Two Plus Two Newer Archives

Two Plus Two Newer Archives (http://archives1.twoplustwo.com/index.php)

- Business, Finance, and Investing (http://archives1.twoplustwo.com/forumdisplay.php?f=32)

- - SEP IRA (http://archives1.twoplustwo.com/showthread.php?t=545684)

Guys,
I am going to owe a lot for taxes at year end, 150k or so. I have a lot of capital tied up in a house right now and wouldnt be able to contribute the 45k max for a SEP IRA after taxes. Is it worth taking a line of equity out to maximize this?

Wouldn't that only depend on the difference in returns between the SEP and the loan minus the tax savings? Seems like the primary consideration is; what tax bracket do you intend to be in when you retire? Remember if you get unlucky and retire in a period when the Dems are in charge paying the tax now may be a much better deal.

Jimbo

Jimbo, I have been pondering this for a while, trying to decide if I can do a Roth IRA or trad. IRA. On one hand our taxes are rather low historically. On the other, what if we don't have income tax as we do today when I retire.

To me it seems like this system is so bad that either they'll do away with it and tax in some other form or we may have some form of Libertarian government (or lack thereof right ACs?). Or maybe we'll have some efficient socialist government that takes 2/3 of our paychecks. Maybe that all sounds kind of silly. Either way I'm currently hedging my bets and doing a Roth IRA and a traditional 401k. Can you pull contributions out of a Roth 401k just like a Roth IRA? That may be the deal breaker for me. The option just became available to me and I haven't really considered it too much yet.

Sorry for hijacking and rambling, but Jimbo makes a good point and this somewhat applies.

Badger,

I would suggest the Roth IRA as long as you will have no trouble with the 5 year holding period timeframe to prevent this scenario.

As far as the 401K transfer I do know that you must be no longer employed where the 401K resides in order to make said transfer. Also the 5 year holding period begins anew if you make the transfer from the Roth 401K to the Roth IRA.

Jimbo

Sorry if I was unclear. I already max out my Roth IRA and continue to do so. In addition to that I put 13% of my salary in a traditional 401k, but am considering doing a smaller percentage in a Roth 401k.