How Syngenta Employees can Increase Their Tax-Free Investments When They Can’t Contribute to a Roth IRA

So you've maxed out the Syngenta Investment Savings Plan (ISP) but you can still save more. What's the next best account to save to? If you are a high earner, you probably earn too much to contribute to a Traditional IRA, Spousal IRA or Roth IRA. Another great option is Syngenta’s Deferred Compensation Plan but it’s not available to everyone.

For individuals earning too much money to contribute to a Roth IRA, the following strategy provides a way around those rules. Syngenta employees can make after-tax contributions to the ISP regardless of income. The after-tax contribution doesn't reduce your income but the money grows tax-deferred. When you become eligible to roll money out of your ISP, this after-tax portion can go into a Roth IRA. At that point, the money will grow tax-free assuming you meet the distribution requirements for the Roth IRA.

Keep in mind, the after-tax money grows tax-deferred until it’s in the Roth IRA. Therefore, it is advantageous to roll the after-tax dollars into a Roth IRA as soon as possible. This maximizes the tax-free growth by starting it earlier. Most people assume they will have to retire before they can complete this process. Fortunately, Syngenta allows a non-hardship in service rollover when employees reach age 59 ½. This allows you to roll over the ISP money into an IRA and Roth IRA while employed at Syngenta. If you plan on retiring at 67, the non-hardship rollover can provide an extra 7 years of tax-free growth.

This strategy is more complicated than contributing to a brokerage account but it helps maximize your tax savings. If you invest in a brokerage account, you will have to deal with ongoing dividend, capital gains and ordinary income tax. Depending on where you live and your income, you could also pay state income tax and the 3.8% Net Investment Income Tax (NIIT).

With all that being said, I have yet to meet someone that wants to pay more tax than they need to. If you are accumulating excess savings in a bank or brokerage account, you should look into making after-tax ISP contributions. If you need some extra support or guidance in finding what strategy is best for you, feel free to reach out here. I will try to get you pointed in the right direction.