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Individual Retirement Account

Introduction​

Also a good retirement vehicle, but with some caveats.

  • Your ability to contribute to a deductible IRA when you also have a work sponsored plan (e.g. 401k), is limited.
  • They can also be income limited, so pay attention.
  • The discussion of Traditional vs Roth also applies.

Pre-tax Option​

Deductible IRAs are pre-tax, but have the limitations noted above.

After-tax Options​

Non-deductible IRAs are after-tax, but earnings grow tax-deferred. But, you can "Backdoor Roth" them to make them fully tax-free. I'll add more here later, but there is plenty out there on the interwebs. You can get some sense for the challenges in my Solo 401k documentation.

Advanced​

This probably falls into the "Advanced Financial Planning" category (which doesn't currently exist here) and is beyond the scope of this backgrounder. You start getting into things like "Mega Backdoor Roth" which is probably the worst metal band name ever.