Question about IRAs...

S

ScapGF

I am aware that one can only deposit $5k per year into a traditional IRA while deducting that same amount from your gross income.

However, how does it work for the following scenario:

1. Person has IRA
2. Person receives $100k and wants to put it in an IRA

Can that person put $100k into the IRA and then deduct $5k from their gross income and still get the tax deferred benefit with the other $95k?

In other words, can the account be funded with $100k and avoid paying the capital gains each year when changes to the portfolio are made?
 
Quote from Bob111:

me?
i'm not even qualified to deduct all this crap..what's the point for me to have an IRA ? to make pointless,miserable 5K non deductible contribution each year?

http://www.money-zine.com/Financial-Planning/Retirement/IRA-Contribution-Limits/
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Actually, the question was trying to figure out why the IRS will let you contribute more to a 401k than an IRA.

An IRA has a clear advantage over most 401k's since 401ks limit you to the investment menu of the plan whereas an IRA lets you have more choice on where to invest.

And to answer your question, the point of having the IRA would also be to avoid paying taxes on the gains each time you make an investment change. Unless of course you like paying the IRS...
 
Quote from ScapGF:

An IRA has a clear advantage over most 401k's since 401ks limit you to the investment menu of the plan whereas an IRA lets you have more choice on where to invest.
More...
well now, we've debated this question before, and it took me a while to comprehend, but in a 401k you have use of your money immediately, in an IRA you don't get the benefit until tax time.

May be a small distinction depending on your income.

otherwise, if 401k options don't fit in with your idea I agree. But if you're a trader you should be able to make them fit in.
 
Quote from ScapGF:

Actually, the question was trying to figure out why the IRS will let you contribute more to a 401k than an IRA.
More...

Because they can allow employers to throw $ into it, you match it )probably add more), and yes, the government now knows you'll be on the hook for the inevitable (when you quit or retire), the IRA timebomb. What a night mare the IRA is.

For the Roth, if you make less than $122,000 agi single, or $179,000 agi married, you can still only put 5k in if under age 50 or 6k in if over 50/year. Yes, these limits are asinine, but this is what the government thinks "is best.":confused: :(

If you guys only knew what a time bomb the IRA really is...:eek:
 
By chance, are you self-employed? If so, you have many options. If not, you have very few.

Quote from ScapGF:

I am aware that one can only deposit $5k per year into a traditional IRA while deducting that same amount from your gross income.

However, how does it work for the following scenario:

1. Person has IRA
2. Person receives $100k and wants to put it in an IRA

Can that person put $100k into the IRA and then deduct $5k from their gross income and still get the tax deferred benefit with the other $95k?

In other words, can the account be funded with $100k and avoid paying the capital gains each year when changes to the portfolio are made?
More...
 
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