Simple Ira Application &Amp: Fill & Download for Free

A 401k and an IRA are both tax-advantaged accounts that incentivize saving/investing for retirement. They both restrict withdrawals from the account in exchange for deferring or excluding taxes. There are Traditional and Roth options for both accounts which is a different question altogether (I have an answer here for IRAs but it is applicable to 401ks as well: Alexander Yuan's answer to Individual Retirement Account (IRA): Is a Roth IRA better than a traditional IRA?). If something is just labelled a 401k or IRA, it is assume to be a Traditional type account.The quick rundown of the differences are the following: you have more flexibility investing in an IRA, you have a higher contribution limit for a 401k, and your employer potentially matches contributions in your 401k (basically gives you free money in the account). But let's go into some more detail.401kA 401k plan is an employer sponsored retirement plan. Not all employers offer one, but many large companies do. Most offer only a Traditional 401k, but there are some companies with Roth 401k options. The employer chooses which type of account to offer and has it set up with a plan manager. There are usually specific funds available for you to invest in within the account. You usually just fill out a form to assign how much of your paycheck you would like to put into the account and how to divide it up into the different options.There are some restrictions on withdrawing the money put into this account but you get tax benefits in return. These restrictions and benefits depend on with type of contribution you make (Traditional vs Roth). The annual contribution limit is fairly high (in 2015 it is $18,000 if you are under 50 years old, $24,000 if you are over 50).The big advantage to contributing to your 401k is employer matching. Your employer may match your contribution which means as you put money into the 401k, your employer will also give you money to put into the account. For example, if your company has 100% matching up to 4% of your income and you make 100k annual salary, you can contribute 4k and your company will put in 4k. This effectively makes your annual salary 104k with 8k being paid to you through your 401k. If the company's matching was only 50%, they will put in 2k when you put in your 4k in the example above. However, the company matched amount usually vests over some period of time which means if you leave the company, you only get the amount you are vested in. For example, if your company has a vesting schedule of 4 years evenly distributed, then in the first example above with 100% matching, you would get claim to an additional 1k each year. You are also always 100% vested in your own contributions. So let's take that example and say you don't contribute anymore after the first year. If you leave after 3 years with the company, you would be entitled to 3k of the 4k match from your first year as well as your own 4k contribution plus whatever gains that 7k earned in the account.Individual Retirement Account (IRA)An IRA is an individual retirement account, meaning you will have to set it up yourself. You will need to reach out to a broker (Charles Schwab, Fidelity, TD Ameritrade, etc.) to set up an account and you decide whether you want to open a Traditional or Roth type. You manually move money into the account which has a smaller annual contribution limit ($5,500 in 2015, $6,500 if you are over 50) relative to the 401k.You get the same restrictions and tax benefits in the IRA for the same type of contribution (Traditional vs Roth), but there are income limits to making these contributions. The main benefit of using an IRA is investment flexibility: you aren't restricted to the investments made in the account. You can invest in individual stocks or mutual funds or index funds of your choice.

First, you need to clarify terminology.A "self-directed IRA" is not a type of IRA. It refers to any IRA under which you have the right to direct the investment of the assets yourself (as opposed to the investments being determined by some professional asset manager). Whether an IRA is "self-directed" has absolutely nothing to do with your question, and will have no effect upon whether or not you can open the IRA.A "simple IRA" refers to a type of employer-sponsored plan, known as a "Savings Incentive Match Plan for Employees" (or "SIMPLE"), that is funded by making contributions to employees' traditional IRAs. The contributions that are permitted under a SIMPLE are salary-reduction contributions by the employee (sort of like what is done in a 401(k) plan) up to $13,500 this year, plus an additional $3,000 if you're age 50+, and contributions by the employer -- either matching up to 3%, or a flat 2% of compensation for each employee. Is that what you're referring to as a "simple IRA"? (I'll assume that it is.)As you might have noticed, if you are in a SIMPLE, you already have a traditional IRA, and it may or may not be self-directed. So what you're really asking must be (1) whether you can open another IRA, and (2) whether you can contribute to that other IRA. (I'm ignoring the self-directed part, because, as I said, any IRA could be self-directed -- that simply depends upon what the particular IRA trust or custodial agreement allows.)(1) There is nothing that stops you from opening another IRA. Or five more IRAs. You can have as many IRAs as you want/need. The issue is getting money into them, as pointed out by Ben Rosenthal's response. He suggested rollovers, which may be the only way that you could do it.(2) The problem that you have, being a participant in a SIMPLE, is that you are subject to the "active participant" phaseout of the IRA deduction limit based on your adjusted gross income. For instance, if you are single, your IRA deduction amount is reduced if your AGI (with some specific modifications) is between $65-75,000, and is $0 if your AGI is over $75,000. If you are married filing a joint return, the phaseout range is $104-124,000.So, even though you could establish a new account, you may not be able to put any money into it. (Roth IRAs are not subject to the phaseout described in (2), but they have their own phaseout rules applicable to how much you are allowed to contribute.)

I feared buying things that required applying for a loan. I assumed it would be a pain. Things like a car or home improvements. I knew I’d need a car, and after a few years, I did. We shopped and invested in an electric car and solar panels. The panels and electric car seem to have reduced our utility and gasoline bill enough to, at least, compensate for the monthly solar panel payments, but we need to go a year before knowing for sure.We still needed a loan to get the car, even with a large downpayment. I was glad to find out that it wasn’t much different applying for a loan as a retiree than when applying for credit when employed. Lenders just look at your income stream from part-time work, IRA, pensions, and social security. And your credit score! (Pro-tip: During the process, it was obvious that it pays to have a very good credit score. The loan application process was swift. And, rest assured, they will forclose if you don’t make payments, no matter your credit score or retirements status.)I had to learn how to manage monthly cash flow carefully. I also had to get extremely objective about financial decision-making. Rather than rushing to pay off loans and mortgages as was my gut feeling, you compare the interest rates against a very, very conservative investment growth rates and a bit of inflation.The goal is to protect the IRA balance so it can continue to grow. We draw the absolute minimum from investments to pay off loans and other recurring expenses, like medical insurance. If a loan interest rate is lower than yearly investment growth, we pay off the loan with regular payments. If the loan rate is higher, we pay off the principal faster. This went against much of what I had always thought.I put together huge spreadsheet with interest rates and inflation rates and projected it out many years. This clearly showed that drawing out large chunks of IRAs to pay off loans quickly wasn’t the best thing. There is always risk, and I meet with our investment advisor at least yearly to tweak things and we watch our monthly expenses like hawks.We use the savings account as our measure, if we are able to make payments to our simple bank savings account each month, we are ok, if not, we roll back spending for a month or two until we can.That said, we do use any “windfalls” or extra cash that somehow accumulates to pay down loan principal, and we are able to maintain and grow a cushion in a bank savings account for quick access in emergencies.Since we are under 65, we have ginormous medical insurance payments. We very much look forward to the day Medicare kicks in, and when our mortgage is done in a few years. It will be like getting a raise or two.