambler.  Don't even think about holding them long.  Buy a lot of shares and profit from a penny uptick.  Rake a hundred dollars here and there a few times a week if you can.  Don't fall in love with it.  Trade for profit.  Don't bet the farm.  Only play what you can afford to lose at the Great Casino in the sky (the stock market).  Sure, you will pick some losers, but you are not married to it, you don't have to keep it.  A couple of good winners will erase some loses.  Having lost thousands on the Blue Chips, and feeling I have wasted time waiting for an annual $100 gain on an ETF or mutual if I get lucky, has made me more risk tolerant for these ""BAD"" investments.  The ""GOOD"" investments should do so well."

negative: There are many technical answers above , but the short story to me is that very few active fund managers consistently beat the market. Look at the results of actively managed funds. Depending on whose analysis you read, you will find out that somewhere between 80-90% of fund managers in a given year do not beat passive index funds. So go figure how you will do compared to a mutual fund manager who has way more experience than you likely have. So, that in itself is moderately interesting, but if you look at same-manager performance over several consecutive years it is rare to find anyone that goes beats the market for more than a few years in a row. There are exceptions, but go pick one of these guys/gals - good luck. Getting in and out of the market is a loser. This is because there is no way to see market spikes and down turns. There are many behavioral studies that have been done that show people do the wrong thing: they sell after losses have occurred and they buy after the market has gone up. Missing an up spike and not being in before the spike is as devastating as missing a down turn and not getting out in time. There is another down side, if you are trading in a personal account, rather than a tax deferred account, going in and out of stocks has tax complications. In short, a broad based equity index will, over time, beat about anything out there and it will do it in a tax efficient manner.  Exchange traded funds (ETFs) are a wonderful way to obtain diversification immediately at very low cost.

negative: For the lazy, Wikipedia says: The term microcap stock (also micro-cap) refers to the stock of public companies in the United States which have a market capitalization of roughly $300 million or less. The shares of companies with a market capitalization of less than $50 million are typically referred to as nano-cap stocks.  Many micro-cap and nano-cap stocks are traded over-the-counter with their prices quoted on the OTCBB or the Pink Sheets. A few of the larger, more established microcaps are listed on the NASDAQ Capital Market or American Stock Exchange (AMEX).  Micro-cap and especially nano-cap stocks are notorious for their volatility. A high percentage of these companies fail to execute their business plans and go out of business. Fraud and market manipulation are not uncommon, and the transactions costs in trading can be quite high. Pricing is more likely to be inefficient, since fewer institutional investors and analysts operate in this space, due to the relatively small dollar amounts involved and the lack of liquidity.

negative: "> It is amazing to me how ""middle class"" can spend hundreds of thousands of dollars and not spend even a few thousand to get some real advice.  i have seen to many ''middle class'' buy a $100k+ house and not even spend $1000 on a decent home inspection..."

negative: Bond information is much tougher to get.  Try to find access to a Bloomberg terminal.  Maybe you have a broker that can do the research for you, maybe your local university has one in their business school, maybe you know someone that works for a bank/financial institution or some other type of news outlet.   Part of the reason for the difference in ease of access to information is that bond markets are dominated by institutional investors.  A $100 million bond issues might be 90% owned by 10-20 investors (banks, insurance co's, mutual funds, etc.) that will hold the bonds to maturity and the bonds might trade a few times a month/year.  On the other hand a similar equity offering may have several hundred or thousand owners with daily trading, especially if it's included in an active stock index. That being said, you can get some information on Fidelity's website if you have an account, but I think their junk data is limited.  Good luck with the hunt.

negative: It is possible to figure out the next price. Just not for Joe Average. A stock exchange has a orderbook. This has two sides. One side has alle the buyers, how many shares they want, and what they are willing to pay. The other side has all the sellers, how many shares they got, and what price they are willing to accept. If any buyers and sellers match up, their orders are executed, money and shares are exchanged, everyone is happy. So the current asking price (the price you have to pay, to get some shares) is currently 12.46$. Let's say you want 6000 shares, for any price. The orderbook now looks like this: Your order is executed, you get 6000 shares for a total of 74,761$ (5900 * 12,46 + 100 * 12,47$). The order book now looks like this: The new asking price is 12.47$. Congrats, you knew the price in advance. Of course this is simplified, there are millions of entries on both sides, thousands of trades happen every millisecond and you'll have to pay the stock exchange a lot of money to give you all this information in real time.  That's what high frequency traders are doing. They use highly specialised computer systems to exploit differences in stock exchanges all over the world. It's called arbitage. They have to be faster than the other guy. This race has gone on for a few years now, so that the limiting factor starts to become the speed of light. YOU are not going to benefit, or else you would not be asking questions on PERSONAL finance :)

negative: Imagine that I own 10% of a company, and yesterday my portion was valued at $1 Million, therefore the company is valued at $10 Million.  Today the company accepts an offer to sell 1% of the company for $500 Thousand: now my portion is worth $5 Million, and company is worth $50 Million. The latest stock price sets the value of the company. If next week the news is all bad and the new investor sells their shares to somebody else for pennies on the dollar, the value of the company will drop accordingly.

negative: Can you show me where? Because pretty sure when obama put a tax to help fund the ACA, the economy thrived, a million doctors were hired, hundreds of hospitals, and thousands upon thousands of walk in clinics we're built. And the stock market thrived more.

