No 401(k) options

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InvestoGuy
Posts: 164
Joined: Thu Feb 11, 2010 1:34 pm

No 401(k) options

Post by InvestoGuy » Mon Dec 01, 2014 3:38 pm

Hello,
My company does not provide a 401(k) plan. I researched the other possible options. My conclusions are:
1. IRA: This is an option, however this only allows $5,500 tax-deductible, also I may not qualify based on income for the tax-deductible portion.
2. SEP / SIMPLE IRA: I don't qualify since I am an employee and have no stake in the company.
3. Self 401(k): Don't qualify based on 2 above.

What are my options to contribute the most a tax-sheltered retirement account? The best right now seems like an IRA. I plan in to put in about $20k in it to match my previous retirement savings rate with my ex-employer who offered a 401(k) and take whatever tax deduction I get, the rest will be post tax.

Is this sound reasoning? Am I missing any other options?
Thanks.

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Dale_G
Posts: 3034
Joined: Tue Feb 20, 2007 5:43 pm
Location: Central Florida - on the grown up side of 81

Re: No 401(k) options

Post by Dale_G » Mon Dec 01, 2014 4:06 pm

InvestoGuy wrote: What are my options to contribute the most a tax-sheltered retirement account? The best right now seems like an IRA. I plan in to put in about $20k in it to match my previous retirement savings rate with my ex-employer who offered a 401(k) and take whatever tax deduction I get, the rest will be post tax.

Is this sound reasoning? Am I missing any other options?
Thanks.
No, no! If you are under 50 the MAXIMUM IRA contribution is $5,500 per calendar year whether deductible or not.
If you have not already done so, you can contribute $5,500 for 2014 and the same for years following.

What did you do with the money from your old 401k?

Dale
Volatility is my friend

retiredjg
Posts: 32730
Joined: Thu Jan 10, 2008 12:56 pm

Re: No 401(k) options

Post by retiredjg » Mon Dec 01, 2014 4:32 pm

If you have no plan at work and no side job, you will need to save money for retirement in a taxable account. The amount you can put into IRA each year will not be enough. Since you have no plan at work, the modified AGI limit may not apply to you, so you might be able to deduct the whole thing. Edit: see english girl's comments below

If you are married, your spouse can have an IRA as well.

If you have a Health Savings Account (associated with a High deductible health insurance plan) you can use that as part of your retirement savings.
Last edited by retiredjg on Mon Dec 01, 2014 5:11 pm, edited 1 time in total.

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englishgirl
Posts: 2471
Joined: Thu Mar 01, 2007 5:34 pm
Location: FL

Re: No 401(k) options

Post by englishgirl » Mon Dec 01, 2014 5:00 pm

If you have no retirement plan at work, there are no income limits for tax deduction of IRA contributions (as mentioned by retiredjg) only if you are single or MFJ with a spouse who does not have a plan at their work. If you are married with a spouse who does have a retirement plan at their work, see: http://www.irs.gov/Retirement-Plans/Pla ... an-at-Work But, if you're married, you can put money in an IRA in your spouse's name.

$5,500 is the max you can put in an IRA, unless you are turning 50 or over this year, in which case you can put $6,500 in an IRA. You can't just put in $20k, as already mentioned.

HSA if you have a high deductible health plan has already been mentioned.

I-bonds are worth doing if you are 30 years or less from retirement. Then put your stock funds in taxable accounts.
Sarah

InvestoGuy
Posts: 164
Joined: Thu Feb 11, 2010 1:34 pm

Re: No 401(k) options

Post by InvestoGuy » Mon Dec 01, 2014 6:42 pm

Thank you all for the replies.

Another piece of information and thus a new question:
My wife does have a 401k through her employer. We are contributing the max $18,500 in her account. Will this plan work:
I put in $5,500 in my IRA and put in $13,000 more in my wife's 401k, for a total of $31,500 in her 401k, out of which the $13,500 will be post-tax.
Is this a possible solution, the idea being maximizing the tax sheltered retirement account?

Thanks.

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archbish99
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Joined: Fri Jun 10, 2011 6:02 pm

Re: No 401(k) options

Post by archbish99 » Mon Dec 01, 2014 7:17 pm

After-tax contributions to a 401k are really only worthwhile if you can do an in-plan conversion to Roth or roll it out to a Roth IRA promptly. (Either because your plan allows in-service distributions of after-tax contributions, or because she's leaving her job shortly.) If you aren't able to do that, taxable is probably your better bet once you get past the regular 401k deferral limits.
I'm not a financial advisor, I just play one on the Internet.

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