IRA question

[pkbites]

I’m retired and have a full pension. I also have 457 plan left over at the agency I retired from. I would like to roll it over into a traditional IRA and continue to contribute to it.

My question is, how do I contribute pre-tax money into it? I have a part-time job now just to stay in the game. I’d like my salary from that put into the IRA. How do I do that pre-tax into my own IRA? Do I set something up with HR/payroll? Or do I have to put post-taxed funds into the IRA and then even it out when I have my taxes done? I put a call in to my tax guy but he hasn’t called me back yet.

[Fuzzy_Dunlop]

@pkbites

I’m retired and have a full pension. I also have 457 plan left over at the agency I retired from. I would like to roll it over into a traditional IRA and continue to contribute to it.

My question is, how do I contribute pre-tax money into it? I have a part-time job now just to stay in the game. I’d like my salary from that put into the IRA. How do I do that pre-tax into my own IRA? Do I set something up with HR/payroll? Or do I have to put post-taxed funds into the IRA and then even it out when I have my taxes done? I put a call in to my tax guy but he hasn’t called me back yet.

Option 2. Your taxable income is reduced by your IRA contributions for the year the contributions won’t directly affect your take home pay. If your employer is effectively withholding too much due to your contributions you can talk to them about changing withholdings or make smaller estimated quarterly payments, but they won’t actually handle the contributions like with a 401(k).

[dracoi]

Pre-tax contributions are entirely dependent on your employer and the type of plan they offer. The good news is that your taxes (both income and payroll tax) net out to the same whether you do contributions through payroll or not. Employer matching is the only issue that would make a different in the net.

Talk to your tax guy and investment adviser about whether a traditional IRA or Roth IRA makes more sense in your situation. Sometimes it’s worth deferring a deduction now for the Roth benefit of not paying tax later when you withdraw the funds.

[pkbites]

@dracoi

Pre-tax contributions are entirely dependent on your employer and the type of plan they offer. The good news is that your taxes (both income and payroll tax) net out to the same whether you do contributions through payroll or not. Employer matching is the only issue that would make a different in the net.

Talk to your tax guy and investment adviser about whether a traditional IRA or Roth IRA makes more sense in your situation. Sometimes it’s worth deferring a deduction now for the Roth benefit of not paying tax later when you withdraw the funds.

I’m talking about a private IRA, not one provided by my employer. I can’t roll the 457 money into a Roth because all my contributions were done pretax and I’d get hit with penalties and taxes if I tried to roll that money into a Roth.

I’m probably going to open both a Roth and a traditional.

[dracoi]

@pkbites

I’m talking about a private IRA, not one provided by my employer. I can’t roll the 457 money into a Roth because all my contributions were done pretax and I’d get hit with penalties and taxes if I tried to roll that money into a Roth.

I’m probably going to open both a Roth and a traditional.

Right…
In case, I wasn’t clear, I was just explaining that the only way an employer could do it through payroll would be via an employer-sponsored plan. But that you’re not disadvantaged by making contributions after payroll to a traditional IRA plan - the net tax outcome is the same either way.

I always mention Roth plans because many people aren’t aware they have options, but I was just talking about the new contributions that you were asking about.