Today TaxMama hears from Joe in Texas with this question. “Is it legal to add to your 401K after you retire and you are not working? Suppose you earn money at post retirement employment?”
Your 401(k) is related to your job and your employer. You may only contribute to it as long as you are employed by that employer, or being paid certain final checks related to your employment. You may not contribute to it on your own. You cannot contribute to your previous employer’s plan, based on income you have from a new employer. They would have to set up their own plan.
However, you can roll over the contents of the 401(k) plan to an IRA. If you really, really want to, you can add contributions to that IRA. I wouldn’t advise it, though. There are a variety of benefits to keeping that money separate and not mingling it with other IRA contributions. One of them is protection from creditors.
If you really want to contribute money to retirement accounts, make contributions to IRAs or Roth-IRAs.
Of course, you can always start your own business and contribute part of the profits, or your wages, to a solo-401(k) or SEP-IRA, or… that you establish for your business.
And remember, you can find answers to all kinds of questions about retirement plans and other tax issues, free. Where? Where else? At TaxMama.com[Note: If you were subscribed to the e-mailed TaxQuips, you’d be getting other exciting news and tips by e-mail, that never appear on the site. Please click on the subscribe link and join us.]
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