I have a high MAGI which effectively eliminates IRA or Roth IRA elegibility. (well actually I was able to contribute $1700 for 2004, but I foresee that for 2005 I will top $110k for my MAGI making me ineligible for contributions).So question I have is that it seems that my only tax friendly retirement investing account is my 401k. For retriement saving, does it make sense to put as much as I can into the 401k and choose among the 12-13 fund choices I have there? Or to do some retirement investing in a taxable account? (eg. individual investing account at fidelity in my case).--------------If your 401k has some decent funds that fit your asset allocation, then you would seem to be in good shape. If not, then there are always alternatives such as:- Tax-efficient and/or Tax-managed funds in a Taxable Account. Is there a reason you have to limit yourself to Fidelity? Vanguard has a pretty decent line-up of funds that might fit your purpose:http://flagship2.vanguard.com/VGApp/hnw/FundsByType?loc=&View=YR&Sc=0#- Series I and EE Savings Bonds are about as safe as you can get:https://www.treasurydirect.gov/RS/BPDLogin?application=rscreate- Tax-exempt Bonds- Laddered CDs, Money-Market Accounts and just good old plain cash.- Real EstateSo there are alternatives. Just remember a couple of basics. These were put together by Taylor Larimore from the "Vanguard Diehards" Board:4-Step Rule for Tax Efficient Fund Placement:1. Put your most tax-inefficient funds in 401ks, 403bs, Traditional IRAs and similar retirement accounts. When full..2. Put your next most tax-inefficient funds in your Roth(s). When your Roth(s) are full-3. Put what's left into your taxable account.4. Try to use only tax-efficient funds in taxable accounts.Here is a list of securities in approximate order of their tax-efficiency. (Least tax efficient at the top.):Hi-Yield BondsTaxable BondsTIPS REIT StocksStock trading accountsSmall-Value stocksSmall-Cap stocksLarge Value stocksInternational stocksLarge Growth StocksMost stock index fundsTax-Managed FundsEE and I-BondsTax-Exempt BondsRegards,Bill
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