"Bucky" <uw_badgers[at]email.com> writes:
- quote -

I used to think that, but came aroudn to believing in maxing
out he conventiona IRA even if it's non-deductible. The
earnings grow tax deferred and there are still other advantages
to it - IRA money, whether it was deductible when put in or
not - is a good thing. It's not counted towards financial aid
for your kids for college and it's protected somewhat from
creditors and/ro bankruptcy or lawsuits if it comes to that.
It's not like one can put all that much in, anyway - it's
only up to $4000 for 2006. So if our OP has, as he said,
some tens of thousands of dollars to put away for long term
savings, I'd say, sure, pop in the $4000 anyway, deductible
or not.

After that, yeah - well managed tax-efficient investments
in taxable accounts makes excellent sense. And that
does not mean only index funds, though they are, in this
area, relatively a no-brainer. However, many actively
managed funds, especially those run by a manager who has
a lot of his own money invested (and therefore has to
deal with the consequences of tax-inefficiency himself)
are quite good in this regard.

One final thing to think about (and I'm *not* recommending
it, but I was recently looking into it) is that there
are a couple of very low-cost VAs out there now. Sure,
it's an insurance contract, but if one gets a no-frills
VA which minimizes the insurance options, they are availble
wich annuity fees as little as 25 bp and with no surrender
charge. Note that most VAs have things like guaranteed
minimum death benefits and such and the industry average
fee (including that benefit) is more like 150 bp - I
am *not* talking about these latter, expensive types.

That all said, our OP seems to have a goodly bit of
available cash and really needs to do some self
educating. Do *not* do anything rash - do *not* tie yourself
to anything expensive or long-term until you nderstand
it and why it may make sense. If you do not understand
it, do *not* buy it. While figuring out what to do,
there's nothing wrong with sitting on cash (or other
taxable investments) in the meantime.


--
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

Any reason you cannot roll over the 401(k)s from former
employers to
traditional IRAs, to give you more control over the assets
in them? Then possibly convert (per tax law) the traditional
IRAs to Roth IRAs, to the extent you see that as
advantageous. Use money /outside/ the IRA account to pay the
conversion taxes. Convert only as much as will keep you out
of the next tax bracket. Plenty of calculators are on the
web to help. That should consume, in a healthy way, a chunk
of this money you want to put away for a rainy day.

- quote -

You are in an enviable position. If I were you, I would do some research on
financial planners in your area. Take your time, because this is a long-term
project and you want the best available to you and that you can afford. Your
income is likely to grow and your needs change over the course of the next
several years. You need someone who will be forward-looking to help you
think of what financial options your future might bring you.

Good luck,

Elizabeth Richardson

have you done an analysis for how much income to reduce to maintain
Roth eligibility? Finding a way to do this by contribuiting to 401k
type vehicles might be worthwhile. I understand you have not 401k at
present employer, does your wife? Can she contribute most of her
income to that plan?

Investing in taxable accounts is an option. This would diversify the
retirement accounts as well. Some in 401k type plans, which require
ordinary income taxes on withdraws, Roth IRAs, which are qualified tax
free withdraws, then equities and other taxable investments which are
taxed at capital gains rates. Another option might be dividend paying
stocks, dividends currently get favorable tax treatment as well.

The laddering a CD idea is a good one. I would calculate monthly and
yearly expenses, then set up CD's for this amount which mature at rate
of one CD per month. The duration of the CD (3 month, 6 month) depends
on how much time you want to invest in setting this plan up and
interest rates. I would keep 2X months bills in a savings account or
money market, in addition to the 12 CDs which mature each month. If
there is money left, consider using the leftover savings to start a
brokerage account.

zxcvbob wrote:
- quote -

If you're talking about non-deductible traditional IRAs, then yes. But
if you're talking about deductible traditional IRAs, then no. Sure, the
withdrawals are taxes as ordinary income, but the contributions are
before tax. So if you're tax bracket is 25%, the total tax you're
paying is 25% for deductible IRA. Compare that with a non-retirement
account. You get taxed 25% up front, then 15% more for any capital
gains. The OP may still be eligible for deductible IRA if their AGI is
< $150-160K.
http://personal.fidelity.com/product...aboutira.shtml

