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"Thanks for your reply. My limited understanding of retirement accounts, and the marketing-oriented approach I had seen in the T. Rowe literature had me assuming you could get the best of both worlds by rolling over a 401(k) to a Roth IRA (tax free on the front end and back end). It was silly of me to think the IRS man would miss something like that!"

Your welcome. Just remember that I am no tax pro; the real pros hang on the Tax board, and tolerate interested kibitizers.

"I'm not sure I completely understand your comment. I'm with you up to the part in bold:

JAFO: <<<<"Your income appears too high, as a single, to contribute to a Roth for 2004. Your joint income will be borderline (but probably just under the cutoff for a Roth for MFJ status). I do not mean to be a pessimist or a jinx, but sht happens, so I would not open the 2004 Roth for you that presumes you will be married on 12/31/05 (i.e., do not count your chickens before they hatch). Your fiance probably should do a Roth IRA instead of a regular if she can afford the current taxes.>>>

"I think my income will just eek under the limit for 2004 (first time I've been hoping for lowered income!), and my finacee should be fine."

When I posted earlier, I forgot which board I was on, the Tax Board FAQ - - has a whole Section dedicated to Retirement Tax Issues.

Sorry to belabor the obvious, but I hope you realize that the income limits for contribution depend upon filing status - single under 95k with phase-out until zero at 100k, IIRC, and MFJ is under 150k with phaseout until zero at 160k.

If you do not get married this year, then your income may be too high for a Roth IRA (or all of a Roth IRA).

The deadline for opening a 2004 IRA is 4/15/05. As I understand it, you will not be married on or before 4/15/05. I am conservative, but I would not open an 2004 IRA that presumed I would get married later in the year; as I said before, sht happens and life is full of funny bounces

Your fiance, OTOH, if she remains single, clearly qualifies for a Roth IRA; the only question, in my mind, is whether she can afford the taxes or whether she would need the deductibility of a traditional IRA in order to fully fund the IRA.

If in fact, you both do marry, then your income will be close to (but probably under) the limit for MFJ, and Roths would be a good idea. I, personally, would feel like I was jinxing my wedding, however, by doing so; kind of like throwing a hanging curveball to fate. To each his own.

The income limit for converting a traditional IRA to a Roth IRA is 100k, single or married, in the year of conversion. There are not retroactive conversions. Thus, it is too late for your to convert for 2004. If you marry in 2005, your joint income will not allow a conversion. Even if you do not marry, your individual income might be too high to convert.

"Assuming I make the cutoff for 2004, and open a Roth for both of us, would I then be able to max each Roth in 2005 (again assuming we were under the cutoff, and were filing MFJ)?"

If I understand the question correctly, yes. 2004 contributions may be made 1/1/040 to 4/15/05 and 2005 contributions may be made from 1/1/05 until 4/15/06. Thus, from 1/1/05 until 4/15/05 you can make essentially two years worth of contributions (assuming under income cut-off, MFJ).

"If, filing jointly we exceed the cap, does that mean neither of us can contribute?"

To a Roth IRA, yes. You could still contribute to a traditional IRA, though it might well not be deductible.

"Conversely, if we're under the cap in terms of joint income, do we both get $4k to contribute?"

Whatever the 2005 limit is, yes.

"This may be biting off more than I can chew at this stage, and perhaps a topic for another day in my learning process, but what are folks doing with combined incomes above $150K for retirement accounts or tax-protected retirement investing in general?"

Fully funding 401-k or equivalent. Many are self-employed and have a broader range of choices (and dollar limits). Given the lower tax rates on qualified dividends and long-term capital gains, many are investing in regular accounts, and then managing the taxes. Some go for VULs (generally not well liked or often recommended on TMF, though they may have a place for some people, subject to alot of caveats).

Regards, JAFO

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