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Author: twing71048 One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 120812  
Subject: IRA Strategies Date: 6/29/1999 11:27 AM
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I have recently changed jobs and my new employer has a retirement plan that I am mandated to participate in. The plan contribute 4.5% of my salary and is matched by the employer at 6%. In addition to this, I have a personal IRA using the MFB Emerging Growth B fund (MEGBX) as an investment vehicle. My employer also offers a defferred compensation plan reglated by Section 403(b) of the IRS code. I ahve read the code information on the net and reviewed some examples of calculating the limitation for contribution to the defferred compensation plan, however, I still cannot determine if I should scrap the MFS IRA and go with the Tax sheltered annuity plan offered by my employer.

Any suggestions?
Mr.T
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Author: jlemmons Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 16751 of 120812
Subject: Re: IRA Strategies Date: 6/29/1999 2:47 PM
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I would contribute the maximum amount to your 403(b) first (for example 20% of your pre-tax income) before I worried about an IRA. Especially if your AGI exceeds the ceiling for deducting your IRA contribution on your tax return. I say this for 2 reasons:
1) The tax savings are greater (contributing pre-tax vs. post-tax and then not getting the deduction on your tax return)

2) You can only contribute a maximum of $2000 to an IRA a year, but with the 403(b), 20% of your salary is (most likely) more than $2000. If a 403(b) has the same rules as a 401(k), then you can contribute a maximum of $10,000 a year pre-tax.

After you max out your 403(b), if you still want to put money into an IRA, consider a Roth IRA (if your AGI doesn't exceed the limit). If you can't deduct the $2000 on your tax return, you might as well not have to pay tax on the pay-out upon retirement.

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Author: kvmahesh One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 16770 of 120812
Subject: Re: IRA Strategies Date: 6/29/1999 8:54 PM
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>After you max out your 403(b), if you still want to >put money into an IRA, consider a Roth IRA (if your >AGI doesn't exceed the limit).

Does it make sense to put funds into a Roth IRA knwing that my AGI will exceed the limit in a year or two? To explain some more, I contribute 15% to a 401(k) at work and the Roth appeals since I can't use the traditional IRA. However, is it helpful to be able to contribute just for a year or two until I reach the threshold limit?

Thanks!



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Author: TMFTaxes Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 16773 of 120812
Subject: Re: IRA Strategies Date: 6/29/1999 9:19 PM
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[[Does it make sense to put funds into a Roth IRA knwing that my AGI will
exceed the limit in a year or two? To explain some more, I contribute 15% to a
401(k) at work and the Roth appeals since I can't use the traditional IRA.
However, is it helpful to be able to contribute just for a year or two until I reach
the threshold limit?]]

I certainly think so. Even if your AGI is over the limit a few years down the line, the Roth IRA that you have established will continue to grow. That is, your future "over limit" AGI will not have a negative impact on any Roth IRA contributions that you have made in the past. So even if you only get in 2 or 3 years of $2k contributions, you might be surprised how that can grow over the course of 10, 15, or 20 years...all potentially tax free.

You can read more about the Roth IRA in my series of posts on that very subject in the Taxes FAQ area. YOu might want to check it out.

TMF Taxes
Roy

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