ziggy29
Moderator Emeritus
I'm working out in the garage listening to a financial/investment planning show on local Austin radio. I'm taking a few minutes to write this before I forget the details.
The first guy I heard call in mentioned that he and his wife earned about $180K, both maxed out their 401K plans (including catchup as they were both over 50), and wanted to see how they could shelter more of their money from taxes.
He mentioned a traditional, non-deductible IRA as likely the only option, because a $180,000 income is too much to qualify for a Roth.
Hold on, now. He neglected to ask one critical question: Is that a $180K AGI *after* 401K deductions, or is $180K your total income before all taxes and deductions? If it were the latter, the radio guy gave terrible advice, because if they have a $180K income *before* deductions, then maxing out two 401K plans with over-50 catchup takes $41,000 off their AGI and makes them eligible for a Roth for a total of $10,000 in 2007 and $12,000 in 2008! In other words, he could be steering them into a non-deductible traditional IRA when a Roth may still be an option!
I shook my head at this "financial planner" type not asking this question in a scenario where this question is critical.
Next up was a guy who had two jobs and was eligible for a 401K (and matching) in both. He said he wanted to contribute up to both employer matches and wondered if that was illegal or a violation of tax law. The radio guy said it wasn't and he'd recommend doing that. (Okay, he's right on this one.) The caller mentioned being afraid of running over some "$5,000 limit" he'd heard about. Well, Radio Guy didn't mention that he was probably thinking of the 2008 IRA contribution limit, but said "I *think* this limit is $15,000" (nope -- it's $15,500).
Then he compounded the blunder by saying he thought that limit was $15,000 per employer and not a combined limit!!!!
How can ANYONE who supposedly knows enough about financial planning to get a radio show be this clueless about things? I never got what his credentials were.
Wow. I just had to share that. Now back to work in the garage.
The first guy I heard call in mentioned that he and his wife earned about $180K, both maxed out their 401K plans (including catchup as they were both over 50), and wanted to see how they could shelter more of their money from taxes.
He mentioned a traditional, non-deductible IRA as likely the only option, because a $180,000 income is too much to qualify for a Roth.
Hold on, now. He neglected to ask one critical question: Is that a $180K AGI *after* 401K deductions, or is $180K your total income before all taxes and deductions? If it were the latter, the radio guy gave terrible advice, because if they have a $180K income *before* deductions, then maxing out two 401K plans with over-50 catchup takes $41,000 off their AGI and makes them eligible for a Roth for a total of $10,000 in 2007 and $12,000 in 2008! In other words, he could be steering them into a non-deductible traditional IRA when a Roth may still be an option!
I shook my head at this "financial planner" type not asking this question in a scenario where this question is critical.
Next up was a guy who had two jobs and was eligible for a 401K (and matching) in both. He said he wanted to contribute up to both employer matches and wondered if that was illegal or a violation of tax law. The radio guy said it wasn't and he'd recommend doing that. (Okay, he's right on this one.) The caller mentioned being afraid of running over some "$5,000 limit" he'd heard about. Well, Radio Guy didn't mention that he was probably thinking of the 2008 IRA contribution limit, but said "I *think* this limit is $15,000" (nope -- it's $15,500).
Then he compounded the blunder by saying he thought that limit was $15,000 per employer and not a combined limit!!!!
How can ANYONE who supposedly knows enough about financial planning to get a radio show be this clueless about things? I never got what his credentials were.
Wow. I just had to share that. Now back to work in the garage.