- quote -

CD ladders are a good idea. But if you are getting 10x the interest
from a CD than a money market acct, then you need to change money
market accounts. The traditional brick and mortar banks are screwing
customers big time. Most high yield money markets are around 4% now
(Vanguard, Fidelity, Emigrant Direct, HSBC Direct, etc.)

jeffbo44[at]yahoo.com wrote:
- quote -

If you believe in index funds, you can buy SPY or DIA or QQQQ in a
taxable account at a discount broker and let them grow tax differed for
*years*, then when you eventually sell them you only pay long-term
capital gains tax. Meanwhile, all you pay tax on is the dividends.
This is a better deal than a conventional IRA because non-Roth IRA
withdraws are taxed as ordinary income. Just make sure you are buying
enough shares at a time that the commissions don't eat up a big chunk of
your investment. If you don't like index funds, you can still invest in
a taxible brokerage account.

- quote -

I did that a few years ago, and now I'm investing the cash that
freed-up every month. If I lose my job, I don't *have* to make monthly
investments, but I used to have to make monthly mortgage payments
whether I had income or not. I like the additional freedom of not
having *any* minimum monthly payments.

- quote -

Buy three 3 month CD's such that one of them matures each month and
rolls over to a new CD. If you can drag out any emergency bills for 2
months instead of 1, you can use 6 month CD's. Short CD's will give you
almost 10x the interest rate of a money market account, and if you want
you can add additional funds or make a withdrawl wihout penalty whenever
they roll over.

Best regards,
Bob

In article <1137797682.275109.249010[at]g44g2000cwa.googlegroups.com> ,
"jeffbo44[at]yahoo.com" <jeffbo44[at]yahoo.com> wrote:

- quote -

I don't think that is going to work. The retirement plans
that I am familiar with require the company to have profits.
If a shell company would qualify, we would be seeing zillions
of ads for them as an easy tax dodge.

- quote -

Be thankful that you have the good fortune to be able to pay
taxes. Beyond that, look for tax efficient investments, like
index funds, or tax free investments such as munis.

- quote -

That depends on your outlook. If you have a reasonable mortgage
under 7%, that is relatively cheap money. The stock market has
done a little better than 11% over time. Why give up 5% money
when you can invest it? Maybe you cannot beat the 5% today, but
over time, you should be able to much better in the market.

- quote -

Invest it. It is better to use a credit card for rainy day.
That way, you don't have funds losing money every day (compared
to inflation) in a low return fixed rate account.

-john-

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

jeffbo44[at]yahoo.com wrote:
- quote -

You can invest in the stock market with an ordinary account. If you're
a moderately good stock picker, you will have long term gains that are
taxed at a lower rate than your earned income. You can optimize your
income by appropriate timing of your sales and purchases and by using
options.

- quote -

Yes, that is a good bet with respect to safety and taxes.

- quote -

You won't need as much of a rainy day fund, because stocks are a liquid
investment. By investing in ten to thirty companies, you should have
some stocks that will be near your preferred selling price.

--
Ron

I have searched all over the place and I still can't seem to find some
good answers as to how to handle my situation so here I am.

I am 28 years old and my wife is 31.
My income = $150k / year (gross)
Wife's Income = $15k / year (gross))
We have about $50k in various retirement accounts.
We have about $50k in checking/moneymarket.
Our only debt is our home mortgage $110k owed on a 30 year fixed rate
6.5%
We have the following retirement plans/IRA's
(2) 401k's from my former employers
(1) Simple IRA from me former employer
(2) roth IRA's (1 each obviously)

Our goal is to save about $70k per year going forward but we're not
sure how to do it since,
1) we are now beyond the Roth limits
2) my new employer doesn't have a retirement plan
3) house will be paid off shortly

My only idea is for my wife and I to (each?) form a company (LLC, etc.)
and use that to create a retirement plan (which one though? Simple,
SEP, Keogh?) for each of us that we can fund as much as possible and
hopefully still be able to get some tax benefits.

But what do we do with our money beyond the maximum contribution
limits?
Is paying off the house a good bet or is there something else I'm
missing?
And by the way, what should we do with our "rainy day" money that's
currently in a money market? I'm sure that's not the most efficient.

Thanks a lot.