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Author: wench500 Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 76418  
Subject: Sprinkle Me With Pixy Dust! Date: 8/14/2001 3:05 PM
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Okay, let me see if I got this IRA contribution thing down:

For a traditional spousal IRA, the limit would be $4000; half for his, half for mine, right?

Starting in 2002, the limit goes up to $3000 for individual contributions, right or wrong? This is where I need dusting--for 2002. Is the spousal traditional contribution limit $3000 for each spouse who qualifies, or does the spousal limit stay at $2000?

Whack me with your wand of wisdom!
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Author: TMFPixy Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 31357 of 76418
Subject: Re: Sprinkle Me With Pixy Dust! Date: 8/14/2001 3:26 PM
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Wench500 writes:

Okay, let me see if I got this IRA contribution thing down:

For a traditional spousal IRA, the limit would be $4000; half for his, half for mine, right?


Yep, provided the couple files a joint return and together they have at least $4,000 in earned compensation.

Starting in 2002, the limit goes up to $3000 for individual contributions, right or wrong? This is where I need dusting--for 2002. Is the spousal traditional contribution limit $3000 for each spouse who qualifies, or does the spousal limit stay at $2000?

That's correct, both spouses will be entitled to a $3,000 IRA contribution in 2002 providing they file a joint return and have at least $6,000 in combined earned compensation. And the income limit for the spouse who has the lesser income will increase to $3,000 for the purposes of a spousal IRA contribution.

Whack me with your wand of wisdom!

Consider yourself whacked. :-)

Regards..Pixy


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Author: Charlie48K Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 31358 of 76418
Subject: Re: Sprinkle Me With Pixy Dust! Date: 8/14/2001 3:29 PM
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Okay, let me see if I got this IRA contribution thing down:

For a traditional spousal IRA, the limit would be $4000; half for his, half for mine, right?

Starting in 2002, the limit goes up to $3000 for individual contributions, right or wrong? This is where I need dusting--for 2002. Is the spousal traditional contribution limit $3000 for each spouse who qualifies, or does the spousal limit stay at $2000?

Whack me with your wand of wisdom!


The spousal IRA is for the non-working spouse. The working spouse gets a normal IRA. Actually, they're both identically titled by the custodian, it's just the rules by which you make the contribution. They're both $2000 this year and $3000 in 2002, 2003 and 2004; both increase eventually to $5000. The schedule is here:

http://www.universalpensions.com/alert/Alert05302001.asp

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Author: wench500 Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 31359 of 76418
Subject: Re: Sprinkle Me With Pixy Dust! Date: 8/14/2001 3:33 PM
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The spousal IRA is for the non-working spouse. The working spouse gets a normal IRA. Actually, they're both identically titled by the custodian, it's just the rules by which you make the contribution. They're both $2000 this year and $3000 in 2002, 2003 and 2004; both increase eventually to $5000. The schedule is here:

http://www.universalpensions.com/alert/Alert05302001.asp


Thanks to you and Pixy--now I can start making sense out of the turmoil that "W" added to my life--just when I had this tax thing down! I have bookmarked your site for future reference.

Wenchypoo
Non-working but hard-working
Since 1502

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Author: Charlie48K Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 31371 of 76418
Subject: Re: Sprinkle Me With Pixy Dust! Date: 8/15/2001 12:23 AM
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Wenchypoo
Non-working but hard-working


Your spouse is lucky. I appreciate the thanks. I should have mentioned this site:

http://www.irs.gov/forms_pubs/pubs.html

Download IRS Publication 590. It explains the old rules for IRAs.
As soon as it's updated, it will explain the new stuff. Helps to get it direct frm the IRS.


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Author: uglierthenme Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 31374 of 76418
Subject: Re: Sprinkle Me With Pixy Dust! Date: 8/15/2001 10:06 AM
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" Okay, let me see if I got this IRA contribution thing down: "

For the heck of it let's add to the confusion.
I believe there is also a "catch-up" if over the age of 50. In 2002 ,2003,2004 ,and 2005 "workers" may contribute an additional $500. In 2006 ,2007, and 2008 an additional $1,000. My question is can a non-working spouse 50 or older add this amount also as the wording states "workers" ?



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Author: TMFPixy Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 31376 of 76418
Subject: Re: Sprinkle Me With Pixy Dust! Date: 8/15/2001 12:08 PM
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Uglierthenme asks:

For the heck of it let's add to the confusion.
I believe there is also a "catch-up" if over the age of 50. In 2002 ,2003,2004 ,and 2005 "workers" may contribute an additional $500. In 2006 ,2007, and 2008 an additional $1,000. My question is can a non-working spouse 50 or older add this amount also as the wording states "workers" ?


The legislative language on the increase in IRA catch-up contirbutions talks about "individuals" over the age of 50, not "workers." Thus, while the IRS has not yet put out its guidance on this area, my bet is a catch-up contribution will be allowed for a spousal IRA as long as the working or higher-paid spouse has the earned compensation to justify that contribution.

