Hi,
I contribute the max ($5,000) to an IRA every year since I haven't had a 401K.
But this year my employer is offering me in a 401K plan.
If I choose to particpate in the 401K, will this affect my IRA contributions ??
Thanks
By "this year' you mean 2008 I presume. (never ASSume!)
Yes, it could at that. But even if it might limit your contributions to a "regular" (we call 'em traditional) IRA, you might still qualify for a ROTH IRA, which I wholeheartedly endorse. It's the best thing since canned dog food.
ChEAr$, Harlan Lunsford, EA n LA
No, your IRA contribution limits are not affected, but the amount you can deduct is. For single taxpayers the phaseout begins at around 52k and ends at 62k -- see the worksheet in the instructions. Be sure to report the non-deductible contributions on form 8606. For the Roth IRA the phaseout is from 99k to 114k. If your income is more than
114k, I recommed you contribute to a traditional IRA and convert it to a Roth when your income drops or in 2010 when supposedly there won't be an AGI limit to add to a Roth or convert a traditional IRA to a Roth.
Contributions, no. Deductibility, maybe. Just to be clear, the contribs are also deductible however and the max limits are higher. If there's an employer match, that's even better. Chin up, a 401k is rarely a bad thing.
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