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Originally Posted by newgolddream
Hello all-
My biggest questions are:
1) Can I have both a 401k and a Roth at the same time?
2) I have earned income, as noted above, so do tax laws have any problem with me using this inheritance to contribute to a Roth? I know that when one makes over a certain amount of cash regularly over a year, said person is not eligible for a Roth IRA. However, this inheritance wouldn't count as "earned income", would it? (Of course I'll pay all the necessary taxes on the inheritance)
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Your plans sound solid so far! Good job for wanting to invest the money and not just spending it on a car or a fancy vacation!
1) Yes, you can have a 401(k) and a Roth at the same time. The contribution limits are (IIRC) $15,500 annually for the 401(k) and $4000 for the Roth IRA. You can contribute to a Roth IRA for 2006 until April 15 2007, so since you have $30,000, you could fully fund your Roth IRA immediately for both 2006 and 2007.
2) There is no problem with using an inheritance to contribute to a Roth, but someone more knowledgeable than me may tell you if this money counts as 'income' (my guess is yes) and if that affects your ability to contribute to a Roth for either 2006 or 2007. My guess is that if it puts you over the income limit, you may not be able to contribute to a Roth the year you receive the inheritance, but could the following (or previous) year. So, if you received it in 2007, you would be able to contribute for 2006; if you received it in 2006 you'd be able to contribute for 2007. Note that to be ineligible to contribute the full amount to a Roth IRA for a given year, your AGI (ajusted gross income) would have to be, IIRC, about $95,000.
Good luck- your fund choices sound like good ones!