Retirement Contribution from FAA to retirement account outside of TSP
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32andBelow
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I don’t think you can because you have a work retirement account. You can do a Roth IRA if you are below the income limit.
32andBelow
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Yah but he’s have to contribute to his Ira post tax
corn4ahead
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Read a book called “The Simple Path to Wealth” by J.L. Collins.
All your questions will be answered. If you don’t want to buy the book and get a taste of his content, he has a blog with the exact same information on it. I just prefer reading the book version.
JL Collins Stock Series
squawkIFR
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I just meant like on the admin side. Like what paperwork is there to fill out. ? ?
TimShady
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It doesn’t work quite like a 401(k)/TSP where it’s a deduction from your paycheck. It’s more like any other tax deduction where you would deduct the amount you contribute from your income come tax time.
You could still set it up through Employee Express where a set amount of your check is automatically deposited into a separate account though. Check the income limits because you may not qualify for the tax deduction anyway.
You could still set it up through Employee Express where a set amount of your check is automatically deposited into a separate account though. Check the income limits because you may not qualify for the tax deduction anyway.
This^ ...most useful response you'll get.
BigEggplant
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Anyone who makes more than 65k single or 104k married is ineligible to deduct Traditional IRA contributions.
For the OP. If you make more than that, I recommend you go to Fidelity, Schwab, or Vanguard and open an IRA. If you’re below 124k (or 196k married) in adjusted gross income, you can contribute to a Roth IRA. If you’re above those numbers, you can contribute to a traditional IRA (But not be elegible for any additional tax Deduction) and than move it to a Roth IRA after 1/1 of the following year.
We just did ours for 2019, and the Roth conversion a few days later.
For the OP. If you make more than that, I recommend you go to Fidelity, Schwab, or Vanguard and open an IRA. If you’re below 124k (or 196k married) in adjusted gross income, you can contribute to a Roth IRA. If you’re above those numbers, you can contribute to a traditional IRA (But not be elegible for any additional tax Deduction) and than move it to a Roth IRA after 1/1 of the following year.
We just did ours for 2019, and the Roth conversion a few days later.
squawkIFR
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Yeah so I opened the vanguard account but I need to have it set up for traditional IRA contributions how do I do that?
yea but then it’s all tax free later plus no time limit on when it needs to be deducted like a traditional ira. I’d rather pay tax now for it to be complety tax free later!!! It’s what all the rich people do.
32andBelow
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You have a 401k (tsp) you don’t qualify for this type of IRA.
If you just opened a standard brokerage account, congrats, that didn't do much for you. You want to specifically open a traditional IRA. Here's the main Vanguard splash page for that. Like bob smith and Type1atc said, at some point in the future you tell Vanguard to "recharacterize" your traditional contributions as Roth, which means you would no longer be able to take a deduction on them (which you can't anyway due to having a high income) and would at that time pay taxes on any gains you've made. I'm not sure exactly how to do this but I'm sure you can google it.
Or if you aren't at the Roth IRA income limits yet, you can just open a Roth IRA in the first place and not have to deal with the backdoor method.
After you open the account you can poke around until you find your routing number and account number, then add that as a financial allotment in Employee Express. It won't be pre-tax but you don't actually want that anyway.
They don't qualify to deduct their contributions to this type of IRA, but they can certainly contribute post-tax money, not take the deduction, and recharacterize to a Roth.
32andBelow
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Yah but his post is all about setting up pre tax allocations.
I don't think there's a way to do that with Employee Express. You could always call HR and ask I guess. But if they do turn out to be eligible for the deduction it'll all come out in the wash at tax time. It's not necessary that taxes aren't withheld, they'll get them back.
32andBelow
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I’m saying he’s not eligible cus it’s meant for people that don’t have work retirement accounts.
Everyone is eligible to contribute to a traditional IRA.
Not everyone is eligible to deduct those contributions from their yearly income.
The IRS said:
Retirement Topics - IRA Contribution Limits | Internal Revenue Service
Information about IRA contribution limits. Learn about tax deductions, IRAs and work retirement plans, spousal IRAs and more.
32andBelow
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His question is literally about how to make these deductions PRE TAXEveryone is eligible to contribute to a traditional IRA.
Not everyone is eligible to deduct those contributions from their yearly income.
Retirement Topics - IRA Contribution Limits | Internal Revenue Service
Information about IRA contribution limits. Learn about tax deductions, IRAs and work retirement plans, spousal IRAs and more.www.irs.gov
squawkIFR
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Lol yeah it is
You're talking about two different things that could both be known as "deductions." First there are deductions from your paycheck, like your 401k contribution and your withheld taxes and your insurance premium. You can set up your own deductions in Employee Express. They're called "allotments" in that system. I have a deduction/allotment going to my Roth IRA, and another one going to a separate savings account.
Then there are deductions from your income that you use to reduce how much income you pay taxes on. The "standard deduction" is one example. Contributions to a traditional 401k are deducted from your income, as are contributions to a traditional IRA if you're eligible. If you lost money in the stock market you can deduct that amount. That sort of thing.
It so happens that the FAA knows trad 401k contributions are deductible from your income, so they go ahead and reduce your per-paycheck taxable income by that amount and withhold taxes based on the lower amount. That's nice. They don't have to though—if they didn't do that, you could take your 1040 at the end of the year and put down how much you contributed, then deduct that amount from your gross income.
I don't believe there is a way in Employee Express to set a user-defined financial allotment as pre-tax, that is to say, to tell the FAA to ignore that amount when withholding taxes. I could be wrong. I would recommend calling HR and asking. But it doesn't matter at all. If at the end of the year you're eligible to deduct the amount from your gross income, go ahead and do that (you'll get the withheld taxes back as a refund). If at the end of the year you aren't eligible to deduct the amount, no harm no foul, taxes were already withheld.
I feel like I'm taking crazy pills here...
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