I'm 28 years old and currently a 1099 self-employed contractor at my job, and have been for 2+ years now. I make about $70k a year before taxes. I'm hoping to eventually get hired on full-time and know the company I work for would match my 401k. I've been looking into IRA options in an effort to prepare for retirement, but I'm not sure if an IRA would be redundant once I have a 401k through my employer. So my questions are:

  1. Should I go ahead and open an IRA now, or should I wait out my employer until I'm hired full-time and have access to their 401k matching? Or...
  2. Should I look into a solo 401k, and, if so, what are the tax benefits (if any) of opening one?

Thanks in advance!

3 Answers 3


You are in the perfect window for making an IRA contribution. The IRS allows you to make IRA contributions for last year until tax day. So you know that for 2014 you didn't have access to a 401K at work. You want to avoid making a deductible IRA contribution for this year (2015) until you are sure that you wont have a 401K at work this year.

Take your time and decide if the detectible IRA or the Roth works best for your situation. Having a IRA now will be good becasue you have many years for it to grow. Keep in mind that it is not unusual to have multiple retirement accounts: Current 401K; rolled over into a IRA; Roth IRA... Each has different rules, limits, and benefits. There is no reason to pick one way of investing for retirement becasue you never know if the next employer will have the type of plan you like.

I am assuming that your spouse, if you are married, doesn't have access to a 401K; otherwise you would have to consider the applicable limits.


Yes for sure. It would be redundant. I have three of them, so what. Its just more money in retirement. I would prefer a ROTH IRA in your tax bracket and you next employer may not offer that.

And yes there are tax breaks either putting money in to a IRA or if you go the Roth route, on the way out.

So if you put money in a Roth now you will have some money at your tax rate in 40 years from now. And if you put money in a traditional IRA when you are an employee you will save on the tax rate you are at then. So you are hedging you bets on tax rates by paying them in two different decade. Personally we are probably all on a tax holiday right now and I would be that taxes will be higher in the future as they are historically pretty low right now.


I would definitely recommend contributing to an IRA. You don't know for sure you'll get hired full-time and be eligible for the 401(k) with match, so you should save for retirement on your own. I would recommend Roth over Traditional IRA in your situation, because let's say you do get hired full-time. Since the company offers a retirement plan, your 2015 Traditional IRA contribution would no longer be deductible at your income level (assuming you're single), and non-deductible Traditional IRAs aren't a very good deal (see here and here). If there's a decent chance you would get hired, this factor would override the pre-tax versus post-tax debate for me. At your income level you could go either way on that anyway.

A Solo 401(k) would be worth looking into if you wanted to increase your contribution limit beyond what IRAs offer, but given that it sounds like you're just starting out saving for retirement, and you may be eligible for a 401(k) soon, it's probably overkill at this point.

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