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dganitt writes:
1. can you have a 401k and an IRA simultaneously?

You can "have" both simultaneously, but you may not be allowed to take a deduction for IRA contributions if you are covered by a 401(k) plan. There are income limits (roughly $25-35k for single and $40-50k for joint) above which you are ineligible for deductible IRA contributions if you're covered by a 401(k). See IRS Publication 590 (http://www.fedworld.gov/pub/irs-pdf/p590.pdf) for details. If you're ineligible to make deductible contributions to a traditional IRA, you may want to consider contributing to a Roth IRA. (Roth IRAs are almost always better than nondeductible traditional IRAs.)

2. Can you deposit more than the 2,000/year into an IRA? ( I assume you can, but you only get the tax break on the first 2k )

No, you cannot make more than $2000/year of total contributions to traditional and Roth IRAs. If you do, the excess contributions will be taxed at 6% every year until you fix the situation by removing the excess contributions and their earnings.

3. Can you have multiple IRAs to further reduce your taxable income?

You can have as many IRAs as you like, but the contribution limits apply to all IRAs in your name, together. In other words, you can contribute $1000 to one of your IRAs and $1000 to another, but you can't contribute $2000 to both in one year.

4. Is the maximum tax-free amount i can deposit into my 401k plan, $9500, a universal number or does that depend entirely on the plan i am using?

Yes, $9500 is the legal limit for employee contributions for 1997. (I'm not sure if it has increased for 1998.) For more info, see
http://www.irs.ustreas.gov/prod/tax_edu/teletax/tc424.html .

- Darrell (not a tax expert)
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