I'm currently working in a contract position with no option to contribute to a 401k. For 2019, the contribution limit on a 401k is 19,000 vs 6000 on an IRA. Why is there such a big difference? I could understand if you were contributing to both. If you only can contribute to one or the other why can't the limits be more equal?
2People do contribute to both.– Ben VoigtFeb 13, 2019 at 16:07
1Do you have the ability to a 1099 contract? If so, you can really sock money away. A contractor making 40/hr below age 50 can put away about 34K/year. If they are above 50, add another 6k to that.– Pete B.Feb 13, 2019 at 17:01
@PeteB.Unfortunately the only option was W2 for this position. If on 1099, what type of account can you put away that much in?– RichFeb 13, 2019 at 18:03
3Wow, so lack of employee benefits and lack of self-employment benefits (20% pass-through deduction, SEP-IRA/solo 401k). Kind of a bummer of a position to be in.– Hart COFeb 13, 2019 at 18:20
If you are a 1099 contract worker (self-employed), you should be eligible for a solo 401(k) which potentially has a much higher effective contribution limit because the participant is both the employer and the employee.
Edited to note: Since I posted this answer, you have clarified in the comments that you are a W-2 employee. It seems the best option is to seek a job that will allow for 401(k) contributions or allow you to work as a contractor.