The Fair Tax explained

Standard

This comment was posted earlier this week on WalletPop, in response to a discussion about loans from 401(k) plans. I generally advise against taking loans from your 401(k) or other retirement plan, because before you know it, that loan could turn into a distribution. (Example: The company you work for shuts down. You have a short period of time in which to repay your 401(k) loan in full or it becomes a distribution.) Early distributions from 401(k)s are expensive. You generally lose about 50% of your money to income tax, interest and penalties. Ouch!

As part of our discussion on WalletPop, this commenter brought up the Fair Tax. I’ve become very interested in the concept of the Fair Tax recently and have been doing some reading on it. This gentleman provides good information and insight about it: Continue reading