If you have invested in employer 401k in any one year, and you leave that employer in the same year, can you still invest in a Roth or regular IRA for that year. I know that you cannot invest more than 2000 or soon to be 3000 in an IRA for any one year. Does that mean what you invested in your 401k for that year counts in the same way.
Yes, I believe the limit is $10,500.HaGD,L2J
If you have invested in employer 401k in any one year, and you leave that employer in the same year, can you still invest in a Roth or regular IRA for that year. Investing in a Roth has nothing to do with 401Ks. It's based only on your modified adjusted gross income. If you have less than $95,000 (single), you can contribute to a Roth. Exact limits are in Publication 590.For the traditional IRA, having a 401K for even part of the year prohibits a deduction unless your income is below a limit on MAGI. It's $32,000 (single.)If you go to a new company, the new 401K goes on top of the old and the combined total is limited.
A further observation is that you can always make a non-deductible contribution to a traditional IRA no matter what your income (as long as there is earned income!) and even if you participate in a qualified retirement plan.--Peter
Is there any benefit to making a non-deductible contribution to a regular IRA? If you're already participating in a 401(k) and are above the AGI levels, you can still contribute to a Roth, right, but what if you're above the levels for that? If the regular IRA doesn't offer a tax deduction is it still better to use that or to just open a seperate investment account?
If you're going to invest in income producing assets (bonds, REITs, dividend paying stocks, mutual funds with high turnover) then a tax-preferred account is probably better. If you're going to invest in assets that don't pay out much income, but grow in value (unrealized capital gains), then a regular account is better.Assuming tax laws stay the same, of course.
Is there any benefit to making a non-deductible contribution to a regular IRA? Sure - the interest and dividends are still tax-deferred. You just don't get a current tax deduction for the contribution. When you make withdrawls, a portion won't be taxable since it is a return of your non-deductible contribution.--Peter
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