SEP IRA

Posts Tagged ‘mymoney’

Question: Can I open up a deductible or Roth IRA if I have 401k plan?

I was wondering if I can open up a Roth IRA if I already have a 401K plan?

I also have a “non-active” (that is I’m not contributing any more) SEP IRA and an active non-deductible IRA.

Answer: Yes you can. You can also have another Traditional IRA as well. You will have income limits and also come under a combined deposit limit. See your accountant or HR person for specific details.

Simplified Employee Pension ( SEP) IRA’s are usually pre-tax as are traditional IRA’s and 401K’s

A Roth is funded with AFTER tax dollars and the capital gains are not taxed.

Were I you, I’d open the traditional IRA and roll your 401K into it ( if you are no longer employed by the company that had the 401K), but do NOT roll the 401K into the Roth, as you will pay taxes and penalties.

With that said——- If you 401K is a “matching” one, IE… your employer kicks in some sort of match up to a certain limit, then I’d stand pat on the 401K and fund it to the maximum of the employer match. EXAMPLE—- Your employer matches 25% of your contributions up to $5000. That is an IMMEDIATE 25% return on investment ( ROI) without having to do a darn thing except make a deposit….