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IRA contribution after 401k max-out?
Old 01-29-2008, 12:44 PM   #1
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IRA contribution after 401k max-out?

I'm sorry, I know this is a basic question but I'm having a heck of a time finding an answer.

I'm not eligible for a Roth.
I max out my 401(k).

I assume that I can't contribute to an IRA pre-tax.
Nor can I contribute to a Roth post-tax.

However, can I can contribute to a regular IRA? I understand that I am contributing with after-tax dollars and would be taxed on withdrawls. However, if I do not need to pay taxes on the investments in the IRA until I withdraw, then it makes sense as a place to build a bond fund.

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Old 01-29-2008, 05:29 PM   #2
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Yes you can contibute to a traditional IRA with post-tax dollars.

Many people recommend against this, and some will probably post here, but I think that it is a good strategy for some people. If you want to invest in bonds and you you also have significant taxable investments then you may be one such person. This would also be good if you will be able to convert to a Roth in the reasonably near future. One thing to watch out for is the tax paperwork which needs to be filed every year for the life of the IRA.

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Old 01-29-2008, 05:44 PM   #3
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Some 401(k) plans allow after tax contributions up to approximately +40K. I did this in my last years of working and these are my bond allocation now. You might want to check with your HR dept.
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Old 01-29-2008, 08:59 PM   #4
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Thank you both for the replies. I will check with HR, I know that we used to have a post-tax contribution option, but that changed. I'm fuzzy on the details, they either no longer match if someone chooses solely after-tax contributions or they no longer offer the plan at all. I had completely forgotten about that option though.
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Old 01-31-2008, 06:21 PM   #5
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If you make after-tax contributions to a regular IRA now you will be able to transfer those contributions to a Roth IRA without paying additional taxes except on any profits. I think it's 2010 when you can make the transfer without a limit on your income. (I'm sure somebody will correct me if I have the year wrong. )
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