What if your program doesn't have a 401K program?

[golgi]

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My plan was to max out my 401K (14,000) and Roth IRA but I found out that my program doesn't offer a 401K program. Does this mean I can't contribute a portion of my pretax income to a retirement account? I am pretty new to all this financial stuff so please excuse my ignorance. Thanks!

 

[GeneGoddess]

You may just be restricted to contributing to traditional or Roth IRAs. Grad students aren't eligible for 403b's, so all I've been able to do is contribute to a Roth.

 

[edmadison]

My plan was to max out my 401K (14,000) and Roth IRA but I found out that my program doesn't offer a 401K program. Does this mean I can't contribute a portion of my pretax income to a retirement account? I am pretty new to all this financial stuff so please excuse my ignorance. Thanks!

No, If your program does not have a "qualified plan", then you can contribute to a traditional IRA in addition to your Roth IRA.

Ed

 

[southerndoc]

No, If your program does not have a "qualified plan", then you can contribute to a traditional IRA in addition to your Roth IRA.

Ed

You can? I thought your total contributions to both Roth IRA's and traditional IRA's cannot exceed $4,000 for 2005. I was under the impression that there wasn't any exceptions for those who are employed at places that do not offer a 401(k).

SEP-IRA is an option, but only if you are self-employed.

 

[GeneGoddess]

Contributions to a traditional and/or Roth Ira cannot exceed your earned income or $4000 (for 2005), whichever is smaller. I'm not sure if other IRA options (SEP, Keogh)are allowed if you aren't self employed.

 

[edmadison]

You can? I thought your total contributions to both Roth IRA's and traditional IRA's cannot exceed $4,000 for 2005. I was under the impression that there wasn't any exceptions for those who are employed at places that do not offer a 401(k).

SEP-IRA is an option, but only if you are self-employed.

Yes, you are right. I was thinking about the old rules. Sorry about that.

Ed

 

[Purulent DC]

Interestingly, the IRS has proposed a "Roth 401k" plan to start next year. See the link for details. This maybe a good deal for those who want to invest but don't like their hospital 401k/403b plans. Sometimes the mutual fund selctions offered by the hospital's retirement accounts can be few and/or poor or the expense fees are inflated, so they end up being not such a good investment despite the appeal of matched contributions from the hospital.

Check it out:

http://www.treas.gov/press/releases/reports/rothproposed.pdf.