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Investing/Strategies / Retirement Investing
|Subject: Re: 401k spouse question||Date: 8/28/2000 2:31 PM|
|Author: TMFPixy||Number: 24412 of 81362|
Greetings, Tresarivers, and welcome. You asked:
<<Does the 401k have the ability to add additional funds for the purpose of saving for retirement for a non-working spouse, like the IRA does?
If not, any suggestions? We are newly in the position of needing to tax-shelter our income, as my husbands salary has increased quite a bit recently.>>
No, there is no spousal contribution for a 401k plan. That exists only for an IRA when one spouse doesn't work. Your only other option for doing something on a tax deferred basis beyond the IRA is to use an annuity, which is NOT a good idea for most folks. To see why, see the annuity series at http://www.fool.com/retirement/annuities/annuities01.htm?ref=G02C04.
FWIW, there really is nothing wrong with paying taxes when you must. Indeed, often using a fully taxable account in a long-term, buy and hold strategy, will result in a greater after-tax stash than an IRA or 401k. So if you've used up your IRA for the unemployed spouse, then use a taxable account. It's perfectly permissible and often Foolish to do so.
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