401k and IRA question.

(sorry for the delay - I was away) A traditional IRA may be deductible, based on participation in other company plans, and income. A roth has its own income restrictions.

jIM got it right as far as my approach goes: If in 15% bracket, go Roth. If higher, go deductible IRA. If usually in higher, (than 15%) but in 'this' year back in 15% or lower, you may 'convert' traditional IRA money to a Roth, and pay the tax.

In the example you quote above, I propose this (if I understood your situation); In 2007 make a traditional IRA deposit. You get $1000 tax break on the $4000 deposit. In 2008, convert it (at 15% if that's your bracket this year) and pay $600 in tax. This approach works great for those who have any disruption in income, lob loss, spouse out for newborn, etc. I'm sure I could go on about it, with more words and examples, but I think this is pretty clear. (follow up questions are still free)

JOE

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