Regards..Pixy




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Author: uglierthenme Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 31378 of 76418
Subject: Re: Sprinkle Me With Pixy Dust! Date: 8/15/2001 12:44 PM
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" The legislative language on the increase in IRA catch-up contirbutions talks about "individuals" over the age of 50, not "workers." Thus, while the IRS has not yet put out its guidance on this area, my bet is a catch-up contribution will be allowed for a spousal IRA as long as the working or higher-paid......"

Thanks - this is why you get the big bucks ! I admit the word "workers" was taken from the Vaguard site & not a official rendering of the law.

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Author: TMFPixy Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 31380 of 76418
Subject: Re: Sprinkle Me With Pixy Dust! Date: 8/15/2001 2:27 PM
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Thanks - this is why you get the big bucks !

ROTFLMREO!

Big bucks indeed. The greenest intern on Wall Street probably makes more than I do. But then my toils at TMF are more labors of love as opposed to those undertaken for monetary reward. If I wanted the latter, I would certainly be elsewhere. Instead, I just enjoy what I do. :-)

Regards..Pixy

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Author: Mehera1 Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 31444 of 76418
Subject: Re: Sprinkle Me With Pixy Dust! Date: 8/17/2001 9:53 PM
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Does anyone know if there exists, somewhere, a calculator which will figure the accumulation in an IRA under the new law?

Mehera

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Author: TMFPixy Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 31459 of 76418
Subject: Re: Sprinkle Me With Pixy Dust! Date: 8/18/2001 9:17 AM
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Greetings, Mehera1, and welcome. You asked:

Does anyone know if there exists, somewhere, a calculator which will figure the accumulation in an IRA under the new law?

????? What do you mean by "accumulation," the amount that must be taken in an MRD under the new rules or the amount to which the IRA may grow given the MRD taken may be smaller under the new rules? If the latter, I don't know of a specific calculator. If the former, see the one available at http://retireplan.about.com/gi/dynamic/offsite.htm?site=http://www.interest.com/hugh/calc/mdib.cgi

Regards..Pixy


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Author: jrr7 Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 31473 of 76418
Subject: Re: Sprinkle Me With Pixy Dust! Date: 8/18/2001 3:43 PM
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Mehera1,

I'm not clear on what you mean.

The new tax law did not change anything about the growth rate of IRAs. That still depends on what investments you choose to purchase in your IRA.

The main thing the law changed about IRAs is how much you are allowed to contribute to your IRA each year.

Please read the Fool's "All About IRAs" articles at:
http://www.fool.com/money/allaboutiras/allaboutiras.htm

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Author: Mehera1 Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 31477 of 76418
Subject: Re: Sprinkle Me With Pixy Dust! Date: 8/18/2001 4:18 PM
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Thanks guys for trying to help. I feel kinda foolish--small f--now. I was thinking of something <really simple>, along the lines of:

"If I start an IRA this year, add the new amount (plus my boomer catch up bonus) in the years after that, and assume x rate of return for x years--how much might I have?"

I have seen calculators like this before the law changed, but now the amount contributed can change along the way, and my math skills are not nearly that good. It would be interesting to get an idea of how much more we can save this way as compared to the way it has been.

Perhaps as time goes on someone will create such a calculator for folks like me. :-)

Mehera

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Author: cdr46 Three stars, 500 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 31483 of 76418
Subject: Re: Sprinkle Me With Pixy Dust! Date: 8/18/2001 5:52 PM
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Have you researched the calculators at these sites?

http://www.dinkytown.net/
http://www.investorguide.com/education.html
http://www.suzeorman.com/index.html

There are hundreds of calculators on the web
input "financial calculators" at www.google.com and you will come up with 151,000 "hits" - some are good some are terrible!
http://www.google.com/search?q=%22financial+calculators%22&sa=Google+Search&cat=&hl=%28null%29

If you have Excel, Quattro, or Lotus 123 you can build your own spreadsheet. It's really not that difficult to build a spreadsheet model to your own specifications.

Example
Col 1 would be "Years" or "Age"
Col 2 Investment deposit
Col 3 Cumulative deposits
Col 4 Hypothetical earnings expressed as a percentage
note: this way you can input "changing" values or do a what-if you matched the S&P Index on a year by year basis.
Col 5 Dollar earnings (col 3 x col 4)
Col 6 Withdrawals
Col 7 Marginal income tax rate applied to withdrawals
Col 8 Penalty applied to withdrawal - prior to age 59 & 1/2
Col 9 Ending account value

You can expand on this spreadsheet or make it more simple. The choice is yours. You can do it on a monthly basis or annual.

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Author: Mehera1 Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 31490 of 76418
Subject: Re: Sprinkle Me With Pixy Dust! Date: 8/18/2001 9:07 PM
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Thanks cdr, I appreciate it! That should keep me busy for a while! Maybe I'll even dust off the 'ole Excel and give it a try.

Mehera

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Author: jrr7 Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 31590 of 76418
Subject: Re: Sprinkle Me With Pixy Dust! Date: 8/23/2001 12:24 PM
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Hmm. I don't know of any pre-made calcualtors, but it's easy to set one up by yourself in Excel or another spreadsheet.

Post a new message asking again -- don't reply to this one.

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