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Subject:  Re: gaming roth 401(k)s? Date:  5/14/2005  12:50 PM
Author:  trepanne Number:  79323 of 132493

Greetings, trepanne, I am following your logic with intrigue but need help in understanding why you would wish to borrow back half the contributions between 2006 and 2009? What goal do you reach by doing so that isn't reached by leaving the proceeds alone in their intended investments (mutual funds, perhaps)?


it's not entirely clear to me why the intended purpose of the funds would have any bearing on the propriety of these transactions.

but if you're simply satisfying your curiosity, well, consider it a form of cash management. the ideal situation would be to accrue maximum tax benefits without consuming any cash whatsoever. then, when you have surplus liquidity, you can call in the tax benefit that you have accrued.

in my situation, i have recently started up a business that is growing. it should generate much higher income in the future than in the present. presently, i need liquidity in order to invest in the business while continuing to fund our extravagant lifestyle.

i have other sources to make the contributions; i would prefer simply to move assets from our taxable accounts into roth IRAs. however, the timing isn't right. first, my cash-management plans depend on using the current income from those assets in order to fund our personal expenses. second, selling those assets & redeploying them into a tax-advantaged accounts would involve paying capital gains taxes.

it would be an advantage if i could start squirrelling away these tax benefits right now while still clutching the cash tightly in my greedy little fists, and then execute the cash flows later, funded either from business income or from the sale of assets at a time that is more convenient to me.

make sense?

if not, well, chalk it up to my being a congenital scofflaw.

i reckon that figuring out methods of abusing IRS regulations to the very limit of what might even possibly survive audit has GOT to have some sort of intrinsic goodness - just good clean american fun - whether or not it has any practical application.

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