bill@utastro.UUCP (William H. Jefferys) (03/13/84)
A discussion some time ago asked about various uses of IRA's,
and the advantages/disadvantages of them. One that I don't recall
having seen, which was highlighted recently in an article in
the American Association of Individual Investors Journal,
points out that even after a relatively brief holding period,
one can break even or end up ahead with an IRA, provided that
the marginal tax rate at the time of withdrawal is substantially
lower than it was at the time of contribution. He points out,
"This suggests uses for an IRA other than
as simply a retirement plan. For instance, an IRA
could be used as a form of self-unemployment
insurance or in family planning when one spouse
anticipates a period of lowered annual income,
hence a lowered tax rate"
This could have important implications for some engineers in
high-tech situations when periods of unemployment between
jobs can be expected, as has occurred in the past.
The article gives formulas for working out the break-even
period under various assumptions. AAII Journal is available
by subscription. Its articles are well written, but are not
written for the novice investor. Some assume a fair amount
of mathematical sophistication. For more information,
write AAII, PO Box 10224, Chicago IL 60610.
--
Bill Jefferys 8-%
Astronomy Dept, University of Texas, Austin TX 78712 (USnail)
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