Planning for Wifes Retirement

[mikekoenig]

I'm the only one that works, and would like to do a tax free 401k for wife. I'm maxing my own out, can we just sign her up for one and then tell the accountant at the end of the year?

Any other suggestions are welcome as well.

Sorry this should be moved to

investing-banking

[cooliemae]

I'm not sure you can just sign you're wife up for a 401k. I believe that they are only offered through employers, however you can open up an IRA in her name. It would be spousal IRA which doesn't require her to have any earned income.

IRS Publication 590

[disneysteve]

That's correct. You can open an IRA (traditional or Roth) for her, not a 401k. I've had one for my wife for years, including the 10 years she was a SAHM.

[mikekoenig]

Hey thanks you guys.

On the IRA can we do that with the same pretax limit of $17500 a year? Or are there no pre-tax benefits?

Thanks

[cooliemae]

Your wife would be able contribute up to $5,000 per year into the IRA with the tax benefits decreasing with increasing income levels.

***Thanks for the update Petunia, I just looked at the publication, didn't even think about 2013 versus 2012 numbers***

[Petunia 100]

The IRA contribution limit for 2013 is 5.5k, additional 1k for folks 50 and older.

You can do a traditional, a Roth, or both (but can't contribute more than the limit in total).

[mikekoenig]

If its the same as the roth we make too much.

I guess i just need an advisor or something.

[cooliemae]

If you make too much money for the tax benefits of a traditional IRA, then a Roth would be your better option because it be tax free income when you two retire. If you're looking at setting up an IRA for her simply to help with taxes, then neither will help due to your income level. However, if you are using the IRA for it's intended purpose then setting up a Roth IRA for your wife would make a great deal of sense to me.

Between the two of you, you could stash up to $11,000 per year away and provide the two of you with tax free income that could supplement your taxable income from the 401k and ultimately lower your future tax rate. Of course that depends on a good number of factors and consulting an adviser would probably be wise with the amount of money you're probably looking at.

[sblatner]

I would call Vanguard, Schwab or another investment firm, tell them your situation and see what they suggest.

[mannda]

You can only do this if you're self-employed. If so each employee (i.e. both you and your wife) can contribute $51,000 per year tax free into either s SEP-IRA or a Qualified Plan (like a Profit Sharing Plan) with an investment or mutual fund company.

[mikekoenig]

What? Someway to save $51k each tax free using a SEP-IRA?

Am I correct in understanding what you were saying?

[disneysteve]

What? Someway to save $51k each tax free using a SEP-IRA?

Am I correct in understanding what you were saying?

Are you self-employed? You couldn't open a SEP for your wife since she doesn't work but you could do one if you are self-employed.

[mikekoenig]

Self employed and work a job.

Speaking with schwab as we speak