Can Traditional IRA contributions be setup pre-tax each paycheck (like health insurance & 401k)? Or do you have to pay taxes like normal then get the tax benefit via deduction on year-end taxes only? Thanks for you help/

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nolesrule t1_j6e9hqc wrote on January 29, 2023 at 7:04 PM

#1,587,443

If you want less taxes withheld from pay to offset the deduction for your traditional IRA contribution, you do that by adjusting your W-4 to have less withholding.

[deleted] t1_j6e9kjg wrote on January 29, 2023 at 7:05 PM

#1,587,457

[deleted]

DeluxeXL t1_j6e9tsf wrote on January 29, 2023 at 7:06 PM

#1,587,497

Because IRA contributions are out of pocket (even if you set up direct deposit through payroll), payroll cannot treat them as pretax deductions. As far as they're concerned, it's just another bank account to deposit your paychecks**. However, this doesn't mean you can't enjoy the tax deduction now. To enjoy the tax deduction now, put the amount you plan to deduct annually on Form W-4 step 4b. This way, payroll will know to withhold less tax because your taxable income is lowered by the amount specified on step 4b.

**Strongly suggest that you do not set up direct deposit into an IRA, because any errors will cause more problems (e.g. excess contribution, reversed mistaken deposit being treated as early withdrawal).