Retirement planning for the W2 contractor

July 10, 2014 12:04 PM

Independent contractor, working for several recruiting firms as a W2 employee, but on a contract-by-contract basis (so my employer may change once or twice a year). Can I do pre-tax withholding for retirement if these employers don't have a 401k (of any kind)?

I've searched the green a few times (as well as the big G) on this issue, but I think the snowflake-y details skew the results in the wrong way. I am an independent contractor, working with several clients through several recruiting firms. The work I do is hourly, but I am a W2 employee of these recruiting firms (in effect, acting as an umbrella corp for me). I get my health insurance through one of these firms, but none of them offers any kind of retirement planning/withholding/accounts etc..

My question is, am I limited to solely using a Roth IRA, or is there a way for me to dictate pre-tax withholdings from my (ostensibly) full time employer, if they themselves do NOT follow a specific retirement plan?

posted by ASoze to Work & Money (2 answers total)

Best answer: If you are not covered by a pension plan at work, contributions to an IRA are deductible. Details from the IRS. More details from the IRS. Since "none of them offers any kind of retirement planning/withholding/accounts etc.," you can deduct your IRA contributions.

That doesn't mean you should; you may still want to choose a Roth. In general, the decision will depend primarily on whether you think your taxes will be higher when you take the money out; details.
posted by Mr.Know-it-some at 12:27 PM on July 10, 2014

Best answer: Check the rules for a SEP.
posted by SemiSalt at 1:04 PM on July 10, 2014