We had our 1st child in 8/04. My wife is a medical office manager (11 years with the hospital, 5 of which as a manager there), and she wanted to go back to her job part-time after maternity leave ended. Unfortunately, she was told fulltime or nothing. She decided therefore to stay home. Although we can safely run the household on my salary alone, we still feel the sting from the loss of her previous income.

With background info above, here's a few questions for you:

#1
Since she no longer can contribute to her 403b, are there any good alternatives for her. It seems a shame to miss out on socking away the 14k for 2005. I think our AGI will exceed the Roth limits. And, I'm not very excited, frankly, about doing a nondeductible IRA.

#2
With the arrival of our new baby, I upped my life insurance and my wife's life insurance and upped my disability coverage. Any thing else I need to consider?

#3
A friend told my wife that she might have a unemployment insurance claim (reside in MA). I don't believe so, what are your comments?

Thank you very much.

Joe

Zip Code: joes765@yahoo.com

You should remember that even though an IRA for your wife would not be deductible under your current circumstances, the income earned on the contribution is tax deferred and still a great way to save for retirement. Without any earned income and your salary level, her options are limited.

You were wise to step up your life insurance. Disability insurance is particularily important now that yours is the only income. Most experts recommend disability insurance to cover 45-60% of your gross income. Remember that you'll also need available cash to cover your expenses during your policy's elimination period.

Finally, I'm not an expert in employment law or MA unemployment policy but my understanding is that when you return from maternity leave, a company is required to give you your existing or an equal position. Going from full to part time wouldn't really qualify as the same position and the decision to leave, as difficult as it was, was hers. When you submit an unemployment claim, the state verifies everything with your previous employer. The employer can dispute the claim. However, a call to MA unemployment for verification of the rules won't hurt anyone.

Good luck!

Zip Code: susan@mdtaxes.com

Thanks, Susan.

Zip Code: joes765@yahoo.com