Home

? Invest in pension plan not through work, how?
Previous  1, 2
 
Post new topic   Reply to topic    Forum -> Household Management -> Finances


View latest: 24h 48h 72h


Amarante




 
 
 
 

Post Tue, Jan 04 2022, 9:42 pm
amother [ OP ] wrote:
I don't understand?


As with most tax and finance issues, you really need the specific numbers in order to proceed.

All anyone can do is advise generally that there are two ways to invest for retirement aside from 401 which is offered through employment. Whether the traditional IRA or Roth is better depends on your situation as does the amount that you can shelter since different ages can shelter more income.

IRA does not tax money that is put into an IRA so it shelters current income but the money is taxed when it is withdrawn and withdrawals must start at 70. So it is traditionally used by higher income people who need tax deductions. Many high income people assume they will be taxed at lower rates when they retire as their income will drop and they might be selling assets which are taxed at lower capital gains rates

Roth is taxed in the current tax year but not taxed when withdrawn.

This is all just very general and so you should really talk to an expert who can help you decide what makes the most sense for you and your family.
Back to top

evi




 
 
 
 

Post Tue, Jan 04 2022, 9:59 pm
Yes it's difficult to say things without knowing your income, but you have 4 options:

-Employer traditional 401k
-Employer Roth 401k
-Personal traditional IRA
-Personal Roth IRA

Traditional accounts (both personal and employer) are supposed to give you a deduction in the same year you contribute. Roths (both personal and employer) don't, but then you don't have to pay taxes on the money when you retire and withdraw.

BUT-

Since your employer offers a 401k, if your income is above a certain threshold, a contribution to a personal traditional IRA won't give you a full deduction. So... don't use a personal traditional IRA if your income is above that threshold.

https://www.irs.gov/newsroom/I.....-2022

The thresholds are (for you, not your spouse)
$68,000 - Single taxpayers
$109,000 - Married couples filing jointly.
$0 – Married filing a separate return
Back to top

evi




 
 
 
 

Post Tue, Jan 04 2022, 10:02 pm
amother [ OP ] wrote:
I don't understand?


The comment you didn't understand only applies if you're not doing a Roth. If you are doing a Roth, don't worry about it.
Back to top

amother




OP
 

Post Tue, Jan 04 2022, 11:39 pm
evi wrote:
Yes it's difficult to say things without knowing your income, but you have 4 options:

-Employer traditional 401k
-Employer Roth 401k
-Personal traditional IRA
-Personal Roth IRA

Traditional accounts (both personal and employer) are supposed to give you a deduction in the same year you contribute. Roths (both personal and employer) don't, but then you don't have to pay taxes on the money when you retire and withdraw.

BUT-

Since your employer offers a 401k, if your income is above a certain threshold, a contribution to a personal traditional IRA won't give you a full deduction. So... don't use a personal traditional IRA if your income is above that threshold.

https://www.irs.gov/newsroom/I.....-2022

The thresholds are (for you, not your spouse)
$68,000 - Single taxpayers
$109,000 - Married couples filing jointly.
$0 – Married filing a separate return
Thank you evi and amarante for explaining.

When they look at income limits is it from January-April of the following year or January-January or April-April? Because you can contribute up to April for previous year.

What are the benefits of using an employer vs personal roth or traditional ira, if employer does not match contributions?

Can I do both a roth ira and traditional employer 401k ? How much money can I put in an employer 401k, is there a limit as there is with roth ira?
Back to top

evi




 
 
 
 

Post Wed, Jan 05 2022, 12:53 am
Income is always measured January to December. When you contribute to an IRA in January 2022-April 2022, they will ask you if it’s for last year or this year. If for last year, last year’s income and rules applies.

Employer traditional IRA has a much higher contribution limit. 19,500 for 2021 contribution. 20,500 for 2022. But it’s less flexible. You have to follow your employer procedures. I don’t know if they typically allow contributions in April for the previous year.

https://www.kiplinger.com/reti.....2?amp
Back to top

amother




OP
 

Post Sun, Jan 09 2022, 12:11 am
evi wrote:
Income is always measured January to December. When you contribute to an IRA in January 2022-April 2022, they will ask you if it’s for last year or this year. If for last year, last year’s income and rules applies.

Employer traditional IRA has a much higher contribution limit. 19,500 for 2021 contribution. 20,500 for 2022. But it’s less flexible. You have to follow your employer procedures. I don’t know if they typically allow contributions in April for the previous year.

https://www.kiplinger.com/reti.....2?amp
Thank you
Back to top
Previous  1, 2 Recent Topics

Page 2 of 2 View latest: 24h 48h 72h


Post new topic   Reply to topic    Forum -> Household Management -> Finances

Related Topics Replies Last Post
It didn't work!
by amother
2 Today at 7:25 pm View last post
by PR6
Bringing baby to work for an hour
by amother
6 Yesterday at 8:26 pm View last post
Does periodswimwear work?
by amother
3 Yesterday at 3:30 pm View last post
Do these headbands work for a fall?
by amother
15 Fri, May 13 2022, 3:52 pm View last post
Which SEIT/enhanced SETSS agency do you work for?
by amother
3 Wed, May 11 2022, 8:29 am View last post