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Author: BruceCM Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 76421  
Subject: Re: Loaded Funds, IRA Date: 2/22/2011 1:45 PM
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Quite frankly, the entire investment world really leaves a bad taste in my mouth. I've been working at hedge funds for years now, and I have lost faith in mankind when it comes to investment. I realize it's a critical and necessary evil, but I also know it's a disgusting, convoluted, manipulated and corrupt mess.

Hmmm. Sounds like you might be a good candidate for another line of work :-)
But your observations are correct....the financial services and products industry, particularly the latter, does seem to draw to it the seemiest of people many of whom remind me of bank-robbers...just smarter about it, but the same ultimate goal.

Can you contribute pre-tax from your pay check directly into your own TIRA account? I thought you sort of had to use the company 401k for pre-tax stuff?

Maybe. Since you are a participant in an employer sponsored retirement plan, your ability to deduct your TIRA contribution may be limited by your adjusted gross income (line 37 of your 2010 form 1040). If you are single (sorry, can't remember if you mentioned this or not), then your ability to deduct your TIRA contribution will start to be limited at an AGI of $56,000 with none of the contribution deductible by an AGI of $66,000. Because you cannot contribute to a RIRA due to your income, your TIRA contribution would not be deductible....although you can still make after-tax contributions to your TIRA each year...just make sure you complete and file a form 8606 for each year you make an after tax TIRA contribution. Now, if you didn't roll your 401(k) over to your IRA, and you have no other TIRA, a work-around for contributing to your RIRA would be to make an after-tax TIRA contribution and then convert it to a Roth.

Also, your new employer may offer a 401(k)-Roth, which would allow you to contribute after tax dollars to this Roth.

One other point from your discussion. You mention that you need to 'read some books' and in effect it sounds like you want to treat your self investment management as though it were part of a hedge fund that had to be precise, detailed and error free with every I dotted and every T crossed (ok...I may be stretching it a bit). But self investment management is much easier than this. You need only know a few things to get it right. As I mentioned earlier, a 12th grader can do this...its really all about your motivation to learn some basics, make your allocations, rebalance once a year and leave it alone.

Anyway, just some thoughts :-)

BruceM
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