Extra Tax-Advantaged Ways to Save for the Future

You may be contributing to your 457 plan and even to an IRA, but you may be overlooking additional ways to build tax-advantaged savings.

  • Spousal IRAs. You usually need to have earned income from a job to be able to contribute to an IRA. But if you work and your spouse doesn’t, you can contribute up to $6,000 for the year (or $7,000 if age 50 or over) to a spousal IRA on his or her behalf.
  • Roth IRAs for kids. If your children earned any income from a job during the year — even just a few hundred or a thousand dollars — they can contribute to an IRA. And children’s income is usually well below the cut-off to qualify for a Roth. With a Roth, children will get tax-free income in retirement and they’ll be able to access their contributions at any age without penalties or taxes. (See “What is a Roth IRA?” for more information.) You may need to sign some special forms when setting up a Roth IRA for a minor.
  • IRAs for retirees. You may think that you have to stop saving for retirement after you leave your full-time job. But if you have any income from a job at all — such as part-time or freelance work — you can contribute to an IRA. You can contribute up to the amount you earned working for the year, but no more than $7,000 if you’re age 50 or over.
  • Retirement savings for freelancers. If you have any freelance or self-employed income, you can also contribute to a Simplified Employee Pension (SEP) or a solo 401(k). See IRS Publication 560, Retirement Plans for Small Business, at www.irs.gov for more information about these savings plans.


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