Roth IRA on my own if boss doesn’t start 40l(k)?
Good morning Terry, I very much enjoy your insights on WGN and thought I would give my question a shot.
I’m not sure how much detail you need, the simple short version is I’m 40 with no savings at all (yes, I know). I have finally convinced my employer to provide something for my retirement and they have offered either a 401K or a Roth IRA (their preferred choice), that they will pay into/have me pay into. What steps should I be taking to maximize the Roth IRA.
Terry Says
If they give you extra income to put into a Roth IRA, you will still have to pay taxes on that income. For example, you can put $6,000 into a Roth at age 40 for 2020. So if you were making say $50,000 a year and they give you an extra $6,000 — then you have to pay taxes on that money!!! (There is no tax deduction for a Roth IRA). They probably want to save the hassle of setting up a 40l(k) plan where they would have to make contributions for YOU. So, ok –tell them you’ll use the money to set up your own Roth IRA (go to Fidelity or Vanguard) — BUT, since you have to pay taxes on the money they give you, ask for a $7,000 raise to cover YOUR taxes! Please, please write back and let me know what happens!
