IRA contribution amount limits

[franklin64]

I am 59 years old and currently working on a contract basis for a company. I plan on staying there for the next 6 years and I have been investing in a Roth IRA for the past 20+ years.

I also need to get as many tax deductions as possible to lessen my tax payments as a contractor. I am trying to establish what my contribution limits are, I have access to a simple IRA, which I know can be over $15,000 and the Roth IRA is $8000.

My question is: how do I work both of them together? If I put $8000 in the Roth IRA, am I done? Or am I allowed to still make a contribution to the simple IRA to help with the taxes?

I have too much money sitting in one account that is liquid, so I would also like to get as much money as possible into an IRA-type account so I am not paying capital gains.

Any advice would be helpful.
Thanks

 

[oldtimer]

According to the IRS "Yes, you can contribute to a traditional and/or Roth IRA even if you participate in an employer-sponsored retirement plan (including a SEP or SIMPLE IRA plan)."
Contribution limits for 2024:
$16k for Simple IRA, +$3.5k >50 catch-up contribution
$7k for tIRA/Roth IRA in total, +$1k >50 catch-up

 

[franklin64]

The tricky part of this is that the Simple IRA would not be tied to the place I work; it would be tied to me as a self-employed contractor.

The company may have an IRA program that I can access; I will have to check.

Thanks

 

[audreyh1]

When you are self-employed you can start a SEP-IRA which I think has more generous contribution limit tied to your earnings not a fixed number.

You won’t be able to contribute to a company IRA program where you are not an employee.

 

[target2019]

If you go the SEP-IRA route, I believe your deductible contributions may be around 20% of business profit. That is how it worked for me. I started with that many years before Simple IRA came along.

I think the best answer derives from your gross earnings, because Roth-IRA gets phased out. Here is a Bard link which explains, and includes references. https://g.co/bard/share/a0bf16330bdb

I know that last year my son-in-law chose to use a Simple IRA for my daughter, rather than SEP-IRA or something else.

YMMV.

 

[franklin64]

I know that I have several different options with this, but my question is how do the contribution limits work if you put money into the Simple or SEP and still have a Roth IRA available?


If I put $10,000 in a Simple IRA, can I still put several thousand dollars in the Roth IRA?


Thanks

 

[oldtimer]

I know that I have several different options with this, but my question is how do the contribution limits work if you put money into the Simple or SEP and still have a Roth IRA available?

If I put $10,000 in a Simple IRA, can I still put several thousand dollars in the Roth IRA?

Thanks

Aggregate traditional IRA/Roth IRA contributions are separate from Simple IRA or SEP-IRA contributions.

 

[iloveyoga]

I was just looking at this today, specifically the income limits for the IRA deduction. I assumed the SIMPLE IRA which has an employer match qualifies as a retirement plan and therefore reduces the IRA income limits? Did I look at this correctly? Thanks.

 

[franklin64]

Aggregate traditional IRA/Roth IRA contributions are separate from Simple IRA or SEP-IRA contributions.

That would be great for me and my situation. The only thing is that the Simple IRA is not tied to the employer; it would essentially sit in my retirement account with the other accounts.


Thanks

 

[target2019]

I know that I have several different options with this, but my question is how do the contribution limits work if you put money into the Simple or SEP and still have a Roth IRA available?

If I put $10,000 in a Simple IRA, can I still put several thousand dollars in the Roth IRA?

Thanks

Can I contribute to a traditional or Roth IRA if I'm covered by a retirement plan at work? https://www.irs.gov/retirement-plan...aditional,IRA contributions aren't deductible.

The correct answer leads back to your income. We do not know that. Roth phaseout is explained here https://investor.vanguard.com/inves... can be reduced,phase-out ranges listed below.

Prepare your 2023 taxes. Make a copy and add various combinations of contributions to various plans. Check the forms to see what is deducted. That is what I did each year to find out what to do for this year.