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Author: ardentsilent One star, 50 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 76384  
Subject: Which accounts to fund... Date: 1/11/2004 7:56 PM
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Greetings,

Wife and I have income around $120k. I am eligible for 13% to TSP (govt. version of 401k). Additionally, my wife is currently eligible for 403(b) of up to 13,000/year until she is there a year, and can open a 401(k).

Beingn we'd like to save as much as possible in tax-deferred accounts, which would be the best path for maximum tax savings?

Our plan thusfar goes like this:
- Invest 5% (the highest matched) for TSP
- Max both spouse and I's Roth IRA
- Invest remaining 8% into TSP to meet limits (13% max allowed)
The next steps then confuse me:
- Put as much in 403(b) for wife or Traditional IRA or something else?
- What to do with remaining savings (if we have any?)

Thanks a bunch,

ardentsilent
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Author: dsemmler Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 38478 of 76384
Subject: Re: Which accounts to fund... Date: 1/11/2004 11:57 PM
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Our plan thusfar goes like this:
- Invest 5% (the highest matched) for TSP
- Max both spouse and I's Roth IRA
- Invest remaining 8% into TSP to meet limits (13% max allowed)
The next steps then confuse me:
- Put as much in 403(b) for wife or Traditional IRA or something else?
- What to do with remaining savings (if we have any?)


ardentsilent,

I just want to point out one issue with your scenario above. Once you have fully funded a Roth IRA for you and spouse, the Traditional IRA is no longer an option. You are limited to a total contribution of $3000 ($3500 age permitting) between all IRA accounts.

Other than that, I think your plan sounds solid. Once you meet the limits for the TSP and Roth IRA, I would probably investigate funding the 403(b) and/or a standard taxable account. I know you want as much tax deferred as possible but a LTBH taxable account may work well.

Also, I assume you a fully funded eFund. If not, you may want to start adding funds into a stable account such as a savings account or MMA.

dt

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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: 38505 of 76384
Subject: Re: Which accounts to fund... Date: 1/13/2004 1:06 PM
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Depending on your situation you should consider investing some of the post tax money in index fuind or something like Spiders(SPY). The lower capital gains tax rates will be less than the ordinary income rate that you will be paying on the 401k or traditional IRA. It is so hard to predict what the tax rates will be in the future I try to spread my money over different types of investments so I will have more flexibility in the future.

There are some good arguments against this but you might also want to consider paying down your mortgage some if you have one.

Greg


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Author: ogrecat Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 38625 of 76384
Subject: Re: Which accounts to fund... Date: 1/18/2004 3:09 PM
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I am eligible for 13% to TSP (govt. version of 401k).

14% for 2004.

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