Welcome Guest. Register Now!  



Reply
 
LinkBack Thread Tools Search this Thread Display Modes
  #1 (permalink)  
Old 04-28-2014, 10:17 PM
Junior Member
 
Join Date: Apr 2014
Posts: 2
Trad IRA + 401k = Nope. Solution?

Hi everyone,

Retirement n00b here. Thanks in advance for any help. I've called friends and talked to a few retirement professionals without any real solution yet.

I started a Traditional IRA in the 2014 tax year. I've contributed $2200. My company just started 401(k) matching, so I'll obviously want to take advantage of that during this same tax year. My income is between 60 and 70k, but it might jump above that this year. Let's plan for that.

What's the cheapest and easiest way for me to proceed here? Should I move the money into a Roth IRA? Can I just leave it there? Am I going to be taxed a bunch at the end of the year?

Again, thanks all.

-Gorp



Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!Reddit! stumble!bookmark in google!Share on Facebook!
Reply With Quote
  #2 (permalink)  
Old 04-29-2014, 02:08 AM
Moderator
 
Join Date: Oct 2010
Posts: 4,835
Quote:
Originally Posted by GorpMagic View Post
Hi everyone,

Retirement n00b here. Thanks in advance for any help. I've called friends and talked to a few retirement professionals without any real solution yet.

I started a Traditional IRA in the 2014 tax year. I've contributed $2200. My company just started 401(k) matching, so I'll obviously want to take advantage of that during this same tax year. My income is between 60 and 70k, but it might jump above that this year. Let's plan for that.

What's the cheapest and easiest way for me to proceed here? Should I move the money into a Roth IRA? Can I just leave it there? Am I going to be taxed a bunch at the end of the year?

Again, thanks all.

-Gorp
What's the cheapest and easiest way for me to proceed here? ===========>>>>>>>>>>>>it depends onyour specific personal situation.Both 401(k)s and IRAs are investment vehicles that allow you to save for retirement. The beauty of these retirement savings accounts is that your contributions are pre-tax, meaning those funds aren't subject to federal income taxes before they're withdrawn in retirement; i guess determining whether a 401(k) or IRA is best for you may feel overwhelming at first, but knowing a bit more about their major differences can help make the process much easier.for401k, some ERs offer to match part or all of what theirEEs contribute to their accounts. Experts recommend that if your employer provides this, you should take full advantage, as an ER match can greatly increase your retirement account's value. An IRA isn't ER-sponsored, matching contributions aren't an option. The IRS limits contributions to traditional IRAs to $17.5k in 2014, though participants age 50 or older at the end of the calendar year can make catch-up contributions of up to $5,500 above the base restriction. The limit for the combined contribution to these accounts (employer and employee) is either 100 percent of the employee's compensation or $52k, whichever is less. The latter number jumps to $57.5k if the participant is eligible for catch-up contributions. For 2014, the IRS limits IRA contributions to $5.5k -$6.5k if you're 50 or older , or your taxable income for the year. But you should note that some of those contributions may not be tax-deductible, depending on your income or if you or your spouse participates in a workplace-based retirement program, such as a 401(k).

Should I move the money into a Roth IRA? ==========>>>>>>>>>>>A R-IRA is an account that allows you to have an opportunity to save money for retirement while you are still active in the workforce. Investors often consider a R- IRA to be one of the most effective sheltered accounts available. There are a number of advantages associated with having a R- IRA instead of a traditional IRA ;however, it depends on ypur specific situation. If you think that taxes are likely to rise in the future, a R-IRA might be beneficial because you pay taxes on your R- IRA now -- not in the future. On the other hand, if you think taxes might fall in the future, a R- IRA might not be as beneficial because you will pay more now in taxes than you might later.



Can I just leave it there?===========>>>>>>>>>of course; it is up to you.

Am I going to be taxed a bunch at the end of the year==========>>>>>>>>>no; The benefits of participating in an ER matched 401(k) program are tremendous. Basically, EEs get free money from their ER by putting some of their own money into the 401(k) plan. As an added benefit, you , the EE,gets tax advantages because your money can grow tax-deferred. In other words, the contributions are made tax-free and you are only taxed upon withdrawal; You can reduce your taxable income by contributing money to a traditional IRA.



Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!Reddit! stumble!bookmark in google!Share on Facebook!
Reply With Quote
  #3 (permalink)  
Old 04-29-2014, 09:37 AM
Junior Member
 
Join Date: Apr 2014
Posts: 2
Quote:
Originally Posted by Wnhough View Post
What's the cheapest and easiest way for me to proceed here? ===========>>>>>>>>>>>>it depends onyour specific personal situation.Both 401(k)s and IRAs are investment vehicles that allow you to save for retirement. The beauty of these retirement savings accounts is that your contributions are pre-tax, meaning those funds aren't subject to federal income taxes before they're withdrawn in retirement; i guess determining whether a 401(k) or IRA is best for you may feel overwhelming at first, but knowing a bit more about their major differences can help make the process much easier.for401k, some ERs offer to match part or all of what theirEEs contribute to their accounts. Experts recommend that if your employer provides this, you should take full advantage, as an ER match can greatly increase your retirement account's value. An IRA isn't ER-sponsored, matching contributions aren't an option. The IRS limits contributions to traditional IRAs to $17.5k in 2014, though participants age 50 or older at the end of the calendar year can make catch-up contributions of up to $5,500 above the base restriction. The limit for the combined contribution to these accounts (employer and employee) is either 100 percent of the employee's compensation or $52k, whichever is less. The latter number jumps to $57.5k if the participant is eligible for catch-up contributions. For 2014, the IRS limits IRA contributions to $5.5k -$6.5k if you're 50 or older , or your taxable income for the year. But you should note that some of those contributions may not be tax-deductible, depending on your income or if you or your spouse participates in a workplace-based retirement program, such as a 401(k).

Should I move the money into a Roth IRA? ==========>>>>>>>>>>>A R-IRA is an account that allows you to have an opportunity to save money for retirement while you are still active in the workforce. Investors often consider a R- IRA to be one of the most effective sheltered accounts available. There are a number of advantages associated with having a R- IRA instead of a traditional IRA ;however, it depends on ypur specific situation. If you think that taxes are likely to rise in the future, a R-IRA might be beneficial because you pay taxes on your R- IRA now -- not in the future. On the other hand, if you think taxes might fall in the future, a R- IRA might not be as beneficial because you will pay more now in taxes than you might later.



Can I just leave it there?===========>>>>>>>>>of course; it is up to you.

Am I going to be taxed a bunch at the end of the year==========>>>>>>>>>no; The benefits of participating in an ER matched 401(k) program are tremendous. Basically, EEs get free money from their ER by putting some of their own money into the 401(k) plan. As an added benefit, you , the EE,gets tax advantages because your money can grow tax-deferred. In other words, the contributions are made tax-free and you are only taxed upon withdrawal; You can reduce your taxable income by contributing money to a traditional IRA.
Thanks for the help!

So if I put all this money into my Tradional IRA and leave it there for this tax year, that's OK? The reason I'm asking is because I hear there is a tax problem if you simultaneously contribute to a Trad IRA and a 401(k).



Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!Reddit! stumble!bookmark in google!Share on Facebook!
Reply With Quote
Ads
Reply


Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

vB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Trad-Roth conv. Not clear cut Rich007 For 2013 0 02-27-2014 08:38 PM
solo 401k change to roth solo 401k meffoar IRA/Sep 1 02-19-2014 06:29 AM
401k b8a3r For 2013 1 01-29-2014 07:34 AM
401k and NJ SIT kkv1 New Jersey 2 01-08-2012 03:26 PM
401K help Please! daisy1950 IRA/Sep 5 01-30-2009 10:27 PM

Follow us on Facebook Follow us on Twitter Google Buzz Rss Feeds

» Categories
 
Individual
 » Income
 » IRA/Sep
 » Medical
 
Corporations
 » Payroll
 
Forum for CPAs
 
Financial Planning