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Author: abFatPitch Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 76237  
Subject: Options while waiting for 401k eligibility Date: 10/17/2005 12:28 PM
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I am hoping to get some opinions on what I might do given my current situation. I sincerely appreciate any thoughts.

I left an S-corp in 5/05 in which I was a partner, and participated in the corp's 401k (maximally). I have begun a new position 10/05 as an employee in which I won't be eligible to participate in the business' (S-corp) 401k plan until 1/07. I will be a partner in this business come 10/06 if that makes a difference, but still won't be eligible for the 401k until 1/07.

So, what are my retirment plan options for 2006?

thanks,

ab
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Author: pauleckler Big funky green star, 20000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 47968 of 76237
Subject: Re: Options while waiting for 401k eligibility Date: 10/17/2005 8:42 PM
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In the absence of a 401K plan, most would suggest 1) max your Roth IRA if you qualify, or 2) invest in a taxable account in the Long Term Buy and Hold (LTBH) mode. This way you focus on investments you can hold long term while incurring minimal taxes. You pay taxes only when you sell and then at capital gains rates.

A variable annuity is another option, but most Fools believe they are very expensive and good performing ones are difficult to find.

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Author: abFatPitch Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 47973 of 76237
Subject: Re: Options while waiting for 401k eligibility Date: 10/18/2005 6:44 AM
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In the absence of a 401K plan, most would suggest 1) max your Roth IRA if you qualify, or 2) invest in a taxable account in the Long Term Buy and Hold (LTBH) mode. This way you focus on investments you can hold long term while incurring minimal taxes. You pay taxes only when you sell and then at capital gains rates.

Thanks for your response. I was trying to find a pre-tax or tax-deductible answer to my problem and spent a bunch of time on the IRS site with publication 590 (IRA's). Due to income, it looks like my only option is a spousal IRA contribution. I will also look into single-participant 401k's and possibly try to have my "employee" status changed to independent contractor status so I can do my own, self-employed retirement plan.

Thanks,

ab



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Author: Watty56 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 47974 of 76237
Subject: Re: Options while waiting for 401k eligibility Date: 10/18/2005 9:40 AM
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I and not sure about the income limits but if you have kids you should also check out the state college savings programs. I know little about them but you might also be able to structure your position so that you would be eligible for a healthcare savings account(HSA).

Greg


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