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Bill, Enrolled Agent
Category: Tax
Satisfied Customers: 3153
Experience:  EA, CEBS - 35 years experience providing financial advice
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My company doesnt have a 401k. So I save $5,000 in a Roth

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My company doesn't have a 401k. So I save $5,000 in a Roth account (I am 48 yrs old and make $55,500 a year. Is the $5k all I can save in a retirement account? I won't be able to retire on that amount (need to save 15% year). I read that people with 401k's can save $16,500 a year. What about me?

Unfortunately, that is all you can save if you are not self-employed or a business owner. A 401(k) can only be established for a business by a business owner. Individual employees cannot establish any other type of plan. An alternate to a 401(k) for small businesses (100 employees or less) is a SIMPLE IRA program that permits employees to save up to $11,500. These plans are attractive to small businesses due to their simplicity and minimum administrative costs. Perhaps your employer would consider one of these plans if it has less than 100 employees.


Another alternative for you might be a fixed or variable annuity. There is no limit on the amount you can invest and the earnings grow tax-deferred.

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