I'm not eligible for my employers 401k for a year. What can I invest in in the meantime? I would like to fully invest as many pre-tax or tax deductible dollars allowed by the IRS. I believe the max on the 401k is $15,000 for 2007 but since I'm not eligible yet, am I only allowed to contribute $5,000 tax-deductible dollars to an IRA?? That doesn't seem fair.
2007-01-30 03:27:29 · 3 answers · asked by JGA 2 in Business & Finance ➔ Investing
Well, unless you're over 50 , it's only $4000 tax deductible dollars. The fairness only lies with your company not allowing you to get in the 401k immediately (my company does)....
2007-01-30 04:30:07 · answer #1 · answered by dashel_gabelli 3 · 0⤊ 0⤋
Sorry , the system wasn't designed to be fair...not many taxes are..
But, I do think you can put the max in a traditional IRA...and still take out a full ROTH, too. May be better in the long run....when you start withdrawing, you'll have two different types of " income" taxed and tax-free...you can control your income tax on withdrawals buy hitting the ROTH some of the time.
Worst case, it's only a year 'til you can max the 401...you got 30/40 years to make -up that....you'll do it.
2007-01-30 13:18:52 · answer #2 · answered by jebediabartlett 6 · 0⤊ 0⤋
Unfortunately, those are the rules. All you can do is put in the 5k IRA and then roll it into your 401k. You can't roll after-tax (non-deductible) IRA's into qualified plans. I realize you're looking for tax savings right now...but you're not going to get them. You may as well put the other amount into a non-deductible IRA or a ROTH IRA so that your income is shielded from taxes.
2007-01-30 05:29:52 · answer #3 · answered by digdowndeepnseattle 6 · 0⤊ 1⤋