IRA Rules

Archive for September, 2009

Question: Can I fund a Traditional IRA with pretax dollars?

I’m not sure if the rules stipulate I have to use after-tax income to fund a traditional IRA.

Answer: There isn’t a mechanism set up to fund your Trad. IRA with pre-tax dollars – you have to wait and take the appropriate deduction when you file your taxes.

Retirement Savings – Compound Interest and the Rule of 72

Question: Minimum employer contributions to Simple IRA plans?

Hi,
I work at a company with about 15 employees. We have a Simple IRA plan. My boss told us that our company matches our contributions to the plan at a rate of 2%. As he explained it, the company matches $.02 for every dollar that we contribute (up to the $10,000 limit for 2007). But on the IRS website, it states that a company can’t match less than 1% of an employee’s contribution. If I make $50,000 and put $2,000 into the Simple IRA, my company’s contribution ($40) represents .08% of my salary. Are employers free to interpret the rules in this manner?

Answer: You already stated that the company matches 2% of your contributions up to the maximum amount allowed by law.

2% is more than 1% so he would be within the law.

Guess I don’t understand your question.

Stretching Your IRA