Retirement savings question

[Klesko]

I am a consultant and really don't plan on taking a full time job anywhere anytime soon. I am very good at what I do and very highly sought after so time without a job it nill. Sure at some point I might take a full time job but right now no. Just for reference I am married with a child and my wife doesnt work right now, but will down the road.

 

To my questions

401k Since I am a consultant I don't have access to a 401k. Besides IRA is there any alternate to retirement savings plan out there which will allow me to save more then just 5k tax free a year?

 

Roth IRA vs Traditional IRA

I make over 100k a year but claim so only about 21% of my taxes are taken out. The reason for this is I take as many deductions as possible so at end of the year I break about even. I did the numbers and if I do 5k a year on traditional IRA now I would save $800 in taxes. If I do the ROTH I dont save anything now.

 

Whats your thoughts?

[Kevin20]

I am a consultant and really don't plan on taking a full time job anywhere anytime soon. I am very good at what I do and very highly sought after so time without a job it nill. Sure at some point I might take a full time job but right now no. Just for reference I am married with a child and my wife doesnt work right now, but will down the road.

 

To my questions

401k Since I am a consultant I don't have access to a 401k. Besides IRA is there any alternate to retirement savings plan out there which will allow me to save more then just 5k tax free a year?

 

Roth IRA vs Traditional IRA

I make over 100k a year but claim so only about 21% of my taxes are taken out. The reason for this is I take as many deductions as possible so at end of the year I break about even. I did the numbers and if I do 5k a year on traditional IRA now I would save $800 in taxes. If I do the ROTH I dont save anything now.

 

Whats your thoughts?

 

 

You actually do have access to a 401k. Nowadays there is an account called a "solo 401k" specifically for self-employed people. Another alternative is the SEP IRA, which is not the standard IRA but rather a qualified plan for self-employeds and business owners that is comparable to a 401k.

 

I believe that in both cases you can put up to 25% of your income, up to $49,000 a year into the account, tax deductible -- something like that. And I think you can do either as a self employed, no business entity required.

 

Strongly suggest you google the terms "self employed solo 401k" and "self employed SEP IRA". These will complicate your taxes somewhat -- if you don't already, consider using a tax professional. And actually it would be worthwhile to consult a CPA about these details.

 

As for Roth vs. Traditional IRA, you'd probably want to make tax-deductible contributions to one of the above types of accounts, and separately contribute to a Roth IRA, to benefit from both types of tax-treatment.

 

To save more money among the household, you wife can also contribute to an IRA even though she's not working.