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Can you open an IRA for side job if you have 401k (maxed) through work?
Posted on 8/22/18 at 4:20 pm
Posted on 8/22/18 at 4:20 pm
I have a regular job and 401k that is maxed. I also have a side job (single member LLC-self employed) that earns about 10k per year.
Can I open an IRA or a 2nd 401k and put those earnings in it and avoid income taxes (now) on the side job?
Can I open an IRA or a 2nd 401k and put those earnings in it and avoid income taxes (now) on the side job?
This post was edited on 8/22/18 at 4:25 pm
4
Posted on 8/22/18 at 4:49 pm to Jimmy2shoes
You can do a non-deductible IRA contribution then convert that to a Roth.
You also may be able to do a SEP-IRA but you will be limited on how much you can put in it.
You also may be able to do a SEP-IRA but you will be limited on how much you can put in it.
Posted on 8/22/18 at 6:39 pm to Jimmy2shoes
You can open an IRA at any time if you don't already have one. The fact that you have a 401 doesn't prevent you from doing that at all. A 401 is associated with your place of employment, but the IRA has nothing to do with that - it's yours and yours alone. Your employer has nothing to do with your IRA.
You can even have multiple 401's, but the contribution limits apply to the sum of all. So if you're already maxing one 401k then having a second means you have to contribute less to the first one. You might be able to get employer match on both though, I'm not really sure. But if you can then it might be a nice perk.
You can even have multiple 401's, but the contribution limits apply to the sum of all. So if you're already maxing one 401k then having a second means you have to contribute less to the first one. You might be able to get employer match on both though, I'm not really sure. But if you can then it might be a nice perk.
Posted on 8/22/18 at 6:54 pm to Jimmy2shoes
you can still do a solo 401k. but only the owner profit sharing of 25% or 20% since you already are maxing the employee contribution side of 18,500
LINK
you can always do a IRA on the side as well.
LINK
you can always do a IRA on the side as well.
This post was edited on 8/22/18 at 6:57 pm
Posted on 8/22/18 at 7:02 pm to LSUFanHouston
quote:
You also may be able to do a SEP-IRA but you will be limited on how much you can put in it.
yeah it also only allows owner profit sharing and no employee contribution. which is all he can do anyway IF he is maxing his employee portion elsewhere even if he gets a solo 401k. solo 401k has better options than a SEP IRA.
Posted on 8/22/18 at 7:26 pm to Fat Bastard
the 401k will be maxed out at year end. I'm looking to defer and reduce taxes on the side gig and stash more away for retirement. It seems like the solo 401k will be limited to employer profit sharing? Any idea if I can just put everything earned after expenses as profit sharing and not take any money for earnings/salary?
Posted on 8/22/18 at 7:26 pm to LSUFanHouston
Couldn't he just open a Roth? If not, why?
Posted on 8/22/18 at 7:27 pm to Jimmy2shoes
Open a SEP ira
Posted on 8/22/18 at 7:39 pm to Jimmy2shoes
quote:
It seems like the solo 401k will be limited to employer profit sharing?
normally NO which makes it better than a SEP IRA
however in your specific case
yes because you will have already maxed out the employee contribution elsewhere. otherwise you would have that AS WELL as the employer profit sharing as being tax deductible through the solo 401k. now it is still a deduction regardless, you would just have it in different options. normal 401k, solo 401k, etc.
quote:
Any idea if I can just put everything earned after expenses as profit sharing and not take any money for earnings/salary?
nope. it is all based on percentages from the IRS.
This post was edited on 8/22/18 at 8:09 pm
Posted on 8/22/18 at 7:46 pm to HailToTheChiz
quote:
Couldn't he just open a Roth? If not, why?
Someone who maxes their 401k and has another job may be over the income limits to directly contribute.
Posted on 8/22/18 at 8:06 pm to Teddy Ruxpin
quote:
Someone who maxes their 401k and has another job may be over the income limits to directly contribute.
yup
Posted on 8/23/18 at 12:02 am to foshizzle
quote:
You can open an IRA at any time if you don't already have one. The fact that you have a 401 doesn't prevent you from doing that at all. A 401 is associated with your place of employment, but the IRA has nothing to do with that - it's yours and yours alone. Your employer has nothing to do with your IRA.
Yes and no. They're two separate accounts, but IRA contributions may not be deductible if you're covered by an employer plan. The phase out limits aren't very high. You can still consider non deductible contributions.
Posted on 8/23/18 at 6:55 am to slackster
quote:
but IRA contributions may not be deductible if you're covered by an employer plan.
correct in regards to a TIRA
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