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Author: mishyla Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 76237  
Subject: Retirement Funding without 401K or Roth Date: 3/8/2012 10:09 AM
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My husband and I are both free-lance employees without access to a 401K for retirement funding. We max out our IRA contributions annually but a paltry $5,000/year is not anywhere near what we need to stash away.

Does anyone have any ideas for other tax-deferred retirement vehicles? Or, any suggestions for other ways to build our nest egg? We have 25 years until we retire.

Thank you for your suggestions.
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Author: joelxwil Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 70307 of 76237
Subject: Re: Retirement Funding without 401K or Roth Date: 3/8/2012 10:18 AM
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Well, I would simply buy and sell stocks or mutual funds in a regular brokerage account. While you would like to take any gains as long-term, remember that there are many people who have seen a short-term gain go to a long-term loss, just because they were trying to minimize taxes.

Beware of municipal bonds. While tax free, they can be quite risky. Google "municipal bankruptcy" and you will see that. In addition, even if they are safe you have to watch out for a rise in interest rates by the Fed, which will probably cause the value of the bonds to go down.

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Author: reallyalldone Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 70308 of 76237
Subject: Re: Retirement Funding without 401K or Roth Date: 3/8/2012 11:04 AM
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Does anyone have any ideas for other tax-deferred retirement vehicles? Or, any suggestions for other ways to build our nest egg? We have 25 years until we retire.

Freelance usually=self-employed and there are definitely other options. Here's a link to info on some http://www.benefitspro.com/2011/12/01/retirement-plan-option...

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Author: ptheland Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 70309 of 76237
Subject: Re: Retirement Funding without 401K or Roth Date: 3/8/2012 11:21 AM
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My husband and I are both free-lance employees ...

I'm not sure what you mean by that. So first off, a question. Do you receive a W-2? Or do you file schedule C?

--Peter

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Author: aj485 Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 70310 of 76237
Subject: Re: Retirement Funding without 401K or Roth Date: 3/8/2012 11:31 AM
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My husband and I are both free-lance employees without access to a 401K for retirement funding. We max out our IRA contributions annually but a paltry $5,000/year is not anywhere near what we need to stash away.

Does anyone have any ideas for other tax-deferred retirement vehicles?


You could each open a 'Single 401(k)' or 'Solo 401(k)'. Many brokerages and mutual fund companies offer these accounts.

As an 'employee', $17k ($22.5k if 50 or older) can be contributed to either Roth or Traditional (pre-tax) option, just like the employee of a company that offers a 401(k) with these options. As an 'employer' you can contribute up to 25% of your net profit for the year, with the caveat that the employer and employee contributions may not total more than $50k ($55.5k if 50 or older). Also, employer contributions must be Traditional (pre-tax) contributions.

AJ

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Author: ptheland Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 70311 of 76237
Subject: Re: Retirement Funding without 401K or Roth Date: 3/8/2012 11:38 AM
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You could each open a 'Single 401(k)' or 'Solo 401(k)'.

Just for clarity, you are assuming that the OP and spouse are each self-employed and filing schedule C.

However, they may be employees, receiving a W-2. If so, then a solo 401k is not an option.

Hence, my question to get at the facts before we try to answer the question.

--Peter

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Author: mishyla Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 70312 of 76237
Subject: Re: Retirement Funding without 401K or Roth Date: 3/8/2012 9:43 PM
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Hi Peter. We get paid via W2 but we're not considered staff and aren't available for any benefits; we're in the entertainment field.

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Author: drdm Three stars, 500 posts Old School Fool Ticker Guide Mission Olympia 2 SC1 Red SN Olympia3 Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 70313 of 76237
Subject: Re: Retirement Funding without 401K or Roth Date: 3/8/2012 10:47 PM
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If you form your own "company" and run your freelance work through the company you are eligible to create a individual 401k (free through TD Ameritrade and probably others) and put away up to $15K (more if your older) plus a percentage of your profits. Must be willing to manage it yourself but you can buy many investments through the brokerage house.

Dr. D.

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Author: ptheland Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 70315 of 76237
Subject: Re: Retirement Funding without 401K or Roth Date: 3/9/2012 12:01 AM
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We get paid via W2 but we're not considered staff and aren't available for any benefits

Then you are not eligible for the solo 401k or other retirement plans mentioned up-thread.

The only tax-deferred option is an IRA - Roth or traditional depending on your income and preferences.

You can also achieve some tax deferral by planning to hold any stock or mutual fund purchases for many years. Until you sell, there's no tax on the increase in value. And if tax laws stay the same as they are now (which is a really big IF), those gains are taxed at a lower rate.

There's nothing preventing you from saving for retirement in ordinary accounts.

--Peter

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Author: ptheland Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 70316 of 76237
Subject: Re: Retirement Funding without 401K or Roth Date: 3/9/2012 12:13 AM
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If you form your own "company" and run your freelance work through the company

You can't just form a "company". To get away from the W2 treatment by their current employers, they would need to form a corporation, or an LLC and elect to be taxed as a corporation.

Then their current employers would need to agree to pay their corporation for the services of the corporation's employees (our OP). And that is definitely NOT a slam dunk.

Finally, they'd have to be employees of the corporation and handle all of the associated payroll taxes and reporting. And prepare tax returns for the corporation as well as their personal returns. All of which likely entail the services of a tax professional. They may well be preparing their own returns now, but the additional complexities of this structure come with additional costs.

