What are my options for retirement planning?

[reallyprettyhappy]

Hi everyone,

I'm trying to plan out our 2010 budget and I'm having trouble figuring out how to plan for our retirement at our anticipated 2010 income level. If my husband doesn't get deployed again at all in 2010, I'm estimating that our gross taxable income will be around 210,000. I know that there are income limits for 401k contributions, as well as Roth IRA contributions, but I don't know what they are...are we even able to use either of these options? If it makes any difference, his plan is a tsp, not a 401k. Any help would be greatly appreciated.

[buildmybudget]

At that income level, I would recommend seeking out a local CFP to help guide you through these decisions. One place you can check for a local certified financial planner is Dave Ramsey's website:

Endorsed Local Providers - daveramsey.com

Best of luck to you!

[creditcardfree]

The TSP is going to have the same income stipulations as a 401K. Take a look around on the IRS website for specific information.

[terces]

the tsp website will give you your annual contribution limits.
tsp.gov

[reallyprettyhappy]

OK, so I am sifting through online resources as well, trying to educate myself in this, but I just want to make sure I understand everything. I found one chart that makes it look like at our estimated income level we will not be able to contribute anything to a Roth IRA. Is there an income level that eliminates altogether the ability to contribute to a 401k plan, or does it just phase-down as income goes up. And is the income that is considered the gross income? I'm so confused.

Also, can I contribute up to $16,500 into my 401k and my husband contribute up to $16,500 in his tsp? OR is it a combined limit of $16,500 for the household.

Is there anyone else dealing in similar numbers who would be willing to share what they do for retirement saving?

[Like2Plan]

Is there an income level that eliminates altogether the ability to contribute to a 401k plan

No.

Also, can I contribute up to $16,500 into my 401k and my husband contribute up to $16,500 in his tsp? OR is it a combined limit of $16,500 for the household.

If your employer offers a 401K and your DH can contribute to TSP, you each can contribute up to the limit set by your employer up to the IRS limit.
What does that mean? You have to check the rules that your employer sets. (Sometimes, there are additional employer driven restrictions such as you may not contribute more than 50% of your income. This varies from by employer. )

I am assuming your are both under the age of 50 and do not qualify for catch up contributions?

Maxing out the contribution would go a long ways towards reducing your taxable income. Are you eligible for a flexible spending account through your employer? Do you have to pay for childcare?

[zetta]

You can contribute $16,500 to your 401k, and your husband can contribute an additional $16,500 (or whatever the tsp max is) to his tsp. There are some rare circumstances where the 401k max is lowered for the executives at a particular company because not enough of the lower-paid people at the company are contributing, but it is unlikely that it applies to you.

You earn too much to contribute to a ROTH, however, you can each put $5,000 to a traditional IRA. This will be after-tax money, you won't get any sort of tax break.

So altogether you can contribute $43,000 to retirement accounts.

In 2010 there is a special rule that will allow you to convert your traditional IRA to a ROTH IRA. I haven't researched all the details, but this article seems to imply that in 2010 you can make an after-tax contribution to a traditional IRA and then shortly thereafter convert it to a ROTH IRA:

2010 Roth IRA Conversions

[mainyy]

You can contribute $16,500 to your 401k, and your husband can contribute an additional $16,500 (or whatever the tsp max is) to his tsp. There are some rare circumstances where the 401k max is lowered for the executives at a particular company because not enough of the lower-paid people at the company are contributing, but it is unlikely that it applies to you.

You earn too much to contribute to a ROTH, however, you can each put $5,000 to a traditional IRA. This will be after-tax money, you won't get any sort of tax break.

So altogether you can contribute $43,000 to retirement accounts.

In 2010 there is a special rule that will allow you to convert your traditional IRA to a ROTH IRA. I haven't researched all the details, but this article seems to imply that in 2010 you can make an after-tax contribution to a traditional IRA and then shortly thereafter convert it to a ROTH IRA:

agree with you. your plan is very good.