- quote -

person from making a contribution to a regular IRA.

But in the case of the person asked about, they would not be able to deduct the
contribtuion. But they can still make the maximum contribution.

YOUR SIBLING EARNS TOO MUCH (I'M ASSUMING SHE'S SINGLE} TO MAKE
CONTRIBUTIONS TO EITHER A TRADITIONAL OR A ROTH IRA

Robert Kim wrote:
- quote -

On Fri, 13 Feb 2004, Tad Borek wrote:

- quote -


Thanks, Tad. From your post, a Recovery IRA seems to have nothing to so
with what I seek so I'm guessing the person who suggested it in the
RichDad forum doesn't know too much about IRA's. I originally asked if
it would be worth contributing to an IRA with a salary over $200,000 a
year and, if not, where would it be worthwhile to do so with retirement
savings and get tax benefits but the Recovery IRA seems to only deal with
IRA losses, which isn't relevant to my question.

I appreciate your clarification of this.

Bob

Rich Carreiro wrote:

- quote -

Oh ya, there's THAT! =)

I think this is most likely with Roths where it's all post-tax money.
Otherwise there seems to be a baby-bathwater kind of problem.

-Tad

- quote -

The biggest "if" of all being that your IRA could suffer a 100% loss,
but there will be no deduction unless you've made non-deductible
contribution.

The loss deduction is that if you've closed *all* of your traditional
IRA accounts and the total amount of money withdrawn is less than the
total amount of non-deductible contributions made, you get a misc
deduction of the difference between non-ded contributions made and
funds withdrawn. So obviously the maximum possible deductible loss
would be the total of your non-deductible contributions made,
regardless of how much money you actually lose in your IRA accounts.

--
Rich Carreiro rlcarr[at]animato.arlington.ma.us

Robert Kim wrote:
- quote -

Bob,
This is another topic from your OP, ya?

"IRA Recovery Plan" reeks of talking-head jargon...the tax code says
that you may be able to deduct losses from your IRA once you withdraw
all of the assets from all of your IRA accounts. Lots of "ifs"
associated with this so it's a rarely-used kind of thing. If you have an
IRA with huge losses, if you want a deduction, if the 2% floor on
miscellaneous deductions (this is one) doesn't reduce the benefit, if
early-withdrawal penalties don't outweigh, etc etc...you might consider it.

But if you have an IRA with huge losses, you probably should get some
professional advice anyway, and part of that would be assessing whether
or not it makes sense to close the IRA. The evaluation of that question
is arguably much more complex than the task of picking investments that
won't result in huge losses in your IRA.

-Tad

If her income is all w-2 income, there are several options
for tax deferred savings: Traditional IRA, Coverdell
ESA, 529 plan, Annuity, some types of life insurance
product. -- I would be happy to discuss in more detail.

If there is some self employment income there are some
other options.

TORO

"John A. Weeks III" <john[at]johnweeks.com> writes:
- quote -

That's correct. You cannot deduct it. But you're still quite
100% eligible.

- quote -

A tax-efficient mutual fund gives one a form of effective tax
deferral, inasmuch as no taxes will be due until sale. But
that makes it impossible to reallocate that money in any way
without tax consequences. In an IRA, it could be shifted to
more conservative investments as one ages. Or it could be
invested in less tax efficient investments if that's what
one is interested in in the first place (ie. dividend-paying
value stocks or corporate bonds or whatever).

Moreover, the IRA offers a variety of other protections -
it's not counted the same way for most college financial aid,
and, depending on the state, may be better protected against
creditors.

- quote -

See Cartoon Networks' fine cartoon, "IR Baboon", co-staring
"I am Weasel". Weasel is an accomplished Lawyer, astronaut, pilot,
physicist, chemist, Nobel prize winner who always ends up trying to
help the less fortunate...

And Weasel is voiced by Michael Dorn ("Worf" from Star Trek).

--
Plain Bread alone for e-mail, thanks. The rest gets trashed.
No HTML in E-Mail! -- http://www.expita.com/nomime.html
Are you posting responses that are easy for others to follow?
http://www.greenend.org.uk/rjk/2000/06/14/quoting

On Wed, 11 Feb 2004, Fred J. Tydeman wrote:

- quote -

Thank you, Fred and Ig. I didn't know about this protection thing with
IRA's.

Bob

On Wed, 11 Feb 2004, Tad Borek wrote:

- quote -

Thank you, Tad et al., for your responses. If I could toss in an idea
given to me from another forum at RichDad.com, someone said she could do
an IRA Recovery plan, whatever that is. From a Google search, it seems
that this IRA Recovery thing is only if you want to cash in a losing IRA
and deduct it from your taxes. I don't see how this would help anyone
unless you have a really bad IRA. If anyone has thoughts, please post
them. TIA.

Bob

In article <SGPWb.81717$ay1.30445[at]okepread05> , Brent D. Gardner, ChFC
<bgardner20[at]cox.net> wrote:

- quote -

My accountant tells me that you lose the ability to deduct a traditional
IRA at some income level just north of $100K. If you cannot deduct
the contributions, then what is the point? You might just as well get
a taxable mutual fund so long as it is tax efficent.

- quote -

I use the word "weasel" interchangable with "expert", and as a sign
of respect for those who are able to use their skills in a creative
manner. Please take it as the compliment that it was intended to be.

