Hello Everyone!
New forum member and first post...Yearly income is north of $150k / yr (for reference purposes below).
I max out my company 401k each year ($18k in 2015), but I'm feeling a little stupid because from I am reading today, I can also contribute $5500 to a traditional IRA, from pre-tax dollars (payroll deduction). I always thought I could only do a backdoor Roth for $5500 each year, I didn't know I can contribute $5500 to a traditional Roth with pre-tax dollars as well. Am I understanding this correctly?
And while I have your attention...
- That $5500 traditional IRA contribution comes from pre-tax dollars, but I cannot use those dollars to lower my taxable income due to income restrictions (
http://tinyurl.com/hwz6zaw). Correct? So basically that $5500 grows tax free, but it won't lower my income for tax purposes further (which is fine).
- While I have to max out my 401k by Dec. 31st, I can contribute to that traditional IRA in calendar year 2016, for calendar year 2015, so long as it is done before 2015 income tax filing deadlines and I specify it is for calendar year 2015 (but where do I specify this if it's coming out of my paycheck and going directly to Vanguard IRA?). Do you agree?
- I'm confused on 401k penalty-free withdrawals. One website (
http://tinyurl.com/odezrpc) states most 401k allow penalty free withdrawels for early retirees after age 55. So retire at 40, then wait until 55 and you can withdraw from your 401k, simple. But this website (
http://tinyurl.com/3357bnl) says you need to work until 55, then you can withdraw 401k penalty free at 55. Which is correct?
I appreciate any and all help. GL in reaching FI if you aren't already there!
