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Kjs1 asks:

1) Can she contribute to a traditional IRA or is she ineligible because of my plans?

She may contribute to a fully deductible traditional IRA until your joint AGI exceeds $150K. Even then, she may continue to contribute to a nondeductible traditional IRA.

2) Being that there are no "early withdrawal" penalties in a 457, is she better off increasing contributions to the 457 or contributing $2000/yr to Roth IRA?

She may not wish to use the 457 at all, given the poor investment choice available. She should consider putting $2K in the Roth first, then use either the 457 or a taxable account to take advantage of the lower capital gains tax rates in the latter. See Step 4 of the 13 Steps to Foolish Retirement Planning, and then run a similar analysis using the 457 plan against the taxable account. You can find Step 4 at http://www.fool.com/Retirement/RetirementStep4.htm .

Regards..Pixy
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