Can you have a tax-deferred payroll deduction to a personal IRA outside your emp

  1. Shepherd's Lamb profile image72
    Shepherd's Lambposted 6 years ago

    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?

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  2. profile image0
    Wearmanyhatsposted 6 years ago

    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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