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Can I bypass my Employers Retirement Plan?

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noslenj123
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Can I bypass my Employers Retirement Plan?  Reply with quote  

I would rather control my own IRA investment choices rather than the options my employer has available. Is this possible? I've read that I might be able to contribute to a traditional IRA but if I have an employer plan that my contributions may not all be deductible. Any advice on that?
Post Mon Sep 24, 2012 3:42 am
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braje
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IRS Publication 590 table 1-2 show the income limits
example Single with a Modified AGI under 56,000 can take a full deduction but >56Kand <66K gets a partial deduction
Post Mon Sep 24, 2012 6:01 pm
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noslenj123
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Well, don't the income limits apply whether I use an employers IRA plan or my own? My question really is if I can set up my own IRA (think self-directed) and contribute after tax dollars made through my employer and then contributed into my own IRA but essentially get pre-tax status on those deposits at tax time. Of course still applying any normal contribution limits.

What I've read so far seems to say that if you have an employer sponsored IRA available but you don't use it and use a non-employer IRA instead that there might be even lower contribution limits. That's what I'm trying to figure out. Anyone?
Post Tue Sep 25, 2012 1:15 am
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clydewolf
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quote:
Originally posted by noslenj123
Well, don't the income limits apply whether I use an employers IRA plan or my own? My question really is if I can set up my own IRA (think self-directed) and contribute after tax dollars made through my employer and then contributed into my own IRA but essentially get pre-tax status on those deposits at tax time. Of course still applying any normal contribution limits.

What I've read so far seems to say that if you have an employer sponsored IRA available but you don't use it and use a non-employer IRA instead that there might be even lower contribution limits. That's what I'm trying to figure out. Anyone?

Noslenj123,

When the employer has a plan you are covered by that plan, even if you do not participate in the employer's plan.

Look at your most recent W-2. With box 13 checked the employer has a plan for you and that will limit the detectability of your IRA contributions.

Some things to consider:
- When the employer makes a matching contribution, that is bonus money to you.
- The annual limit for your contributions to the employer's plan will be higher than the annual limit to your IRA.
- You receive the tax deduction now for contributing instead of waiting to file your tax return.
- When you separate from that employer you can transfer your contributions to your IRA.

Lobby your employer, suggest better investment options for the employer to consider in their plan. Prepare a presentation showing recent history of what you have now vs investment options you suggest. Include a chart showing the cost of the current investment choices vs the investments you suggest.
Post Tue Sep 25, 2012 10:36 pm
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noslenj123
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quote:
Originally posted by coaster
This should answer your question:

http://www.irs.gov/Retirement-Plans/Plan-Participant,-Employee/Retirement-Topics---IRA-Contribution-Limits


Thanks. I think that's what I keep finding. And in it is this section:
quote:
Can I contribute to an IRA if I participate in a retirement plan at work?
You can contribute to a traditional or Roth IRA whether or not you participate in another retirement plan through your employer or business. However, you might not be able to deduct all of your traditional IRA contributions if you or your spouse participates in another retirement plan at work.


But it doesn't explain what "might not" means, nor does it give an example. Could it mean that if you are only allowed $5k for the year and you do $2k with your employers plan that you can only to the other $3k in another IRA? If that's the case then cool, but I'm sure how I can be sure about that.
Post Wed Sep 26, 2012 4:08 am
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noslenj123
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quote:
When the employer has a plan you are covered by that plan, even if you do not participate in the employer's plan.

Look at your most recent W-2. With box 13 checked the employer has a plan for you and that will limit the deduct-ability of your IRA contributions.

Some things to consider:
- When the employer makes a matching contribution, that is bonus money to you.
- The annual limit for your contributions to the employer's plan will be higher than the annual limit to your IRA.
- You receive the tax deduction now for contributing instead of waiting to file your tax return.
- When you separate from that employer you can transfer your contributions to your IRA.

Lobby your employer, suggest better investment options for the employer to consider in their plan. Prepare a presentation showing recent history of what you have now vs investment options you suggest. Include a chart showing the cost of the current investment choices vs the investments you suggest.


Good advice.

I'd be better off banging my head against the wall than trying to lobby my employer as what I want to do is not something the workforce in general would be interested in. That being a self-directed IRA/401k so I can invest as I see fit.

You mentioned limit the deduct-ability which I keep seeing but nowhere does it explain what "limit" means. Maybe just that all your IRA/401k contributions total the $5-6k you are allowed in a year?
Post Wed Sep 26, 2012 4:16 am
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noslenj123
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quote:
Originally posted by coaster

Look closer at that page; there's a link that takes you to an examples page. It's only a one-word link; it's easy to miss it, and a couple links further on there's a table.

Comment: recently the IRS revamped their web site. They used to have a great site; it was easy to find stuff; it was well-organized and the search facility was excellent. You could almost always find an answer to most questions in minutes. This new site is complete crap. The search is terrible, bring up all kinds of irrelevant stuff; the organization is completely byzantine; links often feed right back to their origins; and if you eventually find an answer it's mostly likely you just stumbled across it by chance.

This is your government at work, people, making things "better" for us. Rolling Eyes


Hmmm, I happen to be a web developer. Maybe I can get into politics by helping them.... LOL
Post Thu Sep 27, 2012 2:23 am
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clydewolf
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quote:
You mentioned limit the deduct-ability which I keep seeing but nowhere does it explain what "limit" means. Maybe just that all your IRA/401k contributions total the $5-6k you are allowed in a year?

Noselnj123,

Your Reduced (limited) IRA Deduction Is calculated using the worksheet on page 19 of IRS Pub 590, Individual Retirement Arrangements at this link: http://www.irs.gov/pub/irs-pdf/p590.pdf

Total IRA contribution limits for 2012 for each IRA owner are:
- $5,000 if less than age 50 at the end of the tax year.
- $6,000 if over age 49 at the end of the tax year.

Your contributions to your employer's plan are deducted from your pay and are not taxable until distributed from the 491k plan.
Contribution limits for 2012 to a 401k plan are:
- $17,000 if less than age 50 at the end of the tax year.
- $22,500 if over age 49 at the end of the tax year.

Contributions to a SIMPLE Plan for 2012 are limited to $11,500. There is no catch-up contribution to the SIMPLE Plans.
Post Thu Sep 27, 2012 5:28 pm
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