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#5
03-17-2006, 12:38 AM
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 Re: Using Savings to fund a SIMPLE IRA nickravo wrote: - quote - > That's it. If figure if it's a long-term hold in the IRA you'll come
You'd have to be investing in a pretty tax-inefficient manner in your> out ahead, no? No IRA rule? taxable account to make the IRA come out ahead in this example. -Will |
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#4
03-15-2006, 09:15 AM
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| Re: Using Savings to fund a SIMPLE IRA That's it. If figure if it's a long-term hold in the IRA you'll come out ahead, no? No IRA rule? |
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#3
03-14-2006, 05:23 PM
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| Re: Using Savings to fund a SIMPLE IRA "nickravo" <nickravo[at]gmail.com> writes: - quote - > Could I just employ my wife as a factchecker, cons8ultant or something,
You'll have to pay FICA/self-employment taxes, for starters.> pay her 10k from my taxable savings account and the she would put in in > a tax-deferred IRA? Caveats? I am assuming this is a problem, but maybe > not, who knows? -- Rich Carreiro rlcarr[at]animato.arlington.ma.us |
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#2
03-14-2006, 04:32 PM
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| Re: Using Savings to fund a SIMPLE IRA Could I just employ my wife as a factchecker, cons8ultant or something, pay her 10k from my taxable savings account and the she would put in in a tax-deferred IRA? Caveats? I am assuming this is a problem, but maybe not, who knows? |
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#1
03-13-2006, 09:01 AM
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| Re: Using Savings to fund a SIMPLE IRA "nickravo" <nickravo[at]gmail.com> wrote in message news:1142169787.473625.213380[at]p10g2000cwp.googlegroups.com... - quote - > We can put $7k a year in profits from sidleine work into a SIMPLE IRA, > I understand. Does it make sense to take money out of a taxable mutual > fund/bank account and put it in a tax-deferred account. Sure I get the > tax deferred growth, but I'm paying future taxes on more money, right? > What's the math on this? 7K was the limit back in 2002. The limit is (as of 2005) 10K. |
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03-13-2006, 01:19 AM
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| Re: Using Savings to fund a SIMPLE IRA nickravo wrote: - quote - > We can put $7k a year in profits from sidleine work into a SIMPLE IRA,
You're right that there is a trade-off here. If the assets you invest> I understand. Does it make sense to take money out of a taxable mutual > fund/bank account and put it in a tax-deferred account. Sure I get the > tax deferred growth, but I'm paying future taxes on more money, right? > What's the math on this? in are tax efficient and/or your time horizon is short, it is possible to do better after taxes outside of a tax-deferred account. This is because you convert capital gains taxes into income taxes. It depends on many factors including what you invest in (or more accurately, the tax efficiency of what you invest in), your time horizon, your marginal tax rate in retirement (which is a true unknown), your rate of return, and the deductibilty of your current IRA contributions (and then your current marginal tax rate, and your choices for investing the tax savings). In general, longer time before withdrawal, higher rates of return, higher current tax rates, lower retirement tax rates, and lower tax efficiency of investments all favor the IRA. For long time horizons, you'll have to be pretty darn tax efficent to beat the IRA in a taxable account (or expect to have a really high retirement tax rate). This is all really academic, though. If you have the opportunity to invest in an IRA, why not put additional funds in instead of moving already saved funds between accounts? This will make a vastly greater difference to your nest egg than just shuffling money around. -Will |
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#-1
03-12-2006, 12:33 PM
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| Using Savings to fund a SIMPLE IRA We can put $7k a year in profits from sidleine work into a SIMPLE IRA, I understand. Does it make sense to take money out of a taxable mutual fund/bank account and put it in a tax-deferred account. Sure I get the tax deferred growth, but I'm paying future taxes on more money, right? What's the math on this? |
| Tags |
| fund, ira, savings, simple |
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