I am no longer allowed to contribute to my Roth IRA because of income restrictions. Are there other options?

Question

I also contribute fully to my 401(k). Since I can't contribute to my Roth IRA, I was wondering whether I'm allowed to open a traditional IRA account and whether that's even a good idea. Any insights? Any advice on saving for retirement?

Thanks!

Answer 1

If your employer has amended the 401K plan you could contribute to the plan on a pre-tax basis. The allowed your employer to amend the 401K plan at the beginning of this year to allow employees to elect to defer money into a Roth 401k in your plan. If they haven't amended the plan you should talk with them about doing so.
As stated in another answer, you can always contribute to a regular IRA. Because you are covered by an empolyer plan and your income exceeds certain limits you will be restricted to a non deductible IRA contribution.
You will get tax deferred earnings on this money until you start withdrawing. If you go this route yo will need to exercise care in keeping accurate records of the total amount of such contributions that you make over the years. This is because when you start taking distributions part of each distribution will be a return of a portion of this accumulated nondeductible pool. You will need to be able to show how much this amount is if questioned.
If you are still looking at where to put money I would suggest that you look at municipal bonds or a bond fund for your state. This income is tax free federal and state and can be an excellent alternative to a retirement account.
There are also ways to build a private retirement fund by using certain charitable trusts that have income make up provisions. A good CPA or tax attorney would be needed to guide you through this as it is too complicated to explain here.

Answer 2

i think of you're no longer getting your question replied because of the fact that's totally confusing for the reason which you look to have a pair of misconceptions. First, in case you document a joint return, you in basic terms have one tax bracket and that's based on your mixed earnings. 2nd, a contribution to a Roth IRA isn't tax deductible like a contribution to a conventional IRA or (because of the fact it is likewise pre-tax money) a 401-ok or comparable plan. So the tax bracket is beside the point. all the tax reward of a Roth are at distribution time in that if executed maximum surprising, all the incomes are tax loose and penalty loose. this is to no longer say you mustn't do the Roth in basic terms because of the fact that's not deductible. Any economic adviser will inform you that a blend of pre-tax money (IRA and 401-ok) and after-tax money (Roth) investment is the wonderful. in basic terms what that blend is relies upon on your tax subject (bracket, and so on.)

Answer 3

You can always do a trad IRA , even if you cant take it off your taxes this year and it will still be tax deffered which is better than whatever it would be in without that tax umbrella. In short ALWAYS contribute the max to an IRA if you have the ability even if you cant contribute to a roth or take it off your taxes now. I would suggest directing further questions to a Certified Financial Planner, "retirement specialist" or go to your local bank.

Answer 4

You may be able to contribute to a non-tax deferred retirement account. You can also contribute to 529 (if you have children). There are many options, but you may need to make a decision before 12/31/06. I suggest you contact a godd CPA. If in AZ contact me at:
Chris C.
R.C. Acosta, CPA, P.C.
[phone]