- quote -

That is not the issue. The issue is can someone do it legally? And the answer
is yes, they can.

Why? is another matter altogether.

In article
<i0Nld.903978$Gx4.678775[at]bgtnsc04-news.ops.worldnet.att.net> , Elizabeth
Richardson <erichktn[at]worldnet.att.net> wrote:

- quote -

Lets say that your income is in the cut-off area for the Roth,
so you are allowed to put, for example, only $1200 into a Roth.
That would allow you to put the rest in an traditional IRA,
as I understand the rules.

-john-

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

"Jenny" cjsh2125[at]hotmail.com, you asked:

<< <I> I just had a meeting with a financial planner (free consultaion)

not sure his recommendation makes sense.

His recommendation is move my 401K contribution ($800/m) to tax managed
investment such as insurance/roth/muni. His arguemnt is that when I
distribute 401k (59 1/2 old) my tax bracket is not low as people say becuase
I don't have much tax shelters. ie) house is paid off, no child deduction.
and still pay taxes on earings in 401k. <b> He said insurance investment won't
have to pay tax on earings since I paid tax now.</b> I don't think he is
completely wrong, but does that make sense?</I> >
If that's really what he said he's really said and nothing more, then he's
really not being accurate and you need to ask him to be more specific on what
he's talking about. First, as some say, "insurance" is indeed NOT and
"investment" in the typical way one might think of and "investment" or the way
a typical investor thinks of an "investment." Like 401(k)s and IRAs,
insurance contracts can be used effectively as an investment vehicle along with
meeting other personal planning objectives. And whether or not you pay tax on
earnings from and insurance contract or not really depend on exactly how you
might use the contract and any income stream from it.

Certainly, any growth within an insurance contract would not be taxed. But
when you receive any money from an insurance contract, whether it'll be taxed
or not DEPENDS on the type of insurance contract and just how you go about
receiving that money. There ARE ways to have non-taxable growth within such
contracts AND also not have to pay any tax on an income stream. But whether or
not using insurance products in this way should be used in your case or not
really DEPENDS on the many details of your personal financial plans.

<< <I> My most investment research recommends to max on 401k FIRST, then Roth.
</I> >
I would say that this too really depends on the specifics or your situation and
planning. For most people, this would probably indeed be most appropriate.
And I would say that the 401(k) first would be only to the extent of the
employers matching. Anything beyond that amount can go elsewhere depending of
the specific numbers and objectives involved.


<< <I> I asked how he get paid. He said he is paid by mutual fund companies that
I am going to use. I told him that I would like to retire in 10 years.</I> >
Just keep in mind that how he is paid is not near as important at his ability
to get you where you want to go (like retiring in 10 years). There are many
ways to go and many people have different preferences. Some ways cost more
than others and if the higher costs don't represent a good value, then one
should look elsewhere. But one needs to be aware of the costs and values
whether it costs little or a lot so well informed decisions can be made.

<< <I> Is this common practice investing in life insurance??</I> >
Yes . . . it's very common. However, that fact doesn't mean that it's an
appropriate vehicle for you and your set of issues. One of the reasons it's
common is because life insurance can be an effective tool as PART of a great
many people's planning. The problem we see too often is that life insurance
contacts are also very often over sold with overstated benefits that are not
necessarily of much benefit to the policy owner over other methods of handling
financial issues. And we also see very often that the costs associated with
may of the benefits from life insurance contacts are too much and/or provide
little if any value. Much of it sounds good and very well may be if it's what
you're really interested in having.

Much can be accomplished through the use of a life insurance contract . . .
..even on the "investing" side. There are pro and cons depending on exactly
how you might use a life insurance contract and they ARE used in a much more
complex ways than typical "investments."

So, stand back and listen carefully to both sides of the arguments for and
against using life insurance as an investment vehicle. Try not to be swayed by
statement by either side that try to scare you away from the other. Look at
you're specific issues and numbers carefully and make intelligent informed
decisions. There's not just one way of doing anything and certainly having all
of one's eggs in one basket is not desirable either. A life insurance contract
just MIGHT work well in your comprehensive planning . . . including as PART of
your investment program. It all DEPENDS your specific details!

