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You question seems at first blush to be straight forward: "I am nearing 30 and am finally creating a retirement plan. Ijust maxed out my 401K contributions and would like to create a Roth IRA to supplement it."

However, before I can provide a good response, I need a little more data.

February isn't even over and you said you maxed out your 401(k). I believe the maximum contribution level for any employee is 15% and the maximum contribution this year is about $10.5K. I may be a little off since I retired several years ago and no longer have an option of participating in a 401(k), but I should be close. However, for illustration, I use these numbers. If you have hit $10.5K you've already made $70K this year and, unless your firm matches up to 15%, you've effectively cut yourself short on their match. I posted an example of how some high income earners short themselves by contributing at a percentage higher than what will max company matching a week or so ago.

If these assumptions are correct, you will probably exceed the maximum income limits allowable for ROTH contributors. If this is the case, I would invest in a S&P500 index (Vanguard is probably the best) because there is minimal realized gains during the holding period. ROTH gains are tax free. The next best alternative is tax defered gains. Investing in the index will typically beat even the best annuity.

Regards, pmcw
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