Agreement For Salary Reduction For Employee Contributions: Fill & Download for Free

A 403(b) follows pretty much the same rules as its 401(k) counterpart, but is for employees of non-profit institutions.There are annual contribution limits.You may have both traditional and ROTH options.Contributions to a traditional 403(b) are tax deductible. They are probably being made as withdrawals from your paycheck and will appear on your W-2 at the end of the year and feed into your taxes annually.NOTE: Your employer may and probably does reduce your federally-reported income by your contributions on your W-2, so you may not have noticed that you effectively include them. (You may notice that your federally-taxable income is different than your income for social security or Medicare - 403(b) contributions are one of the reasons.) (Your contributions may also be called out on your W-2 in box 12, Code E — Elective deferrals under a Section 403(b) salary reduction agreement.)Withdrawals from a traditional 403(b) are taxed at the federal level. (Taxation varies at the state level - both going in and coming out.) There are age and work-related rules about this. You should get your tax information annually on a 1099-R form. You will report this on your taxes.

Hi. Thanks for the A2A. An FSA is a “Flexible Spending Account” and an HSA is a “Health Savings Account.” The fundamental difference between these two accounts is captured in that second word, “spending” vs “saving.”FSA funds are intended to be spent each year for qualifying medical expenses incurred during that benefit period (I’m excluding accounts for transportation and childcare benefit plans). Alternatively, HSA funds have what amounts to “forward” compatibility, meaning amounts in an HSA can be spent this plan year, next plan year, and so on, really anytime after the account is established. There is even “backwards” compatibility which I’ll explain below.As Jim indicates in his thorough description, an FSA is an account that does not belong to the user, per se. Instead the account is owned by the sponsor (employer) and maintained on behalf of the user (employee), usually as part of a “salary reduction agreement.” Because of these somewhat quirky rules found in IRS guidelines, the full amount of an employee’s annual FSA payroll deduction is actually available at the start of the plan year.For example, suppose you decide to fund your FSA with $1,200 in the upcoming annual benefit period, so $100 per month deducted from your paycheck. However, and before you deposit your first dollar, you decide to spend the full $1,200 on braces. You can incur the expense, submit your receipt and $1,200 will be deposited in your checking account. What happens behind the scenes is the employer will cover any withdrawal overages that you, the employee, may not yet have funded through your payroll contributions.Further, should you spend the full $1,200 and decide to change employers mid-year, your old employer is essentially left holding the bag on the amount you did not contribute into your FSA. Conversely, any amounts deposited by you through payroll deductions you did not spend during the year, including a grace period into the following year, are forfeited to the employer. Recognize further these are the official US government regulations, not your employer’s policy.As mentioned above, a Health Savings Account works somewhat differently. While both the FSA and HSA provide the same pre-income tax, pre-payroll tax and tax free withdrawals, and are intended to be spent on the same qualified medical expenses, funds deposited into the HSA never expire and are never forfeited back to your employer.This is because the Health Savings Account is owned by the individual. The account is portable from employer to employer. You can even open an HSA through a provider other than the one sponsored by your employer, so in this way an HSA is more like an IRA rather than your employer’s 401(k), but with better tax benefits than both of those retirement accounts. As Jim indicates you can even use your HSA funds for non-health related expenses penalty free once you turn 65. You simply pay ordinary income tax on the withdrawals, the same you would on those traditional retirement programs.Also as introduced briefly, you can use HSA funds to pay for prior healthcare related expenses, provided the HSA had been established at the time the expense was incurred. For instance, and keeping with the FSA example above, suppose you incur a $1,200 medical expense early in the plan year and are only depositing $100 a month into your HSA. You can wait until the end of the year to withdraw the funds and pay yourself back, you can withdraw $100 each time that amount is deposited, or some other schedule. You could even keep your receipt and place money into the account at some future date. The combinations are endless. The funds and your own personal, tax-preferenced “IOU” never expire.Finally, and unlike FSAs, most HSA providers allow account holders to invest in the market through brokerage accounts. These give users the ability to contribute into mutual funds, often the same funds available through their 401(k) and IRA plans. For savers looking ahead to future and even long-term healthcare costs, these brokerage accounts can be a very tax efficient way to save for a meaningful portion of expected retirees expenses (see Fidelity estimate here for future medical expenses, $260,000 for 2016). As noted above, HSA funds can be used for non-healthcare related expenses with no penalty after the taxpayer reaches 65, so “over-saving” in an HSA is not an issue.Disclosure – we launched an app, HSA Coach, that helps users maintain their HSA and keep track of expenses. We include HSA education, as well as other health expense tips and advice, along with some personal calculators. These calculators help users estimate how much to contribute into their HSA, even their 401(k), based on an employer’s match policies. Available for free in the App Store and Google Play.

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.)