Home Page link  

retirement question

  
Groups | Search | About
User Password
Register Now! Lost Password?

Quicken Personal Finance Discussions - Quicken - personal finance software discussions

 Post an article  get this group's latest topics as an RSS feed add this group's latest topics to your My MSN content add this group's latest topics to your My Yahoo content  add this group's latest topics to your Google content  YahooMyWeb Yahoo!  Google Google  Windows Live Favorites Windows Live  del.icio.us del.icio.us  digg digg  Add to Netscape Netscape
Subject Author Date
retirement question speedlever 03-14-2008
Posted by speedlever on March 14, 2008, 6:35 am
Please log in for more thread options
 This is probably not the NG to post this question to. But I figured with
the wealth of knowledge here, I could get some good ideas.

I'm caught between the cracks (tax-wise) with respect to retirement
savings. For various reasons I was unable to began any sort of retirement
savings until the last few years. My current employer does not offer a
401k but does provide a 5% net bonus for my retirement.

My wife has a 403b through Valic from her employer. We can do a Roth for
2007 for both of us, but I suspect we may not qualify for an IRA of any
type for 2008.

If I understand the process correctly, the folks that have a company 401k
have no AGI limit for participation and can also participate in a Roth up
to the AGI limits. But for those of us without a 401k, we are still
subject to the AGI limit for IRA (Roth or conventional).

I guess I'm feeling penalized by the tax code by having a halfway decent
income fairly late in life, but no way to have a tax advantaged plan to
take advantage of it.

If my thinking is correct, my retirement options are savings and/or
regular taxable investments.

Am I missing something or have I been caught in a retirement tax penalty
box?


Posted by Han on March 14, 2008, 6:50 am
Please log in for more thread options
 speedlever <speedlever.at.yahoodotcom> wrote in

> This is probably not the NG to post this question to. But I figured
> with the wealth of knowledge here, I could get some good ideas.
>
> I'm caught between the cracks (tax-wise) with respect to retirement
> savings. For various reasons I was unable to began any sort of
> retirement savings until the last few years. My current employer does
> not offer a 401k but does provide a 5% net bonus for my retirement.
>
> My wife has a 403b through Valic from her employer. We can do a Roth
> for 2007 for both of us, but I suspect we may not qualify for an IRA
> of any type for 2008.
>
> If I understand the process correctly, the folks that have a company
> 401k have no AGI limit for participation and can also participate in a
> Roth up to the AGI limits. But for those of us without a 401k, we are
> still subject to the AGI limit for IRA (Roth or conventional).
>
> I guess I'm feeling penalized by the tax code by having a halfway
> decent income fairly late in life, but no way to have a tax advantaged
> plan to take advantage of it.
>
> If my thinking is correct, my retirement options are savings and/or
> regular taxable investments.
>
> Am I missing something or have I been caught in a retirement tax
> penalty box?
>
It is my understanding that "highly compensated" employees start falling
into taxable territory for their pension contributions as their
compensation and pension contributions rise. If you fall into this
category, then count your blessings that you have a really good income,
reduce your spending and start saving. I stopped making voluntary 403(b)
7 contributions when I realized that likely my tax bracket would get
similar after retirement as it is now. Putting after tax money into Roth
seemed better to me in the long run.

But I am not a tax professional, I may have gotten it all wrong.

--
Best regards
Han
email address is invalid

Posted by scott s. on March 14, 2008, 3:41 pm
Please log in for more thread options
speedlever <speedlever.at.yahoodotcom> wrote in

>
> If my thinking is correct, my retirement options are savings and/or
> regular taxable investments.
>
> Am I missing something or have I been caught in a retirement tax
> penalty box?
>

I think as long as you have sufficient earned income, you can contribute
(and optionally contribute for spouse) in a traditional IRA. But it
sounds like the contributions will not be tax deductable in the
year made, so the benefit consists in defering the tax on the
income/gains until you take distributions (must start no later than
70 1/2).

I also think in 2010 there will be a one year opportunity to convert
a traditional IRA to a Roth, without AGI limit. Since your
contributions would be post-tax, the tax on the conversion would
be on the gains and income above the contributions. Once in a Roth
the gains / income won't be taxed and you don't have to take
mandatory distributions.

At least that's my layman understanding of it.

scott s.
.


Posted by scott s. on March 15, 2008, 4:26 pm
Please log in for more thread options

> Unless Congress closes the "loophole," conversions from traditional
> IRAs to Roths are open to all comers starting in 2010. I think the
> special treatment of 2010 conversions is that tax due can be spread
> out over 2 years.
>
> http://www.bankrate.com/brm/itax/news/20060411a4.asp?caret=2f

thanks for the clarification

scott s.
.

Posted by C and A on April 30, 2008, 1:24 pm
Please log in for more thread options
A financial forum would be a better place to post this. Google morningstar
forum.
--
C and A Bredt
"speedlever" <speedlever.at.yahoodotcom> wrote in message
> This is probably not the NG to post this question to. But I figured with
> the wealth of knowledge here, I could get some good ideas.
>
> I'm caught between the cracks (tax-wise) with respect to retirement
> savings. For various reasons I was unable to began any sort of retirement
> savings until the last few years. My current employer does not offer a
> 401k but does provide a 5% net bonus for my retirement.
>
> My wife has a 403b through Valic from her employer. We can do a Roth for
> 2007 for both of us, but I suspect we may not qualify for an IRA of any
> type for 2008.
>
> If I understand the process correctly, the folks that have a company 401k
> have no AGI limit for participation and can also participate in a Roth up
> to the AGI limits. But for those of us without a 401k, we are still
> subject to the AGI limit for IRA (Roth or conventional).
>
> I guess I'm feeling penalized by the tax code by having a halfway decent
> income fairly late in life, but no way to have a tax advantaged plan to
> take advantage of it.
>
> If my thinking is correct, my retirement options are savings and/or
> regular taxable investments.
>
> Am I missing something or have I been caught in a retirement tax penalty
> box?
>


Similar ThreadsPosted
retirement planner question May 8, 2007, 5:53 pm
Retirement Program September 19, 2006, 9:11 pm
Using Retirement Plannin January 26, 2007, 7:33 am
Retirement Planner March 15, 2007, 12:14 pm
Early Retirement Planning December 19, 2006, 4:59 pm
Early Retirement Planning ! December 20, 2006, 9:44 pm
Retirement Planning is RELIABLE!! August 9, 2007, 6:29 am
[Newbie Question] Stock account question March 10, 2007, 8:50 pm
How Quicken calculates retirement funds August 5, 2006, 7:24 pm
Defined Contribution Retirement Plan April 26, 2006, 11:57 pm

Contact Us | Privacy Policy
This site is not affiliated with Intuit - makers of Quickbooks and Quicken software
This site is not affiliated with Sage Software - makers of Peachtree accounting software
XML SitemapXML Sitemap