Am I allowed to add to an existing 401K retirement plan to save on taxes

[kipanddaisy]

I have a 401K retirement plan.  Can I add to that to save on taxes?

[AmandaR1 · Accepted solution]

No, your 401(k) plan is through your employer.  However, you can setup your own personal retirement plan and receive credit on this year's taxes.  You can contribute to a Roth IRA or a Traditional IRA. 

A traditional IRA is the only plan that will save you tax dollars because your contributions are deductible. A Roth IRA is after tax, but you would be able to contribute for last year and this year, so you'd get the benefit of getting more money into a retirement plan. The benefit of the Roth is that when you withdraw from the plan, there's no taxes, ever, even on earnings. There's also some more flexible terms to the Roth over the Traditional IRA.

You can contact the same firm that holds your 401(k) to ask them about adding a plan. Make sure they are aware that your contributions are for last year.