On 2006-02-12 16:36:45 -0500, "MichaelC" <mikecraney[at]sbcglobal.net> said:

- quote -

There are no immediate tax benefits to a Roth. You contribute *post*-tax
dollars to it. The tax benefit comes much much later, when you take
the money back out of it.

If you make too much to contribute to a Roth, and you have a 401k,
you can still contribute to a *traditional* IRA, but you will not
be able to deduct those contributions from your income. That means
that those regular IRA contributions are also *post* tax - but they
still have some tax advantages much much later when they've grown
tax-deferred and you pay income taxes only on the growth (you track
your IRA's "basis" year-to-year if you make non-deductible contributions
to one).

Generally, the only time one would make non-deductible traditional IRA
contributions is if one has already maxed out his 401k and does not
qualify to contribute to a Roth.

See the thread several days ago where a couple of us walked through
the numbers on several theoretical situations - taxable, IRA, Roth IRA
and 401ks.

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<screenaccount[at]gmail.com> wrote in message
news:1139765356.705640.305930[at]z14g2000cwz.googlegroups.com...
- quote -

A Roth that doesn't have tax benefits is just like any other non-qualifying
account, since the tax benefits are on the back end.

Mike

- quote -

Oh. I hadn't thought about it -- it's only become an issue the last few
months. I guess I figured that I could still contribute to the Roth
that I have, but come tax time, I just wouldn't be able to claim any
tax benefits from it. No?

Mike

MichaelC wrote:
- quote -

He can make non-deductible contributions to a traditional IRA. 401(k)
contributions are a better deal, since they are pre-tax (up to the
$15,000 annual limit).

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<screenaccount[at]gmail.com> wrote in message
news:1139683082.929932.187090[at]g43g2000cwa.googlegroups.com...
- quote -

How is it that you don't qualify for Roth but can contribute to an IRA? (You
likely don't qualify for either).

- quote -

IRA. More choices.
- quote -

If you can get cash into the IRA, you'll be able to leverage energy and
emerging markets.

Mike


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- quote -

Oops -- meant "ETF"...

Thanks much for the advice on the other points.

Mike

1) I think you're correct

2) If the IRA from your previous company is invested in their stock,
and amounts to very much money, get out of it, it's too much exposure -
roll it over into an IRA you control. You may want to roll it anyway
so your company is not involved, I would.

3) EFT - electronic funds transfer ?

Hi, all. I'm 35 and have been contributing to a retirement plan for the
past few years, starting right after I got out of grad school and got a
real job. My focus for the past couple of years has been to contribute
to my company 401k plan only to the extent that the company will match
my contributions. I then put the rest of my leftover money in a Roth
IRA (a Vanguard Total Retirement Fund).

I just recently switched to a new job that pays a lot more but is in a
much higher cost-of-living area -- so there's no way I can max out
either my 401k or my IRA, let alone both. From what I've read, I'm over
the income limit for claiming tax benefits from Roth IRAs, so I was
thinking of putting the majority of what I can into the 401k (a
Fidelity Freedom Fund), which does give me tax benefits, and the
leftover into the IRA. (The Freedom Fund "primarily invests
approximately 70% in domestic equity funds, 15% in international equity
funds, 5% in investment grade fixed income funds and 10% in high yield
fixed income funds.")

I had a couple of questions, though:

1) Given that I can't max out either, and that (if I'm correct) only
the 401k provides me any tax benefits, should I just forget about the
IRA and sink everything into the 401k? If it makes any difference, my
IRA is almost at the $10k mark, at which point Vanguard will stop
charging annual fees.

2) I still have money in the 401k from my previous company. Is it
generally advisable to roll that over into my new 401k or into my IRA?

3) I'd kind of like to invest in things such as the energy and
international markets. Should I not worry about playing around in such
markets until I'm able to max out my retirement plans, or is it "ok" to
divert some of my 401k investments in the Fidelity Freedom Fund to
funds in those specific markets (still in the 401k plan, though)? For
example, people have mentioned EFTs, which I still need to investigate.

Thanks in advance for any help,
Mike