My employer has no retirement plan, incl. no 401(k). Besides an IRA, what else can I set up?

Question

My employer has no retirement plan, incl. no 401(k). Besides an IRA, what else can I set up?

Answer 1

An IRA is actually better than a 401K, in some cases.  My current 401K has all stock funds, which are  losing money, or a money market find, earning spit.  With a self-directed IRA, you have some control over how it is invested.

A Roth IRA, as I understand it, is funded with AFTER TAX dollars.  This means you pay taxes on the money that you put in it.  However, under the current rules, you will never be taxed in that money, or it's earnings again.

Answer 2

open a Roth IRA  it is better than a 401 k ... the thing about the 401 k is that your money is taken out every week before you see it .. set up you account so its taken out of your savings so you don't miss a contribution.  

Earnings may be withdrawn free from federal taxes you  get old enough  59 1/2..  with a 401k   you pay the taxes!



No minimum distribution requirements.



Beneficiaries pay no income taxes for inherited accounts.



Up to $10,000 in earnings may be withdrawn tax-free if used for a qualified first-time home purchase.

Answer 3

avoid credit card purchases except for absolute emergencies, pay down your mortgage (an extra x$/mo towards principal will pay off your loan faster).  save like crazy and buy more real estate, but this isn't a tax-free investment and must be managed - you have to report rental income and possibly pay capital gains taxes when you sell.  but the right real estate is an excellent investment and there is ample evidence that we are entering an era in which real estate will be a very important of any portfolio.

Answer 4

Open your own company and contract your labor out with your employer instead of being an employee.  Otherwise you're limited to the non-deductible IRA (after-tax IRA).  At first glance you'll be behind (social security taxes) but you'll be able to put away about 45k.  Tax savings on that exceeds the social security you'll be paying and then some.  Of course there is a point where that's not true...I think it's around $140k of income and lower combined with 30k of contributions.  run your own scenarios to make sure.

Answer 5

You may want to meet with your bank's investment person. That can sound intimidating, but that person is licensed to give you advice on what to do with your money. They ask you some questions, like - How much do you want to have when you retire, what do you think your annual retirement needs will be, how much do you want to put away per month- and they will probably assess your risk tolerance, which is how comfortable you are investing in various stocks, bonds, mutual funds, etc. That will open up more avenues to you than just an IRA. There should also be some info about tax-deferred options, if you don't want to pay taxes on some of your earning until you use them. There's lots to consider, and it's always good to have a qualified person's input.