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retirement question

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?

Reply to
speedlever
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speedlever wrote in news:Xns9A6142F3CC77Cspeedleveryahoocom@66.250.146.128:

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.

Reply to
Han

speedlever wrote in news:Xns9A6142F3CC77Cspeedleveryahoocom@66.250.146.128:

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. .

Reply to
scott s.

I also think in 2010 there will be a one year opportunity to convert a traditional IRA to a Roth, without AGI limit.

Reply to
Bob Wang

"Bob Wang" wrote in news:PMqdnW4Yz7EWb0fanZ2dnUVZ snipped-for-privacy@comcast.com:

thanks for the clarification

scott s. .

Reply to
scott s.

A financial forum would be a better place to post this. Google morningstar forum.

Reply to
C and A

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