Tax tactic: Revisiting the IRA
Mar 27, 2009 10:49 AM
April 15 is the deadline for creating or adding to an existing IRA in order to get a 2008 tax deduction. As I mentioned in an earlier post, it's one of the last, best tax moves you can make before filing your 2008 return.
But should you bother with an IRA this tax season? IRAs are more limited savings vehicles than 401(k)s; the maximum you can put away is $5,000 a year ($6,000 if you're 50 and over), and your tax deductibility is reduced--and ultimately disappears--as your income increases.
Still, as many people have seen their 401(k) matches evaporate, the option looks somewhat better than it once did, particularly when the investment choices within the 401(k) are few and larded with fees.
Check out this recent article in Consumer Reports Money Adviser, which discusses the benefits of IRAs. Its companion article examines strategies for revamping your overall retirement savings.
--Tobie Stanger
--Tobie Stanger
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