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For some years now, I've been contributing the maximum amount to my personal IRA ($5,500 in 2015) and my 401k ($18,000 in 2015). This, plus employer match, means I am saving about $30,000 per year in a tax-advantaged account.

Now I am considering switching jobs, but they don't have a 401k plan. Do I have any options other than just a standard investment account with 15% capital gains tax? Would it help if I set up self-employment and contracted myself?

marked as duplicate by Victor, Dheer, Nathan L, dg99, JoeTaxpayer united-states Nov 6 '15 at 22:33

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  • I think you can afford a tax specialist. Best to ask a professional than get advice from the Internet, if you can afford it. – Jack Swayze Sr Nov 4 '15 at 20:04
  • You don't have the equivalent of a personal pension in the USA? – Pepone Nov 4 '15 at 21:06
  • @Pepone I had never heard of that, but apparently we do. It requires self-employment though, in which case I would have simpler options. – default.kramer Nov 4 '15 at 21:46
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    If you're on salary rather than genuinely on contract, the IRS takes a very dim view of attempting to call yourself a contractor. – keshlam Nov 4 '15 at 22:33
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    You are pretty much out of tax-advantaged options as far as I know since you are maxing out your IRA. As @user662852 said, a brokerage does give you some control. If you follow the indexing school, you can try a service like Betterment or Wealthfront that has tax-loss harvesting and intelligent portfolio balancing. I give the edge to Betterment personally due to the fractional shares, but both have their supporters. – Alex Kuhl Nov 5 '15 at 1:03
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It may not be an ideal option, but you could use an HSA as a tax-sheltered investment vehicle.

The contribution limit is only $3,350 for an individual and $6,650 for a family in 2015 (plus $1K if you're 55+), so you're only making up a small portion of the 401(k) limit. Also, you (and a family member to get the higher contribution limit) have to be covered by a qualifying high-deductible health insurance plan (HDHP) to be eligible to make HSA contributions. As such, it may not be the best option if you regularly incur significant medical expenses. And in many cases, the investment fees in an HSA are higher than you would find in a 401(k) or IRA. The investment choices can be limited, so it is important to research the options before selecting a provider.

All that being said, the contributions and growth are both tax-deferred (tax-free if you use it for healthcare). Then at age 65 or Medicare eligibility you can withdraw the funds without penalty and pay only income tax, even if they are not used toward healthcare expenses.

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Post-tax (i.e. non-retirement account) investing is nothing to ignore. You don't mention a spouse, so for a start, you still have the $5500 to put in an IRA.

The remaining investment funds will earn dividends, if any, at a tax preferred rate, and then the gain on sale will be taxed at 15% if the code doesn't change again. The gains accumulate tax deferred, and you control the timing of the sale. With a 401(k) all withdrawal are taxable as income. In your case, just the gain is taxed at a potential long term cap gain rate. Hopefully the new job pays more than the old one and the loss of 401(k) is compensated.

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Fidelity recently had an article on their website about deferred annuities (variable and fixed) that don't have the contribution limitations of an IRA, are a tax-deferred investment, and can be turned into a future income stream. I just started investigating this for myself.

DISCLAIMER: I'm not a financial professional, and would suggest that you consult with a fee-only planner and tax advisor before making any decision.

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