Can you have a tax-deferred payroll deduction to a personal IRA outside your employer's plan?
Let’s say your employer matches 50% up to a 6% payroll contribution to their 401k, but you have 12% to invest. I have four questions: If you don’t want to put that extra 6% into the employer plan and want to have an outside IRA account, can you have an automatic payroll deduction into that account that is tax-deferred? If not, and you select a Roth IRA (post-tax), is there a limit to annual contributions and do you have to claim interest earned on your yearly tax return?
Rather than an IRA, would individual 'safe investments' be better?
There are many questions here that need to be answered, but most of it starts with, "It depends." If a person has more than the 5 or 6% that is matched and wishes to put that money elsewhere, there are many options in putting together a set of retirement investments. Some employers are willing to work wth an employee by sending money off to desingnated retirment accounts not associated with a 401k, other companies want nothing to do with this task.
A Roth IRA is wonderful because although the money is not initially tax-deferred, it will not be when taxed later when presumably a larger nest egg would be taxed at a higher rate. You do not need to pay taxes each year on a Roth IRA. The tricky part is that the rules differ on how much a person can contribute, and it just depends on how much you make a year. There is a myriad of investments that are relatively safe and diverse enough to make a retirement portfolio run fairly smoothly. However, most people should work with a competent, licensed financial advisor to develop a roadmap to a secure financial future. Even people who understand complicated investing and feel competent enough to manage their own finances can benefit from having fresh eyes on their financial planning.
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