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My 401K admin states that if I reach the individual max contribution limit, the 401K admin will reduce my contributions to zero, for the remainder of the year and will refund any excess contribution to me.

1. At that point, can I contribute an additional, pre-tax,$2K into my self directed IRA?

2. Slight twist, can I contribute post tax dollars to my IRA?

3. Can my wife setup an IRA and contribute $2K, pre-tax? She doesn't have a 401K plan available to her?

4. Are there any tax or administration implications, if I co-mingle pre and post tax contributions to an IRA?

Thanks,

Terry...
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My 401K admin states that if I reach the individual max contribution limit, the 401K admin will reduce my contributions to zero, for the remainder of the year and will refund any excess contribution to me.

1. At that point, can I contribute an additional, pre-tax,$2K into my self directed IRA?

Because you're eligible to participate in a 401K plan, your ability to deduct contribution s to a Traditional IRA may be limited.

2. Slight twist, can I contribute post tax dollars to my IRA?

Regardless of income, you can make non-deductible contributions to a Traditional IRA, however, if your income is too high to deduct Traditional IRA contributions, but below the phase out range for Roth IRA contributions (currently $150,000-$160,000), you'd be better off making your after-tax contributions to a Roth IRA, where earnings will be tax free rather than simply tax deferred.

3. Can my wife setup an IRA and contribute $2K, pre-tax? She doesn't have a 401K plan available to her?

Yes, assuming your combined income is greater than $4,000, you can each contribute $2,000 to an IRA. Since she's not eligible for a 401K plan, her contribution can be fully deductible.

4. Are there any tax or administration implications, if I co-mingle pre and post tax contributions to an IRA?

Your IRA provider should keep track of the taxable and already taxed dollars, but if you're eligible to contribute to a Roth IRA, it is without question better than a non-deductible Traditional IRA contribution.
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4. Are there any tax or administration implications, if I co-mingle pre and post tax contributions to an IRA?

Your IRA provider should keep track of the taxable and already taxed dollars, but if you're eligible to contribute to a Roth IRA, it is without question better than a non-deductible Traditional IRA contribution.

Sorry, this is incorrect. Thanks Pixy, for pointing this out. I was mixing up my 401K's and IRA's.

With an IRA you do have to file form 8606 every year to note any non-deductible contributions. You must save these forms, as they are only proof that you've already paid taxes on a portion of the money in your IRA.

It's a 401K plan where the provider will separately track pre and post tax dollars.
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Slight note of terminology. 401k contributions are pre-tax, which means the money goes in before income , social security, medicare taxes are taken out. IRA contributions can, in some circumstances, be tax-deductible -- you get the paycheck with all three taxes taken out, but then when you file your tax return, your income taxes are lower or you get a bigger refund.

So post-tax dollars are the only kind you can contribute to your IRA, $2000 a year. In some circumstances you can get a tax deduction.
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