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Posted by Jane on February 6, 2007, 4:56 am
>
> > Other than an IRA what other tax deferred savings is he eligible for?
> > How much can he save? I believe for 2006 he can save $4000 in a
> > traditional IRA. Can he do that now for his 2006 tax return?
>
> I would turn to a Roth IRA first. If you're going to make a maximal
> contribution, the Roth is probably a better choice. The reason is
> that the Roth is 'denser' than a traditional IRA. Of the money you
> contribution to a traditional IRA, some of it belongs to the
> government. The money in a Roth is all yours. Instead of putting in
> pre-tax money, you put in after-tax money and then all the earnings
> are tax-free.
>
> I think the Roth is a good place to start. After that, there's
> nothing wrong with an old-fashioned after-tax account. It's certainly
> not as great as a tax-advantaged account, but it's not bad. And it
> has the advantage that the earnings are taxed as dividends and capital
> gains, not regular income. You can also defer the majority of
> incremental taxes on capital gains and dividends by investing in tax-
> efficient mutual funds.
>
> Others might suggest your son turn to a variable annuity. This is a
> very divisive topic in this newsgroup. I, personally, steer clear of
> them. If your son has a LOT of taxable income, a variable annuity
> could help get that down.
>
> --Bill
I would have thought that at his tax bracket a traditional IRA would
have been a better choice. Not true?
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