Author Topic: Maxing out pre tax investments  (Read 1859 times)

norcalmike

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Maxing out pre tax investments
« on: August 07, 2015, 11:00:17 AM »
Sorry if this has been asked before. I looked on the googles but couldnt find the answer.
If I have a 457 plan and I already maxed it out, can I do other pre tax investments?
I thought i heard with a 457, i can do other pretax stuff.
also, can my wife have a traditional IRA if she is not working? (student) can I contribute for her?

KCM5

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Re: Maxing out pre tax investments
« Reply #1 on: August 07, 2015, 11:07:40 AM »
Yes to the wife's IRA. Up to $5500/yr.

Also, you can contribute to an IRA (traditional or Roth, $5500/yr) as well as a 401(k) or 403(b) ($18000/yr) if you company has one. That limit is separate from the 457 limit ($18000/yr).

So if you have a 457 and 403(b) you can contribute up to $36k pretax from paycheck deductions. Also $5500/yr/person of traditional IRA for a total pretax savings of $47k/yr. More if/when your wife gets a job with retirement benefits.

sirdoug007

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Re: Maxing out pre tax investments
« Reply #2 on: August 07, 2015, 11:07:45 AM »
You can do a traditional IRA if you are under the income limits.

For your wife, she would need to have earned income to contribute to a IRA.  If she is not working you can't contribute for her since contributions are limited to the individuals earned income.

Sorry, I forgot about the spousal exemption.  You can contribute to your wife's IRA if you file jointly: http://www.schwab.com/public/schwab/resource_center/expert_insight/ask_carrie/retirement/can_you_contribute_to_an_ira_if_you_dont_have_a_job.html
« Last Edit: August 07, 2015, 11:09:53 AM by sirdoug007 »

norcalmike

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Re: Maxing out pre tax investments
« Reply #3 on: August 07, 2015, 11:19:00 AM »
Yes to the wife's IRA. Up to $5500/yr.

Also, you can contribute to an IRA (traditional or Roth, $5500/yr) as well as a 401(k) or 403(b) ($18000/yr) if you company has one. That limit is separate from the 457 limit ($18000/yr).

So if you have a 457 and 403(b) you can contribute up to $36k pretax from paycheck deductions. Also $5500/yr/person of traditional IRA for a total pretax savings of $47k/yr. More if/when your wife gets a job with retirement benefits.
I don't think my employer has any other options besides the 457. I'll check though.
So I can't go open up an idividual, pretax  401k if I am not a business owner?

KCM5

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Re: Maxing out pre tax investments
« Reply #4 on: August 07, 2015, 11:27:39 AM »
Yes, the traditional IRA with a limit of $5500 for those under age 50 is available regardless of whether or not you have a retirement account with your job or own a business or anything.

Regarding the IRA, you may want to consider whether you want to contribute to a Roth or traditional IRA, if you're eligible for the traditional IRA. To be eligible for the traditional IRA your MAGI has to be less than $98k for married filing joint in 2015 for the full deduction. Depending on your tax bracket and anticipated future earnings/income in retirement you may wish to contribute post tax money to a Roth rather than pre tax money to a traditional IRA.

norcalmike

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Re: Maxing out pre tax investments
« Reply #5 on: August 07, 2015, 11:49:36 AM »
that puts me out of the traditional IRA then. I am looking for anyway I can to put away as much pretax income that i can. My projected gross income next year will be around 130k. i need to cut that down.