401K, IRA, ROTH IRA

[cmartyn 0]

I maxed out my 401K at work. I took advantage of the 15K maximum. We are maried, filing joint and make too much money to qualify for a Roth and Too much money to make an IRA contribution tax deductable. Should I even open an IRA? I mean, If I put 4K in it and it gives me no tax advantage now, will I have to pay tax on the 4K when I take it out?

Also, if we both had 401K's can we both contribute the 15K max? That doesnt seem faie since my wife is self employed, she cant have a 401K or can she?

[babybunny 2]

why dont you call JP morgan and ask the questions..

if we have to answer - you owe us 300.00 for our precious time..lol

[lak&ajm 0]

I maxed out my 401K at work. I took advantage of the 15K maximum. We are maried, filing joint and make too much money to qualify for a Roth and Too much money to make an IRA contribution tax deductable. Should I even open an IRA? I mean, If I put 4K in it and it gives me no tax advantage now, will I have to pay tax on the 4K when I take it out?

Also, if we both had 401K's can we both contribute the 15K max? That doesnt seem faie since my wife is self employed, she cant have a 401K or can she?

I am not sure on your 401k question, but I have worked with IRAs for quite some time - actually trained our bank employees on the ins and outs also for years.

You are always eligible to make a traditional IRA contribution as long as you have earned income and during that tax year and you will not attain age 70 1/2 (which I would assume is a long way off for you) during the tax year. However it does create some very crazy tax reporting times down the road.

You will not pay taxes on your out-of-pocket after tax contribution (the 4K) because you have already paid taxes on them. However the earnings will be taxable when you finally start taking distributions. And if you have made pre-tax contributions (tax-deductible) when you start taking distributions they are a mixture of pre-tax, after-tax and earnings. So you can probably now see why it can be an accountant's nightmare.

Most accountants I know do not want their customers to make these after-tax traditional IRA contributions because of the difficulties down the road. But like I said, they can be done. If you have an accountant, you may want to discuss this option with him or her.

Good luck!

Lori

[Garfield fan 0]

This is info that I got from a financial advisor in our credit union: 401K is gained through employment, so your wife cannot have a 401K, but she can do IRA (which is basically the same as 401K, but you can do it yourself). Better double check with your accountant or financial advisor to be sure.

[cmartyn 0]

Ifigured it out :-) She can have an SEP IRA or a SELF 401K.. which is very cool for anyone doing work onthe side. With the SEP IRA she can contribute up to 25% of hear income. And The self 401K she can contribute 15% of her income up to 15K and then, as her own employer, contribute another 25% up to 44K (approx) so thats a hell of a self match. Thanks everybody!

[pj1959us 0]

Hey, thanks for pointing this out...since David is branching out on his own, it's very interesting and something I doubt I would have considered.