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I am around 33 years old and have only 401 K Account.My employer doesn't participate in my 401K Contribution. Since June, I am contributing 20% of my 401K.

I don't have IRA Account. I live by myself. Which IRA Account would be ideal for me to contribute 5% of my Pay Check?

My purpose of having an IRA Account will give some Tax Deduction in the year end. I live and work in NJ.

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If you specifically want to make IRA contributions to get a tax deduction, you'd need a traditional IRA account. However, even then, you won't be able to claim a tax deduction unless your adjusted gross income is less than $71k

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Also, note that you are already reducing your taxable income by contributing to your 401k (assuming it is not a Roth 401k); you won't get any additional tax benefit from the IRA that you wouldn't get by contributing more to your 401k (although you may have more choice of investments in the IRA, depending on what your 401k offers).

As JoeTaxpayer notes, a Roth IRA is worth considering too, but this will not give you a tax deduction now. (It will give you tax-free income later, when you withdraw it.)

  • Thank you, My Adjusted Gross Income is little over $71,000. I might not be eligible for Tax Deduction. How ever, I may consider Roth IRA to put 5% of my Pay Check. Thanks – goofyui Aug 16 '15 at 16:05
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The choices for you are Traditional or Roth. The traditional might offer you a tax deduction if your income is not above a certain level. The Roth offers no deduction, but grows tax-free, and then withdrawals are tax free.

Without knowing any more of your details, I'd suggest the Roth if you are in the 15% bracket, and traditional if 25% or above. I assume the 401(k) is traditional, pretax, and not the Roth flavor.

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    Thank you Joe, I will go by your suggestion.. will open a ROTH IRA Account – goofyui Aug 16 '15 at 16:06

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