I currently hold a 401k through my employer which i contribute to weekly. Im looking to do a couple things here:-
1. I already max out this 401K every year but want to put away MORE pre-tax dollars, can i set up a personal Self Directed IRA, in addition to this 401K, so i can minimize my weekly tax bit. 2. i want to buy RE through my 401k, which is not allowed, so this is a second reason for wanting to setup a Self Directed IRA personally.
With the above notes, if you do this, has your employer given you any resistance in setting up pre-tax dollars to be sent to your IRA? My 401K Financial Adviser told me that i wasnt allowed to have both, but some friends say they have both. Im assuming FA just doesnt want me shopping elsewhere! Or am I missing something bigger?
Yes, you can setup self-directed IRA, in addition to your employer-sponsored 401k plan. Contributions to an IRA are limited to $6,000 per year (plus $1,000 catch up if you are over 50). You can't contribute to your IRA directly from your paycheck before the taxes are taken out. However after you get your paycheck deposited to your personal checking account you can contribute to an IRA. The contribution to Traditional IRA will be tax-deductible so while you use after-tax dollar to make the contribution it will be recalculated when you file your taxes and you will get a deduction for it.
You can't buy much real estate with one year's contribution so you probably would have to wait a few years until you accumulate enough funds to invest in a deal (unless you have some other retirement account which you could rollover into SDIRA).
While I agree with this sentiment. The IRA deductions phase out over certain income thresholds if you're covered by a retirement plan at work. So you may be able to save more money for retirement, but not get the deduction.
As I understand it if you have been affected by Covid can you take a distribution from your company 401K and then roll that over to a self directed IRA? That would seed the SDIRA with more than the $6000 per year + avoid a taxable event.