If i max out my SEP-IRA can i still add to another IRA with pre-tax money - is there a limit of pre-tax dollars that can be put away (like multiple IRAs?)

what about a non-working spouse - can i create/add to an IRA?

or am i stuck with post-tax investments/annuities/bonds?

Zip Code: 02891

Each year, you can max out your salary deferrals through your employer, max out your SEP IRA, and contribute to an IRA. You have until 4/15/08 to contribute to your IRA for 2007.

Whether your IRA contribution will be tax deductible depends on your adjusted gross income. If your income is low enough, however, it might make sense to contribute to a Roth IRA instead of a traditional IRA, since neither will be tax deductible to you (most likely), but only Roth's grow tax-free. For 2007, the Roth phase-out limits are $99k-$114k for single individuals and $156k-166k for married couples.

If you do make a non-deductible IRA contribution, don't forget to attach a Form 8606 to your federal tax return. That's how you keep track of the after-tax contributions you make to your IRA over time.

It's great that you're trying to take advantage of all these tax-advantaged savings opportunities.

Zip Code: cpa@mdtaxes.com

thanks!

Assuming AGI>300k - could i be doing smarter things than putting 4-5k/year in a non-deductible IRA? especially considering the IRA isn't very liquid

Zip Code: 02891

Here is the order that seems to make sense for people making good money:

1. Start by maxing out your salary deferrals at work.

2. If you're self-employed, max out your SEP.

3. Contribute $4k (increasing to $5k in 2008) to your IRA and if your married, to your spouses IRA, as a non-deductible IRA which you can consider converting to a Roth in 2010.

4. If you have kids, take a good look at 529 plans.

And then with whatever money is left, start to build up a tax-efficient portfolio within a taxable account.


The common thread to each of these items is that you will be saving money. The earlier you start, the more years you have to take advantage of compounded growth.

Zip Code: cpa@mdtaxes.com

Adrian,

If you have employees, a SEP-IRA is a terribly costly way to gain a tax deduction and save for retirement. Let me illustrate. Suppose you earn $230,000 or more. You want to put in the max $46,000 into the SEP-IRA. You have two employees, one earning $45,000 a year and the other earning $35,000 a year. Into the SEP-IRA, you'll be putting into the SEP-IRA for one $9,000 and for the other $7,000.

Using a cross-testing 401k you could likely cut that $16,000 a year cost in required contributions for your staff to just $4,000. It depends on factors such as age and so forth, but as you can see, the savings could be $12,000 a year.

Zip Code: 83402