But if that can be made to work and the costs to do it aren't excessive, then their corporation could put a retirement plan in place. My guess is that a SEP or a 401k plan would be the most likely choices.

--Peter

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Author: mishyla Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 70317 of 76237
Subject: Re: Retirement Funding without 401K or Roth Date: 3/9/2012 8:49 AM
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Thank you all for your suggestions. Looks like beefing up our non-IRA accounts is the way to go.

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Author: reallyalldone Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 70318 of 76237
Subject: Re: Retirement Funding without 401K or Roth Date: 3/9/2012 10:17 AM
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If your freelance skills aren't limited by any exclusivity agreement, maybe you could have other 1099 work and use the other retirement accounts.

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Author: TMFMurph Big gold star, 5000 posts Old School Fool Home Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 70319 of 76237
Subject: Re: Retirement Funding without 401K or Roth Date: 3/10/2012 7:53 AM
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Hi mishyla!

My advice to someone with 25 years until retirement would be to start building a dividend income stream that will pay as close to 100% of retirement expenses as possible. I didn't start this process until age 57. When I was younger, I was busy swinging for the big capital gains fences. Big mistake!

Here is a post you might find useful:

http://boards.fool.com/hi-mattyfatbags-here-is-a-copy-of-a-r...

Cheers!
Murph
Home Fool

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Author: TMFMurph Big gold star, 5000 posts Old School Fool Home Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 70320 of 76237
Subject: Re: Retirement Funding without 401K or Roth Date: 3/10/2012 7:57 AM
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Also read these two excellent articles about dividend growth investing:

http://seekingalpha.com/article/419971-the-rational-case-for...


http://seekingalpha.com/article/419991-the-rational-case-for...


Cheers!
Murph
Home Fool

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Author: mishyla Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 70321 of 76237
Subject: Re: Retirement Funding without 401K or Roth Date: 3/10/2012 9:37 AM
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Thank you for the links Murph and thank you all for providing me with some new options to explore.

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Author: 0x6a74 Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 70324 of 76237
Subject: Re: Retirement Funding without 401K or Roth Date: 3/10/2012 1:38 PM
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I didn't start this process until age 57. When I was younger, I was busy swinging for the big capital gains fences. Big mistake!


i wonder if we all think we were wastrel youths..

i didn't start saving or investing At ALL till late 40s (spent every dime on Wine, Women & Blackjack)

so, to me, OP is very smart to be looking for best ways to save <G>

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Author: reallyalldone Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 70329 of 76237
Subject: Re: Retirement Funding without 401K or Roth Date: 3/10/2012 4:45 PM
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i wonder if we all think we were wastrel youths../i>

Not I - I started retirement savings in my early twenties. Kind of wish I had spent more along the way and saved less.


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Author: 0x6a74 Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 70331 of 76237
Subject: Re: Retirement Funding without 401K or Roth Date: 3/10/2012 5:56 PM
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Not I - I started retirement savings in my early twenties. Kind of wish I had spent more along the way and saved less.



finding the balance between Grasshopper and Ant is a tricky one...


i was just damn lucky not to have turned out frozen Grasshopper

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Author: PSUEngineer Big funky green star, 20000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 70334 of 76237
Subject: Re: Retirement Funding without 401K or Roth Date: 3/10/2012 8:12 PM
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Not I - I started retirement savings in my early twenties. Kind of wish I had spent more along the way and saved less.

I wish I had the perfect crystal ball so I know how my life will turn out.

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Author: reallyalldone Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 70339 of 76237
Subject: Re: Retirement Funding without 401K or Roth Date: 3/10/2012 11:00 PM
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Wow- you really think I deserved that comment ?

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Author: PSUEngineer Big funky green star, 20000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 70341 of 76237
Subject: Re: Retirement Funding without 401K or Roth Date: 3/11/2012 12:09 AM
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Wow- you really think I deserved that comment ?

You read it the wrong way.

I have a woman coworker who is my age with one son and is a single parent. We started working at our employer the same year. She has stage 4 ovarian cancer.

After seeing what you went through, what she is going through and losing my father last year, I am evaluating how much I spend and do today and how much I save for tomorrow. One of the reasons I just spent two weeks in Hawaii was these events. At the same time, relatives of mine have lived into their 90s and 100s.

So my comment was directed at myself. I wish I had the perfect crystal ball to know how my life turns out so I could know how to adjust my savings and spending.

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Author: BruceCM Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 70343 of 76237
Subject: Re: Retirement Funding without 401K or Roth Date: 3/11/2012 3:41 PM
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Do you file a schedule C each year? If you do and you do not receive a W2 from an employer, and you don't have any employees that work for you over 1000 hours per year, you and your spouse my set up a solo-401(k). The above link is general in its description of how a solo-401(k) plan is set up, as there are more details in how maximum contribution amounts are calculated, start up costs, annual required reporting after the account value reaches $250,000, and so forth.

For a more detailed description of a SEP or SIMPLE IRA, take a look at IRS Publication 560, at

www.irs.gov/pub/irs-pdf/p560.pdf

It has all the details you'll require for setting up either of these two plans.

BruceM

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Author: reallyalldone Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 70344 of 76237
Subject: Re: Retirement Funding without 401K or Roth Date: 3/11/2012 6:23 PM
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So my comment was directed at myself. I wish I had the perfect crystal ball to know how my life turns out so I could know how to adjust my savings and spending.

got it - sorry !

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