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I'd recommend fully funding Roth IRAs for both of you. While it won't save you any taxes now, you are able to pay the tax and all future withdrawals will be tax-free. Also, I don't know how small your side business is, but you can potentially put 100% of your profit, up to about $10,000 into a tax deferred SIMPLE IRA, in addition to your 401K and Roth or traditional IRAs. Boilerplate forms are available and you can put the money in a discount brokerage account if you choose, minimizing costs.

Foolish regards,

Vic
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