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1) As to the IRA question - as I understand the law, if either Bill or Mary are already contributing to a 401K through their jobs - the only IRA they can sign up for is a Roth - further it appears that their combined income may put them over the top for a Roth (??)

Not true. Coverage by a retirement plan affects only the deductibility of traditional IRA contributions. Anyone under 70 1/2 with $2,000 taxable compensation can contribute $2,000 to some sort of IRA, even if it's just a nondeductible contribution to a traditional IRA.

2)I learned something new here. I've never heard of preference items. I thought AMT kicked in automatically at a certain income level. Can you pls provide examples of what these preference items are?

At a high income level standard tax rates are going to way exceed AMT rates. Preference items include some itemized deductions, capital gains, and ISO's, among other things. You'll find basic information about AMT in the instructions to Form 6251. I think there's also an article in the FAQ, but I'm not sure about that.

3) While I appreciate the need for procreation of the species - my husband and I have found that having a child basically only provides an additional exemption (not that there's anything wrong that....:) ) Because our combined household income is on par with that of Bill and Mary - we find that our childcare credit is somewhat limited - further I may be mistaken- but I think we may also be precluded from opening an educational IRA for our child. Please point me to the real tax savings you are referring to.

At a high income level you do lose most of the tax benefits of children, but my mother tells me they bring you joy in your declining years.

One note about Education IRAs. There's a loophole the size of a small Central American country in the law. Anyone who meets the AGI limits can contribute to an Ed IRA, even if the contributor has no income. You can always give the little nipper $500 and have him make the contribution, even if he's not moved to strained vegetables yet.

Phil Marti
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