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Financial Planning / Tax Strategies


Subject:  Re: IRA Strategies Date:  6/29/1999  2:47 PM
Author:  jlemmons Number:  16751 of 127549

I would contribute the maximum amount to your 403(b) first (for example 20% of your pre-tax income) before I worried about an IRA. Especially if your AGI exceeds the ceiling for deducting your IRA contribution on your tax return. I say this for 2 reasons:
1) The tax savings are greater (contributing pre-tax vs. post-tax and then not getting the deduction on your tax return)

2) You can only contribute a maximum of $2000 to an IRA a year, but with the 403(b), 20% of your salary is (most likely) more than $2000. If a 403(b) has the same rules as a 401(k), then you can contribute a maximum of $10,000 a year pre-tax.

After you max out your 403(b), if you still want to put money into an IRA, consider a Roth IRA (if your AGI doesn't exceed the limit). If you can't deduct the $2000 on your tax return, you might as well not have to pay tax on the pay-out upon retirement.
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