Dumb tax questions

[cute fuzzy bunny]

I think I figured out one of these, and I know there are folks here who know the answer to the other off the top of their heads.

We're completely dissatisfied with the wifes 403b offerings at work. Limited funds, high costs, and they keep closing old offerings and presenting new ones that I'm even less interested in. Last month they closed the foreign bond fund and the REIT fund and created a couple more large cap blend funds with 2% fees.

We decided to stop taking withdrawals from her paycheck to fund the 403b, change our port to reduce current income and retarget it for longer growth, and use her current income instead while we let the portfolio grow at a signficantly reduced withdrawal.

We've both been fully funding Roths the past 3 years.

Its bugged me a bit though that we cant take advantage of the tax deferral the 403b offers.

I believe we can also both contribute to a regular IRA providing we remain within the contribution limits, file jointly, and dont exceed 64k AGI limits (after which the deductability goes away). We would have met those criteria last year, and I think we'll do so again this year.

Am I reading it right? Theres almost nothing I could find with 15-20 minutes of searching that accommodates someone who ER'ed at 39, just got married, and has a working wife that has a retirement plan at work she doesnt like that wants to contribute to an IRA...

So thats the tougher of the two.

The other question was posed by my in-laws. My FIL retired on a disability after suffering a stroke some years ago. My MIL is a charge nurse that believe it or not, loves to work overtime. She's approaching the age where she can start early SS withdrawals. She was wondering what the implications of working and drawing SS early are with regards to taxation of the benefits, and limitations. I'm sure I can find this in 5 minutes on the social security web site, but I think a few of y'all are quite familiar with this and could describe the ins and outs.

Thanks for any ideas, suggestions, offhand remaks, quips and unrelated stories in advance.

 

[ats5g]

See You can work and get Social Security at the same time

- Alec

 

[cute fuzzy bunny]

That answered question #2 Alec...thanks! Looks like working and trying to collect early SS wont do her any good...looks like her benefits will be reduced to about zero as she's grossing well over 50k a year.

 

[Martha]

For details on the IRAs, look at IRS publication 590. http://www.irs.gov/pub/irs-pdf/p590.pdf

For 2005, if covered by a retirement plan at work, contributions to a traditional IRA are phased out if modified adjusted gross income is more than $70,000, if married filing jointly.

 

[cute fuzzy bunny]

Thats what I thought from what I'd seen, which is good news. Means I can shelter another $8k in income starting next year.

Me no likey paying taxes...

 

[bow-tie]

Th,

If you both are maxing out your Roth IRA contributions each year, doesn't that preclude you from contributing to a regular IRA. It seems that way from what I read from Martha's link.

 

[cute fuzzy bunny]

Ok I give up...where in the 100 pages did you see that? I thought the two were mutually exclusive and you could contribute to both...

 

[bow-tie]

Page 55, I think

"If contributions are made to both Roth IRAs and trad. IRAs established for your benefit, your contr. limits for Roth generally is the same as limit would be if contr. were made to only Roth IRAs, but then reduced by all contr. (other than employer contr under SEP and SIMPLE IRA) for the year to all IRAs other than Roth IRAs"

 

[bow-tie]

doh! double post... sorry 'bout that

 

[cute fuzzy bunny]

Crap, that looks like its an either-or proposition.

Now why couldnt they put that on page frickin one of the document and put it in english?

"You can contribute up to xxx dollars total to a roth or regular ira. Full amount to one or the other or split it as you see fit. Your total contributions cannot exceed xxx dollars."

Pleh. Well I may decide to do regular iras than roths in years where I need the tax break and go the other way when I dont. I was so happy about the prospects of being able to contribute to both.

 

[bow-tie]

Well, you screwed that up. You're supposed to tell me I read that legal-jargon-crap wrong, because I would be ALL OVER the maxing out both IRAs scenario.

Stupid rules........