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Subject:  Re: Some advice please Date:  12/23/2004  9:59 AM
Author:  jesserivera67 Number:  43688 of 88011

Welcome Ff!

Stay at home dad eh? Awesome! Focusing on investing? Man, I envy you!

There's a ton of information out there on IRA's. Here's the link on the Fool that will get you started.

I would also peak into publication 590 on the IRS website:

This will have some detailed information on what you're looking for. To summarize some answers to your questions...

What kind of IRA's can I have?

There are multiple types of IRA's that will be explained in publication 590. Primarily there are the two types, a Roth and Traditional. Are you perhaps running a small business out of your home? If so, that opens up a SEP-IRA. Since you're the spouse and if you don't have any income you can open up a spousal IRA that will be either a Roth (Actually a Roth isn't an option for you due to your wife's income) or Traditional.

Well here's the good news. You're wife has a great income which means you have a lot of options for investing. The typical advise

1) Focus on 401k up to the company match
2) Move over to max out a Roth IRA if you are eligible
3) Go back to 401k and max it out

The last piece has gone into some question due to the fact that Long Term Capital Gains (LTCG) taxes are so low (15%) and for tax efficient investments it may make sense to just deposit those funds outside the 401k. There are pro's and con's to this (e.g.Pro: LTCG tax is 15% Con: rebalancing becomes more complicated due to tax implications).

I have a traditional IRA now, but I am limited to the amount I can put into it. How many IRA's can I have? What is the maximum amount of contributions that I can make into all IRA's?

Since you are over 50 you can put in $3500 for 2004 and I believe $4500 for 2005 (check publication 590 for this). Both your wife and you can have an IRA but do not qualify for a Roth ($160,000 max income) and your Traditional IRA will be non-deductible because of your wife's income. You still have a number of options I stated above that I would seriously explore.



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