- quote -

Good point, Gene. It is important to note, that while no one can truly
predict the future, it is also important to note that we have no idea what
$3300 per month would buy 40 years from now. I think we can safely say,
though, that it will purchase far less then than now. I hope the OP will be
able to make the additional contributions.

Elizabeth Richardson

<cintreon[at]universaltelecom.com> wrote in message
news:1102714774.476819.249280[at]f14g2000cwb.googlegroups.com...
- quote -

You may have misunderstood how the SIMPLE IRA works. You get to defer a
percentage of your salary AND the employer matches 3%. The $1,200 you
reference is the maximum amount of your employer's contribution but has
nothing to do with how much YOU can defer. For 2005 I believe you can defer
up to $10,000 from your salary.

Also, keep in mind that the employer's 3% match is the MAXIMUM they will put
in for you. BUT it can be much lower. The actual match is the LESSER of 3%
of your compensation on the amount you defer. So if you defer $1,200 or
more the employer will put in $1,200. If you defer less than $1,200 the
employer will match what you put in. I would recommend that as soon as you
can you defer at least $1,200 to get the most from your employer. You
should however defer as much as you can.

At your age - 25 - and assuming a retirement age of 67 - $100 per month from
you AND $100 per month from your employer, accumulating at a minimum rate of
7% (which can be gotten guaranteed long term) would result in more than
$600,000 for you to draw against in retirement - this would amount to
approximately $3,300 in monthly income for the rest of your life. By
deferring $210 and having your employer match $120 each month you would
easily have over $1,000,000 or $7,200 per month for the rest of your life.
Amazing what an extra $130 will do for a person your age, isn't it!

Gene E. Utterback, EA

cintreon[at]universaltelecom.com wrote:
- quote -

Yes, you can contribute to both a SIMPLE IRA and a Roth IRA in the same
tax year. Despite the name a SIMPLE IRA is considered an employer
retirement plan, comparable to a 401k, and so doesn't affect your
ability to make a Roth IRA contribution. You can make the full Roth IRA
contribution allowed by law, which in 2005 is $4,000, as long as you
have that much income ($3k for 2004, and you can make that contribution
as late as April 15 2005).

If you were adding the $1200/year to a Traditional IRA instead, then it
would reduce the amount you could put in a Roth. Also, the deductibility
of the Trad-IRA contribution would be reduced because of the SIMPLE
plan. But you said Roth, so ignore this paragraph!

-Tad

I am 25 years old and I have been with my company for nearly a year. I
have yet to start saving for retirement and will start in January. The
company that I work for offers a SIMPLE IRA with 3% match, but that
will not be offered for another year. Since I make $40,000 per year,
that comes to $1200.00 per year, or exactly $100.00 per month. Is it
possible for me to open a ROTH IRA in Janurary and max out the
contribution every year and still be able to utilize the SIMPLE IRA? I
will probably only contribute the $100.00 per month to the SIMPLE IRA
to maximize the contribution and then focus on the ROTH IRA. My max
contribution for 2006 to the ROTH IRA will be $4000.00, So Can I still
throw $1200.00 with $1200.00 matched in 2006 to the SIMPLE IRA? Any
help will be greatly appreciated.

Thanks