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IRA's and union pensions


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#1 David Mullen ASC

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Posted 28 July 2008 - 11:08 PM

I started a Roth-IRA a few years ago but lately have been hitting or hovering just below the income limit above which you cannot contribute that year to the Roth-IRA (I think it's around $150,000 per year when combined with your spouse's income.)

So I started a regular IRA but after contributing to it, I heard that you cannot contribute to an IRA if you have a retirement pension, which in theory I do as an IATSE member.

So does anyone in the union understand this stuff? Should I give up on IRA's and open some other type of account for saving?
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#2 Gregory Irwin

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Posted 30 July 2008 - 12:29 PM

I started a Roth-IRA a few years ago but lately have been hitting or hovering just below the income limit above which you cannot contribute that year to the Roth-IRA (I think it's around $150,000 per year when combined with your spouse's income.)

So I started a regular IRA but after contributing to it, I heard that you cannot contribute to an IRA if you have a retirement pension, which in theory I do as an IATSE member.

So does anyone in the union understand this stuff? Should I give up on IRA's and open some other type of account for saving?



Hi David,

What you should have is a SEP (Simplified Employee Pension) IRA. The SEP IRA is designed for self-employed people like you and me here in the USA. You can contribute up to 25% of your gross income or up to $48,000 max. for 2008 - which ever comes first. That number goes up annually. I've had one for years and as you know, I've been a union member for years. It's the best annuity of its type for us free-lancers. You will be qualified to take money out of it, penalty free, once you are 59 years old. Then you are taxed at whatever tax rate you are in at that time. The theory is most people use their IRA as retirement funds and are automatically in a lower tax bracket. Till then you'll enjoy the tax deferments that the SEP IRA offers lowering your gross income at tax time.

Having said all of this, you should never rely on just one source of financial planning. Annuities are just one type of funding for the future. You need a balanced portfolio of all sectors of the market (stocks or mutual funds, bonds, annuities, REITS, etc.) Get a financial advisor that you will be comfortable with and begin some discussions with him or her. I have accounts with Ameriprise as well as Sanford Bernstein & Co. Good luck!

Best,
Greg
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#3 Gregory Irwin

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Posted 30 July 2008 - 12:41 PM

Till then you'll enjoy the tax deferments that the SEP IRA offers lowering your gross income at tax time.


Best,
Greg


I should clarify that I meant the SEP IRA will lower your taxable gross income.

Greg
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