- quote -

Can yo describe a scenario in which you would want to do that?

Elizabeth Richardson

- quote -

However the the total contribution to both added together cannot exceed the
dollar limit set for IRA's: i.e. $3,000 or $3,500 if over age 50 for tax year
2004.

In article
<WRBld.900643$Gx4.743407[at]bgtnsc04-news.ops.worldnet.att.net> , Rodney
Lim <rglim[at]nospamworldnet.att.net> wrote:

- quote -

Rodney, it might be fun to flame someone, but in this case, you
don't have all the facts. It might very well be that the poster
in question makes too much money to contribute to a Roth. In
that event, they can do the 401K, then look at their traditional
IRA options. It might be that they can contribute, but not be
able to take a deduction for the tradtional IRA. That is why
they should take a look at all the options.

-john-

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

Go get a free consultation from a planner that gets paid by you and see if
the recommendation remains the same.

If you are getting a match on the 401k and he is telling you to ignore it,
ignore him.

"Jenny" <cjsh2125[at]hotmail.com> wrote in message
news:BAtld.41464$QJ3.22799[at]newssvr21.news.prodigy.com...
- quote -

- quote -

John, I agree with your advice on this, but I don't think you can contribute
to both a Roth and a Traditional IRA in the same year. Maybe you didn't mean
that.

Elizabeth Richardson

John A. Weeks III wrote:
- quote -

This is a prime example of the potential danger in asking for free
advice on financial planning in a forum like this. You get what you pay
for. Most pundits let alone actual experts would NOT agree with this
advice. If you have maxxed a Roth IRA, you cannot then max out a
traditional IRA because once you have maxed out any IRA with respect to
annual contribution, you cannot contribute any more money into ANY IRA's
for that tax year (rollovers and transfers of qualified money into
existing IRA's of course do not count against the annual limit).


Few people max out all of these options. Once
- quote -

"Jenny" <cjsh2125[at]hotmail.com> writes:

- quote -

I don't think insurance is an investment. But I think what your
planner said about a Roth or tax-managed account may make sense. Tax
rates are at a historical low right now and I'm guessing taxes are
more likely to go up again than down by the time I retire. Plus
growth as well as principal in a 401(k) or traditional IRA will be
taxed at the ordinary income rate when you withdraw, not the lower
capital gains rate. Personally, I'm putting most of my investment
money in a taxable account now, have cut back my 401(k) contributions
only to the limit of the employer match, and I'm planning to do a Roth
conversion on my traditional IRA and 401(k) plan from a previous
employer next year. (Looks like I'm going to make too much money to
do it this year.) My taxable investment account is mostly equity
mutual funds picked with an eye towards tax-efficiency plus a smaller
stake in muni bonds.

-Sandra the cynic

In article <BAtld.41464$QJ3.22799[at]newssvr21.news.prodigy.com> , Jenny
<cjsh2125[at]hotmail.com> wrote:

- quote -

No. Insurance is not an investment. It is insurance. And the
type of insurance that this guy is selling is both expensive and
a very, very poor investment.

Most pundits agree that you should invest in the 401K to the
point where you max out any match you might have. Then do the
Roth. Then max out the rest of your 401K. Then look at the
traditional IRA. Few people max out all of these options. Once
you do max them out, then muni's and tax efficient funds start
to make a lot of sense.

-john-

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

- quote -

Unfortunately, too common.

I just had a meeting with a financial planner (free consultaion)

not sure his recommendation makes sense.

His recommendation is move my 401K contribution ($800/m) to tax managed
investment such as insurance/roth/muni. His arguemnt is that when I
distribute 401k (59 1/2 old) my tax bracket is not low as people say becuase
I don't have much tax shelters. ie) house is paid off, no child deduction.
and still pay taxes on earings in 401k. He said insurance investment won't
have to pay tax on earings since I paid tax now. I don't think he is
completely wrong, but does that make sense? My most investment research
recommends to max on 401k FIRST, then Roth. I asked how he get paid. He said
he is paid by mutual fund companies that I am going to use. I told him that
I would like to retire in 10 years.

Is this common practice investing in life insurance??

thanks