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March 07, 2008

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"As long as you (or your spouse) receive a paycheck, you are eligible to open a Roth IRA."

Unfortunately, if you or your spouse receives a paycheck that is "too big", your statement is not true.

FMF - To follow the poster above, I strongly recommend you correct your post to accurately reflect the following:

(from Smartmoney.com)
"Trouble is, everyone isn't eligible to open a Roth IRA. Who qualifies for 2008? Joint filers with modified adjusted gross income, or MAGI, below $169,000, and individuals with MAGI below $116,000. (Though eligible contributions start to phase out at $159,000 for joint filers and $101,000 for individuals.)"

I just think it's important to present all the facts accurately.

Man...You guys are pretty literal, huh?

I took this statement, in the context of the article, that if your spouse works a part-time job, clearly on a smaller scale like a summer gig or something to that effect, that they too would be able to send off a Roth for his/her spouse.

I didn't take this statement to mean if your spouse runs a one billion dollar hedge fund that you can send off a $5000 check to an IRA.

Isn't there a certain level of understanding and knowledge a reader is assumed to have?

I guess I am tired of Roth IRA articles. They all mention the same thing anyways.

I too am tired of Roth articles, but only because we don't qualify to fund one. I certainly don't run a hudge fund, but my husband and I both make a respectable living as two professionals, and we're excluded from funding IRAs (Roth or otherwise). I acutally started funding a traditional IRA for my husband at one point (who doesn't have a 401k option from his employer), and then realized too late that none of the contributions were tax deductable. Not the end of the world, but I wish more aritcles like this included all the relevent salary caps. It applies to more people than you would think.

Why even read Roth articles? They don't apply to you, the rules never change and it's the same stuff rehashed over and over.

There are blogs that touch on issues for folks making 100K and more and higher income fixes for folks like yourself.

It's ok Zook, money can't buy happiness. Keep telling yourself that.

"I took this statement, in the context of the article, that if your spouse works a part-time job, clearly on a smaller scale like a summer gig or something to that effect, that they too would be able to send off a Roth for his/her spouse."

FYI, what that statement actually says is, if only one spouse earns a paycheck, BOTH spouses can fund a Roth IRA (which is correct except for those pesky little income caps, but that topic seems to annoy you so I won't mention it again).

Hey Poop-
What on earth are you talking about?

The main point is that nothing is new here with the Roth IRA. If you need the income limits and maximum amount to contribute for 2008 you must live in a cliff in Uzbekistan. Did you miss the 45,987,876 articles on Yahoo!, MSN and every other major site that do daily Roth IRA articles and rehash the same points?

I am still trying to figure out what the point is for the animosity? If you don't qualify for a Roth IRA, why would you read AND post about it?

What's the point here? You found a common known fact missing from this article and want a pat on the back?

FMF, you post great stuff, but these Marotta pieces are consistently the lesser offerings on your blog. They often are written with strange tones that surround the advice. For example, I recall the article aimed at young workers starting out that advised them to give appreciated securities instead of cash as charitable contributions. (Big mistake and huge misunderstanding of why giving appreciated securities can be a tax advantageous move.) Then this one that has the tones of a government conspiracy to trick people into getting the government more tax revenue in the future.

Here's the real advice. People should be taking advantage of as many tax-advantaged savings methods that they can. But the difference between investing in a Roth and investing in a traditional IRA, for quite a lot of people, isn't a heck of a lot. People who aren't maxing out all of their retirement account options and still investing on their own in taxable accounts should fret a little less about whether they are doing the absolutely optimal thing. No one can predict with great certainty whether the combination of your income level and tax rates will be higher or lower in the future. So some would suggest just diversifying your exposure some. The main reason I recommend a Roth to many people is precisely the income restrictions. I realize not everyone is in this spectrum, but a good number of people might find themselves ineligible as their career progresses. So it may be worth taking advantage when you can. But if all you have is two thousand dollars, say, to invest, it's not going to matter terribly if you use an IRA or a Roth IRA. Just invest the two thousand in the way you are most comfortable and be done with it.

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