401k Question

[Syncerus]

Hi all,

I have a 401k plan; my wife does not. If I deposit more than $15k/yr in my account, does the amount over $15k apply to the $15k my wife is allowed to save?

In other words, the two of us want to save more than $15k/yr, but only one of us has a 401k account. Since we file jointly, can we just put more than $15k in the one account and have it apply to both of our allowances? (15k each)?

Thanks for any info

[flatscat1]

No, it doesn't work like that. 401K plans are sponsored by a company usually, and as such, employees are the ones capable of contributing to the accounts. There are "self-employed 401-K" plans that are available depending on if your wife has earned income, a side business, any employees, etc. You can look up SEPS or Solo-401K if this might be an option for you. For a 401K, you need earned income and a plan sponsor (your employer) or a solo-401K/SEP if you are self employed.

You can both contribute to Individual Retirement Accounts or perpahs Roth Retirement Accounts depending on how much your combined income is. IRA accounts are in addition to your 401K. There is also a spousal 401K if she doesn't have income.

Many 401K plans will allow you to contribute over the 15K limit, but this amount is subject to tax and/or penalty.....it doesn't allow you to keep contributing until you reach your AND her maximum...

Hope this helps a little.

[Syncerus]

Thanks for the help, flatscat1. I appreciate the info.

[Professor Jones]

Syncerus,
You can put the extra money (up to a limit depending on your ages) in a Roth IRA. That's what my wife and I do. Talk to an investment advisor and see what they can do for you.

The Professor

[fishnlab]

ROTH is only good if your combined income is less than $160K. Great vehicle for saving if eligible. $4000 max per year, I believe. Set up one for you and your wife for a total of $8000 per year of tax free gains.

[drfishalot]

Roth-combined "taxable" income less than that 150-160k-i don't know the specific number