My employer doesn't offer a 401k and it doesn't look like they will anytime soon. I already have a maxed out Roth IRA, so I would really like to do something with pre-tax dollars before I push my money into something else. Can I setup my own 401k and invest into that?

  • 1
    Do you have an emergency fund set up already outside any sort of account that would penalise you if you're withdrawing money from it? Mar 9, 2011 at 23:05
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    If you have to bite the bullet and invest outside a tax shelter, get some simple index funds with low turnover and low expense ratios. Long-term capital gains and dividend rates are better than income tax, anyway.
    – user296
    Mar 10, 2011 at 5:17
  • @Timo Yep, already have an emergency money market fund w/ six months of income in it.
    – zippy
    Mar 10, 2011 at 20:16
  • good for you! Mar 10, 2011 at 20:17
  • If you want to invest pre-tax dollars so much, you should have contributed to a Traditional IRA instead of a Roth IRA
    – user102008
    Jan 8, 2013 at 2:27

3 Answers 3


You are already doing everything you can.

If your employer does not have a 401(k) you are limited to investing in a Roth or a traditional IRA (Roth is post tax money, traditional IRA gives you a deduction so it is essentially pre tax money). The contribution limits are the same for both and contributing to either adds to the limit (so you can't duplicate).

CNN wrote an article on some other ways to save:

  1. Roth or regular IRA
  2. Insurance products (blech)
  3. Low cost investments (index funds, etfs, tax free muni bonds)
  4. Plead with your employer

One thing you may want to bring up with your employer is that they could set up a SEP-IRA. This allows them to set a % (up to 25%) that they contribute pre-tax to an IRA for everyone at the company that has worked there at least 3 years. If you are at a small company, maybe everyone with that kind of seniority would take an equivalent pay cut to get the automatic retirement contribution? (Note that a SEP-IRA has to apply to everyone equally percentage wise that has worked there for 3 years, and the employer makes the contribution, not you).

  • A SIMPLE IRA is also a possibility for your employer, but I'm not sure there's an advantage over the SEP.
    – bstpierre
    Mar 10, 2011 at 3:24

If you have kids, there are also 529 funds to consider. They aren't pre-tax, but do have tax advantages. If your employer doesn't have a 401k, chances are they don't offer Health Savings Accounts, but that is another thing to look at.

  • No kids and no HSA at work. I think the lack of a 401k is just one of the drawbacks of working for a small company. I'm giving Michael credit for the answer because it's more applicable to my situation...I'll give you an upvote though.
    – zippy
    Mar 10, 2011 at 20:17

It's not pre-tax but you can consider some short term municipal bonds. The interest is tax free. I would keep to short term ones (1 year maturity), so that you aren't affected by big swings in interest rates and can get your money back within a year.

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