I"m Not Eligible for a 401k But Want to Save for Retirement - IRAs and Retirement Savings Plans
We all know that a 401k is THE way to save for retirement.
But to have a 401k you need to have an employer.
That pays you full time, with benefits and 401k options.
So what about the rest of us? Those that freelance, work part-time, are self-employed or contract professionally? How can we be smart about our retirement savings without risking it all in a stock market still recovering from a global financial crisis? The answer lies in the IRA, the Roth IRA and the lesser known Roth 401k.
Generally, 401k contributions are made pre-tax withholding through your employer, and are taxed at retirement, when you take the money out.
A Roth 401k is the opposite; because the money you're putting in was taxed in your paycheck, retrieving the money at retirement is untaxed.
If this sounds confusing, it is..
..
which is why many young people simply give up.
If you need a hand understanding your retirement saving options, speak with an investment advisor.
Many retirement financial planners offer free consultations, so you can get the advice you need and invest that money in your future, not in a conversation with a financial planner.
So the Roth 401k is the closest you can get to a traditional 401k plan as a freelancer, but there are other options, as well.
The Roth IRA is similar to the Roth 401k in that all donations are made after taxes.
That said, it matures and is released back to you tax-free, so you are still only being taxed once on your earnings.
Unlike the 401k plan, to which you can donate as much or as little as you'd like, the Roth IRA caps at $5,000 per year.
The traditional IRA is a bit more confusing.
Contributions are made post taxing, but they contributions are tax deductible, so you essentially get back all the taxes in April.
Still confused, looking to learn more or ready to begin investing? Speak to a financial planner to get started today.
But to have a 401k you need to have an employer.
That pays you full time, with benefits and 401k options.
So what about the rest of us? Those that freelance, work part-time, are self-employed or contract professionally? How can we be smart about our retirement savings without risking it all in a stock market still recovering from a global financial crisis? The answer lies in the IRA, the Roth IRA and the lesser known Roth 401k.
Generally, 401k contributions are made pre-tax withholding through your employer, and are taxed at retirement, when you take the money out.
A Roth 401k is the opposite; because the money you're putting in was taxed in your paycheck, retrieving the money at retirement is untaxed.
If this sounds confusing, it is..
..
which is why many young people simply give up.
If you need a hand understanding your retirement saving options, speak with an investment advisor.
Many retirement financial planners offer free consultations, so you can get the advice you need and invest that money in your future, not in a conversation with a financial planner.
So the Roth 401k is the closest you can get to a traditional 401k plan as a freelancer, but there are other options, as well.
The Roth IRA is similar to the Roth 401k in that all donations are made after taxes.
That said, it matures and is released back to you tax-free, so you are still only being taxed once on your earnings.
Unlike the 401k plan, to which you can donate as much or as little as you'd like, the Roth IRA caps at $5,000 per year.
The traditional IRA is a bit more confusing.
Contributions are made post taxing, but they contributions are tax deductible, so you essentially get back all the taxes in April.
Still confused, looking to learn more or ready to begin investing? Speak to a financial planner to get started today.
Source...