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kev

Traditional Ira

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OK - I previously posted about poor investment options in regard to my wife's 457 plan. This is an incredibly basic question, but it is something I really don't know that much about - traditional IRA's. I invest through T. Rowe Price in a 403b, my wife has a roth IRA (Which does not allow for tax deduction). As I have a 403b, and my wife has the option of a 457, can she invest in a traditional IRA straight through a mutual fund co. (vanguard or TRP for example)? Would the contributions be tax deductible? How do you fund a traditional IRA - is it pretax withdrawals from a paycheck, or can you pay with after tax money and then deduct it? This seems like it should be simple, but I don't understand traditional IRA's very well.

 

Thanks for the help!

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Yes you can fund a traditional IRA directly through a mutual fund company. I fund mine through Vanguard. The only requirements the mutual fund company will have is a minimum initial investment. Vanguard requires a $1000 initial investment in the STAR fund and then $3000 for most of the other funds. Other companies do not require a minimum investment but will require a regular investment of money. If you qualify for a traditional IRA then it is tax deductible. There is a $4000 limit for most investors and I believe the catch up is a $1000 more for those who are fifty and above. I do not believe you can fund an IRA through a salary reduction. You will have to fund it with money that has been taxed and then deduct it during tax time. You are still able to fund your 2006 IRA until April 17th of this year. If you want to make your IRA contributions very simple once you set up the IRA you can usually set up an automatic contribution to the IRA. I am paid twice a month so twice a month I contribute to my IRA. The money is direct deposited to my account on the 15th and 30th and then Vanguard withdrawals it on the same day. I never miss the money.

 

steve

 

 

 

quote name='kev' date='Jan 25 2007, 04:03 PM' post='12038']

OK - I previously posted about poor investment options in regard to my wife's 457 plan. This is an incredibly basic question, but it is something I really don't know that much about - traditional IRA's. I invest through T. Rowe Price in a 403b, my wife has a roth IRA (Which does not allow for tax deduction). As I have a 403b, and my wife has the option of a 457, can she invest in a traditional IRA straight through a mutual fund co. (vanguard or TRP for example)? Would the contributions be tax deductible? How do you fund a traditional IRA - is it pretax withdrawals from a paycheck, or can you pay with after tax money and then deduct it? This seems like it should be simple, but I don't understand traditional IRA's very well.

 

Thanks for the help!

 

 

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Thanks for the info- I did some more research, and I think this is an option we are gong to pursue - It looks like we are just going to slide in under the limit for full deductibility, so that makes it even more worthwhile.

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