-john-

--
================================================== ==================
John A. Weeks III 952-432-2708 john[at]johnweeks.com
Newave Communications http://www.johnweeks.com
================================================== ==================

"John A. Weeks III" <john[at]johnweeks.com> wrote in message
news:110220040951054956%john[at]johnweeks.com...
- quote -

Incorrect. EVERYONE who has earned income, regardless of how much, can
contribute 100% of their earned income into an IRA, up to the annual limit.

MODERATOR: "Insurance weasel" is an ad hominem attack against an entire
industry. Are you asleep at the keyboard today?

Brent D. Gardner, ChFC
Chartered Financial Consultant
http://members.cox.net/brentdgardner1378/

"Be ever questioning. Ignorance is not bliss. It is oblivion. You don't go
to heaven if you die dumb. Become better informed. Learn from other's
mistakes. You could not live long enough to make them all yourself." - Hyman
George Rickover (1900-86), Admiral, US Navy, advocated development of
nuclear subs & ships

The Chartered Life Underwriter (CLU) and Chartered Financial Consultant
(ChFC), designations owned and exclusively offered by The American College,
signify the highest standards of academic study and professional excellence
in the financial services industry.

In article <402AC6DD.5E85F044[at]tybor.com> , Fred J. Tydeman wrote:
- quote -

Thanks, I found one article:

http://www.mosessinger.com/resources/protecting.shtml

i

Ignoramus18995 wrote:
- quote -

Another place to look:

http://www.mosessinger.com/resources/

There is an article on insurance+annuities, and another
article on pensions+IRAs. Both have tables that show
protection on state by state basis.
---
Fred J. Tydeman Tydeman Consulting
tydeman[at]tybor.com Programming, testing, numerics
+1 (775) 287-5904 Vice-chair of J11 (ANSI "C")
Sample C99+FPCE tests: ftp://jump.net/pub/tybor/
Savers sleep well, investors eat well, spenders work forever.

HW "Skip" Weldon wrote:
- quote -

To add to Skip's comments...there isn't a straight yes/no answer on this
because it depends in part on what you think about tax rates in the
distant future, and of course, nobody has the foggiest idea what tax
rates will be in the distant future.

Right now the nondeductible IRA contribution doesn't make a lot of sense
for higher-income people, because at the end of the pipe all of gains
will be taxed as ordinary income rather than long-term capital gains.
High income, if you're planning things right, eventually equates to high
net worth, and the "problem" isn't so much retirement saving, it's
having "too much money" in the IRA. This forces higher-than-desired
mandatory distributions and gives up some tax benefits when the assets
are inherited. So you pick up one tax benefit but lose some others.

Even for that type of individual, I guess there is an argument for
putting your income-generating investments into an IRA that's funded
with nondeductible contributions. Eg REITs, bonds. Similarly an annuity
could make sense for these types of assets...you do have the benefit of
tax deferral, and the income would be taxed as ordinary income anyway.
Few people think at this level of detail about where to allocate their
investment dollars, but if you want to bother, there's a potential benefit.

Of course, you might not be high-income when you take the money out of
the IRA, so maybe that future tax hit isn't a concern. And who knows if
the capital gains rates will continue to be lower? If that's repealed,
IRAs will look a lot more attractive, even for nondeductible contributions.

-Tad

In article <Pine.SOL.4.51.0402111326090.1244[at]herald.cc.purdue.edu> , Robert Kim wrote:
- quote -

She is eligible to make a contribution to a traditional IRA (I am in a
more or less the same boat as your sister). Such contributions would
not be deductible from her income tax, but even so, it is a good deal
due to tax deferral and faster compounding.

i

In article <20040211124401.00830.00000190[at]mb-m22.aol.com> , PaulMaf wrote:
- quote -

Let'r review the entire statement of Mr Weeks, in response to the
original question:

- quote -

Obviously, the question specifies either a Roth or a conventional
[traditional] IRA.

Then Mr Weeks responded:

- quote -

In response to that question, Mr. Weeks said that "She likely does not
qualify for an IRA due to having too much income".

That was an incorrect statement and nowhere did Mr Weeks limit himself
to a Roth IRA.

I corrected Mr Weeks by saying that the original poster is in fact
eligible for a traditional IRA, although the contributions would not
be tax deductible.

- quote -

i

In article <20040211124137.00830.00000189[at]mb-m22.aol.com> , PaulMaf wrote:
- quote -

let's see...

- quote -

Well, withdrawals are taxed at the time of withdrawal, depending on
which proportion of the funds is made of deductible vs. nonseductible
contributions, and accumulated earnings. At the time when capital
gains and dividends accrue, no tax is due, which allows the money to
compound faster.

- quote -

Incorrect, they are protected from creditors completely in most
states, and they are somewhat protected in other states.

http://winke.com/hfpc/hfpc./retascr.htm

`` twenty-six states exempt all IRA assets from creditor claims and 18
states and the District of Columbia leave it up to the courts to
determine what is a reasonable amount to exempt in order to support
the retiree and dependents.''


- quote -

see above.

- quote -

Well, an IRA makes it particularly difficult to access the money, due
to penalty.

i

On Wed, 11 Feb 2004, PaulMaf wrote:

- quote -

Thank you all for your comments on this issue. I'm still not sure if the
general consensus would be for my sister to fully fund a conventional IRA
or not but now I know she is not eligible for the Roth at all.

Please keep the comments coming if you have time to post them. I'm still
learning from you all. TIA.

Bob

- quote -


- quote -

Roth IRA contribution. and he is 100% correct.

You are 4 for 4; 4 questions answered 4 wrong answers. Way to go!