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My 401(k) is maxed-out for 1999. Is there any way to start and invest in a tax-advantaged IRA (traditional or Roth)? At what level of 1999 income are the present/future tax-advantages lost?



You can make a non deductible traditional IRA contribution no matter what your income level.

If your income is less than 40-50k for joint filers who participate in a 401k or other employer sponsored plan you can still contribute and receive a tax deduction. This benefit phases out once income is greater than 35k for singles and 50k for joint filers.

ROTH Ira's are available for joint filers who make less than 160k per year, 80k for singles (i believe, not 100% sure on the amounts and have no research material here at home).

ROTH is generally the better alternative in that although you receive no deduction for the contribution it will grow tax deferred and there will be no tax due upon withdrawal at retirement.

IF you contribute to the nondeductible IRA you would receive your after tax contributions tax free upon retirement but the appreciation and tax deferred earnings in the account would still be subject to taxation.


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