What would you like to do?
There are some similarities and some differences between 401k and Roth IRA . Here are the some important differences between them. Contribution : The money …you put in 401k or Roth IRA account. Earnings : It is the money you earn on contributed money (interest or capital gain). Read more about each one in detail below: . 401K Employer Retirement Account Plan . ROTH IRA Under current law, there is no ability for an investor in an employer-sponsored 401(k) account to make such a conversion to a Roth accounts within the same plan. Now, there are reports that the Senate is going to propose rules that overturn this law and allow certain employees to roll over amounts from their 401k retirement plans to a Roth-type savings account. .
Yes. Your ability to have a personal or spousal Roth IRA is a separate questions from whether you can have a SEP IRA. Anyone with earned income can contribute up to $4,000 (or… $5,000 if your are 50 or over) in 2007 and $5,000 (or $6,000 in 2008) if they meet the income requirements. You must have earned income of under $99,000 for 2007 and $101,000 for 2008 for singles or $156,000 for 2007 and $159,000 for 2008 for married filing jointly. For a SEP IRA, you must have business income to contribute. You can contribute up to 25% of your business income with a limit of $45,000 in 2007 and $50,000 in 2008 (those 50 years or older may contribute $5,000 more). Thus, if you have business income, you can contribute to your ROTH IRA if you are eligible and a SEP IRA. If your SEP IRA is likely to become substantial or you have funds in a 401(k) from a previous employer and you are an one person (or one person with a spouse) business, you should look into individual 401(k)s. All of the major financial institution and self-directed trust companies offer them. They work like a corporate 401(k) but you have complete control. They may be better than a SEP since: 1. The contribution limits are higher 2. You can borrow in a 401k but not a SEP 3. You can have a Roth 401(k) but you cannot make Roth contributions to a SEP 4. You can buy life insurance or invest in a S corporationin a 401(k)
no >>>>> And why would you want to? You already paid taxes on that money.
Is your question can you have both a ROTH and Traditional IRA? If so, yes you can.
Yes, the limitation does not apply between a SIMPLE IRA and a Roth/Traditional. However, because a SIMPLE IRA is a "qualified retirement plan" offered by your employer, yo…u may not be able to get a traditional IRA deduction- all depends on your income situation.
You can roll a 401k plan over into a Roth IRA. However, when you do so, you will have to pay ordinary income tax on the amount rolled into the Roth. Even so, a Roth IRA will… usually perform better over time, as the money not only grows tax free, but is taken out tax free as well. There are some great calculators out there that will show you the impact of conducting this rollover. See attached link.
You cannot contribute more to your IRA than the amount of your "compensation income." Compensation income is the taxable portion of your wages/salary, net self-employment, and… alimony. Any amount shown in box 1 of a W-2 minus the amount shown in box 11 of the same W-2 is automatically considered taxable compensation income. So if you are not doing some kind of work or receiving alimony, you can't contribute. There is no age limit for contributions to a Roth IRA. People over 70 1/2 cannot contribute to a traditional IRA.
A money market account (MMA) and a 401(k) plan are not the same. The former is a type of savings account while the latter is an investment account. Some of the key differences… lie in the type of deposits, or contributions, made, how the money grows, and whether or not withdrawals can be made from the accounts .
If you have a 401k and an IRA can you convert some of your IRA to a roth IRA and contribute to your IRA?
Yes.as long as you do not contribute more than your annual limit.
Yes. An individual may make IRA contributions to both a Roth and aTraditional IRA, providing the combined contribution total does not exceed the contribution limit for …the year.
Not directly but you can roll it over to a Traditional IRA first then convert that IRA to a Roth.
A 401k is a "profit sharing "plan or retirement account established by an employer to enable their employees to share in the company profits. You contribute to with pre-taxed …dollars, but your employer must also contribute. Since no tax has been paid on the money when it is entered, it is subject to a income tax when it is withdrawn. A Roth IRA is a similar retirement account, but you put dollars that have already been taxed (ie. income tax). Your contributions are not tax deductible, but the money grows tax free until the age of 59 1/2 when you can remove the amount. This account has a maximum limit you can contribute each year and a income cap. If you make more than say $150k you cannot participate that year, the income cap changes from year to year.
In IRA Plans
You can have as many Roth IRAs as you like. However, total contributions for all accounts must not exceed the annual maximum contribution.
The answer to this questions depends entirely on the individual. A SEP account is more popular than a 401K retirement plan with self-employed individuals and small business ow…ners because it was created with the intended purpose of benefiting them.
Contributing more than the maximum into a Roth IRA will result in a 6% excise tax. The 6% tax applies only to the amount which one has over contributed.
In IRA Plans
There are many companies that can help someone convert their 401k rollover to a Roth IRA account. Such companies include Fidelity and Vanguard. Investopedia has also published… some information that one should know before converting their 401k rollover to a Roth IRA account.