negative: Stock trades are always between real buyers and real sellers. In thinly-traded small stocks, for example, you may not always be able to find a buyer when you want to sell. For most public companies, there is enough volume that individual investors can just about always fill their market orders.

negative: "An important thing that many people fail to realize is that the number of shares outstanding in a stock, times the current market price of those shares, does not represent anything related to the total value of those shares.  If a company has one million shares outstanding and its total value is $10 million, then the real worth of each share is $10.  If few people feels like buying or selling, but a few people think the company is worth $50 million and offer $50/share, that could raise the market price to $50/share, but it wouldn't mean that the company became worth five times as much; it would merely mean the stock was overpriced. If, after the price went to $50/share, all the owners of the stock put in stop-loss orders at $45.  Note that the real $10/share ""real value"" of their stock would never have changed.  If the people who thought the stock was worth $50 decided to get out of the market, and nobody else was willing to offer more than $10, that would instantly drop the price to $10.  The fact that a million shares of stock have stop-loss orders at $45 wouldn't magically generate buyers for those stocks at that price.  Indeed, unchecked stop-loss orders would have the reverse effect, since many people who would have been willing if not eager to buy the stock if it had been available for less than $10/share would instead be trying to sell it below that price. It's too bad people think that the number of shares outstanding times the current market price represents some kind of ""meaningful quantity"".  If the present cash value of all future payouts associated with a share of stock is $10, then someone who buys a share of stock for less than that makes money off the seller; someone who pays more loses money to the seller.  Many people think they can lose money to the seller and still come out okay if the price goes higher, but what that really means is that they're hoping to find a bigger sucker--a game where it's guaranteed that some people will have losses they don't recoup."

negative: ? Share price reflects the residual value of the company to the shareholders and therefore the value they assume it can create for its customers.  Now, if you have a better understanding of that value than the millions of investors that own and trade its share, that's a different story.

negative: I recommended Currency Trading For Dummies, in my answer to Layman's guide to getting started with Forex (foreign exchange trading)? The nature of the contract size points toward only putting up a fraction of the value.  The Euro FX contract size is 125,000 Euro. If you wish to send the broker US$125K+ to trade this contract, go ahead. Most people trade it with a few thousand dollars.

negative: In my experience they charge you coming and going. For example, if a brokerage firm is advertising that their commissions are only $7/trade, then that means you pay money to buy the stock, plus $7 to them, and later on if you want to sell that stock you must pay $7 to get out of the deal.  So, if you want to make any money on a stock (say, priced at $10) you would have to sell it at a price above $10+$7+$7=$24. That kind of sale could take a few years to turn a profit. However, with flat-rate fees like that it is advantageous to buy in bulk.

negative: "People in this case, are large institutional investors. The ""bid ask"" spread is for ""small traders"" like yourself. It is put out by the so-called specialists (or ""market makers"") and is typically good for hundreds or thousands of shares at a time. Normally, 2 points on a 50 stock is a wide spread, and the market maker will make quite a bit of money on it trading with people like yourself. It's different if a large institution, say Fidelity, wants to sell, say 1 million shares of the stock. Depending on market conditions, it may have trouble finding buyers willing to buy in those amounts anywhere near 50. To ""move"" such a large block of stock, they may have to put the equivalent of K-Mart's old ""Blue Light Special"" on, several points below."

negative: If you want to convert more than a few thousand dollars, one somewhat complex method is to have two investment accounts at a discount broker that operations both in Canada and the USA, then buy securities for USD on a US exchange, have your broker move them to the Canadian account, then sell them on a Canadian exchange for CAD.  This will, of course, incur trading fees, but they should be lower than most currency conversion fees if you convert more than a few thousand dollars, because trading fees typically have a very small percentage component. Using a currency ETF as the security to buy/sell can eliminate the market risk. In any case, it may take up to a week for the trades and transfer to settle.

negative: Stock price is based on supply and demand. Unless the stock you are looking to buy usually has very low volume trading 100 shares isn't likely to have any effect on price. There are many companies that have millions or tens of millions of shares trade daily. For stocks like that 100 shares is barely a trivial percentage of the daily volume. For thinly traded stocks you can look at the bid and ask size but even that isn't likely to get you an exact answer. Unless you are trading large volumes your trade will have no effect on the price of shares.

negative: Everyone that owns a share of stock in a company is part owner. Some just own more than others. According to Apple's latest proxy statement he owns 5.5 million shares of the 914 million shares outstanding. So he owns approximately 0.6% of the company.  If he owned more than 50% of the company's outstanding stock he would effectively control the board of directors by being able to pick whoever he wanted.  Then he would control the company. Very few publicly traded companies are that way. Most have sold off parts of the company to the public in order to raise cash for the company and make their investment more liquid.

negative: Exactly. A fundamental principle of economics is that purchases are only so valuable, and when the price increases beyond that value, they are no longer needed. If someone has calculated that these people will costs millions, while only returning thousands, there is clearly no point in hiring them. It is exactly like considering private jet in the millions, when thousands of dollars of commercial airfare would do. There is no real reason to own the jet either.  It is still fun to dream about owning a private jet. You might remark about buying one if they were cheaper. But, realistically, it is not needed given the costs. It is also fun to dream about growing your business, and tell others that you would grow your business with cheaper people, but it's not needed given the costs.