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Author: suckupandsave Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121572  
Subject: dba's Date: 1/25/2000 11:18 PM
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My wife and I both have full-time jobs and contribute to 401k's. We have our own business on the side that has been making more money than we anticipated, and we are concerned about the tax consequences. Are we eligible to contribute to an IRA through our business and deduct the contribution from our pre-tax dollars.

Thanks
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Author: Wiggy4 One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 26038 of 121572
Subject: Re: dba's Date: 1/25/2000 11:33 PM
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The way I understand (and I'm sure I'll be corrected if I'm wrong)it is that if you participated in a defined contribution plan or a defined benefit plan anytime during a tax year you are not eligible to participate in a traditional IRA (deductible), but you may participate in a Roth IRA (non-deductible). A SEP-IRA (IRA contributions of a business on behalf of employees) is only available to self-employeds who are not covered by any other retirement plan because it is a deductible IRA.

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Author: Bob78164 Big red star, 1000 posts Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 26045 of 121572
Subject: Re: dba's Date: 1/26/2000 1:49 AM
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Wiggy4 writes (in part):

The way I understand (and I'm sure I'll be corrected if I'm wrong)it is that if you participated in a defined contribution plan or a defined benefit plan anytime during a tax year you are not eligible to participate in a traditional IRA (deductible), but you may participate in a Roth IRA (non-deductible).

I reply:

Wrong again, I'm afraid. <hint>As discussed in the Taxes FAQ,</hint> even participants in defined contribution or defined benefit plans may make deductible IRA contributions if their AGI is sufficiently low. However, as long as you have earned income, you may always contribute to a non-deductible IRA, no matter how high your income. But if you're in this position, of course, it's much better to contribute to a Roth IRA, provided that you're not in or above the phase-out range.

I've omitted any discussion of SIMPLE IRAs because I don't know anything about them. Another great resource, though, if you haven't already discovered him, is TMFPixy on the Retirement Investing board. --Bob

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Author: UUinMN Three stars, 500 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 26141 of 121572
Subject: Re: dba's Date: 1/27/2000 9:48 AM
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If you set up a C-corp, you're allowed to contribute up to 25% of salaries to paired pension and profit-sharing plans. $30K max per year, per employee. And you can define a retirement age younger than 59 1/2, and make earlier withdrawals. You need an accountant's advice on the how-to.

Michael

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