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In addition, I forgot to mention that you may contribute to a traditional IRA even if you are a member of an employer's plan and your salary exceeds the phaseout ranges, but the contribution will be non-deductable, becoming part of the owner's basis in the IRA, and therefore non-taxable upon withdrawl.

Here's where it more advantageous to contribute to a ROTH, since it does not force the owner to draw down the balance upon the owner reaching the year in which he/she turns 70.5.

As far as I'm concerned, if you have any more than 10+ years and you DON'T NEED the deduction, the ROTH IRA is the way to go. I put as much as I can into my 401k (15% = @ $7k per year) and then max out the ROTH contribition on a weekly transfer basis. It's easier to pay myself this way than to find the $2k+ each eyar to fund the IRA. Plus, my ROTH is a brokerage account so I'm constantly adding cash to the trading account.

The 401k is diversified across all the major fund types (small-, large- and mid-caps, international, total bonds and total stock {aka index}) so that with DCA (dolar cost averaging) I'm picking up the shares at various discounts in relation to the markets preference.

Unfortunately my employeer does not match any funds going into the 401k. Damn. I used to work for a bank that match 100% for the first 6% deposit. 100% return!! I saved so much in 10 years there, it was real nice....

No matter what, put it away now, how ever you can. if you absolutely need the tax deduction, then I would fund your regular IRA first then the 401k. Calculate/estimate the amounts needed to deposit into each account type without going over the limits...And, remember, the 401k caps are going up...

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