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RUSS WILES YOUR MONEY
Tapping funds can be costly Almost everyone with an Individual Retirement Account or 401(k)style plan has felt the urge to tap into their money early. Many people have tens if not hundreds of thousands of dollars accumulated in these programs, and it can be tempting to access some of it here and there. About one in five loan-eligible 401(k) participants has a loan outstanding, report the Employee Benefit Research Institute and Investment Company Institute. The average 401(k) balance, according to their research, was about $72,400 at the end of 2013, with the median around $18,400. The typical loan balance is around $7,000. But whether it’s smart to tap funds early is another matter. That depends on personal circumstances and potential drawbacks — namely, tax traps and the opportunity cost of diverting retirement assets for other uses. When it comes to accessing money before retirement age, here’s the good, the bad and the ugly.
Some entrepreneurs launch many businesses
SUE DOERFLER THE REPUBLIC
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AZCENTRAL.COM
once it takes hold.
Some business owners have trouble shaking the entrepreneurial spirit
They move from one startup to another, continually coming up with new
ways to handle issues, challenges and innovations.
They are serial entrepreneurs.
These
The good Traditional IRAs and workplace 401(k)s are designed to encourage people to invest for the long haul. They feature incentives such as taxdeferred growth of investment earnings. Usually, contributions can be made on a pre-tax basis. Taxes don’t apply until withdrawals are made, hopefully decades down the road. While premature withdrawals usually are a poor choice, you can tap some of the money to meet short-term needs. This can be a smart, or at least fairly neutral, decision — assuming you will return the money to the account reasonably quickly. Many 401(k)-style plans allow participants to borrow a portion of the balances they have accumulated, usually up to $50,000. If you face a near-term cash crunch, a loan might be ideal in terms of speed and convenience, though you will be using after-tax dollars to pay it back. The loan process is quick, often requiring little more than completion of an online form, with the money usually available within a few days. There’s no credit application or need to qualify, no credit score to worry about and no impact on your credit
business owners grow their first companies, sell them or phase them out, then move on to start or help others with another company. Some are idea people. Others like the management side of the business. And some enjoy both.
The following three metro Phoenix serial entrepreneurs have
continued to focus on similar fields in their next ventures.
JOHN LEONESIO
MATTHEW PITTINSKY
focuses on service businesses with membership fees.
ran Blackboard and now runs Parchment.
See ENTREPRENEUR , Page 5E
ALY SAXE used her public relations firm as a launch pad for a tech firm.
ILLUSTRATION BY ALIYA MOOD/THE REPUBLIC
See WILES, Page 2E
After slow recovery, non-profits see donations climb back RUSS WILES THE REPUBLIC
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Ken Schutz admits that there’s an element of luck for non-profits when it comes to fundraising, no matter how much advance planning they do. The CEO of the Desert Botanical Garden recalls how the Phoenix entity had just wrapped up a multimillion-dollar fundraising campaign in 2007, with most of the money in hand and commitments made, just before the economy went into a tailspin. “I’m thankful we weren’t in the middle of a campaign when the recession hit,” Schutz said. Not all charity groups had such good fortune. Many saw their donations dry up as unemployment spiked, the stock and real-estate markets unraveled and financial insecurity rose. Many non-
CEO Ken Schutz says the Desert Botanical Garden has seen a steady rise in donations over the past three years as it has tried new activities and promotions to attract visitors. JOHN SAMORA /THE REPUBLIC
profits also had to grapple with surging demand for their services, especially those providing food, medical care and other basic human assistance. It has been a slow recovery, but nonprofits finally are getting back to where they had been prior to the downturn. Most other key economic measures have fully recovered from the recession — corporate profits, household wealth, jobs and gross domestic product among them. Now, finally, non-profits are joining the club. Americans donated an estimated $358 billion to charities in 2014, up 7 percent over the prior year and finally surpassing the inflation-adjusted pre-recession high, said Giving USA Foundation and researchers at Indiana University in their annual Giving USA report released See DONATIONS, Page 4E