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' If your tax filing status is 'Married Filing Jointly' - $160,000

' If your tax filing status is 'Married Filing Separately' (and you live with your spouse) - $100,000

' If your tax filing status is 'Single', 'Head of Household' or 'Married Filing Separately' (and you did not live with your spouse during the year) - $110,000

Now, here is a little known totally legal secret that is worth your time reading this article. Below outlines the contribution limits established for the next several years:

' 2004 - $3,000 ($3,500 if you are age 50 and above)

' 2005 - $4,000 ($4,500 if you are age 50 and above)

' 2006 - $4,000 ($5,000 if you are age 50 and above)

' 2007 - $4,000 ($5,000 if you are age 50 and above)

' 2008 - $5,000 ($6,000 if you are age 50 and above)

If you need more information about Roth IRAs, you should consult a tax professional such as a Certified Public Accountant or Certified Financial Planner.

The Roth is kind of weird until you get used to it in terms of how much you can put in (contribute) each year depending on how much you earn (compensation). as things go of this you really have two limits, one dealing with your compensation and the other dealing with your contribution. Let me explain.

The first contribution limit has to do with compensation, in other words you have to be making some money somewhere. As mentioned, you must have some form of compensation to qualify to make a contribution, but there is also an income limit that says whether or not you can put money in; make a contribution.

If your fit gross income exceeds these limits, you are no longer eligible to contribute to a Roth IRA. In 2004, the familiarized gross income limits were:

• If your tax filing status is “Married Filing Jointly” - $160,000

• If your tax filing status is “Married Filing Separately” (and you live with your spouse) - $100,000

• If your tax filing status is “Single”, “Head of Household” or “Married Filing Separately” (and you did not live with your spouse during the year) - $110,000

Now, here is a little known totally legal secret that is worth your time reading this article. When I taught investment at the University of South Carolina I gave 10% credit of the course grade for the simple act of opening a Roth IRA. I was in awe when a few students would not open one seeing as how their parents had told them it was illegal to if they did not have a job. I told them that they were going nowhere fast if they could not think creatively enough to just go mow a lawn somewhere for ten wampum and put it into the account. I made it unhampered to them that wealthy people shift into so by taking staff work nut just thinking along toward taking action!

The best court plaster of this concept I ever learned was a real estate investor that wanted to open a Roth for his newborn son. The problem of proving that a newborn makes money in a job is a tough one even for my noodle but this fellow came up with a great idea. He took a photo of the baby and put it on the charge card with the words; “Help my dad finance my education by marketing a home from him…he is the best dad in the whole world!” Then he paid the baby, get this…modeling fees! He put those fees straight into the narration and filed a return for the baby with the IRS. I love that story! Talk some creative that is the kind of person that will go far in business. This is also the only newborn I have heard of with a tax free stock portfolio from earnings off his own job!

The second Roth IRA contribution limit has to do with how much you can contribute to your account. downhill outlines the contribution limits established for the next several years:

• 2004 - $3,000 ($3,500 if you are age 50 and above)

• 2005 - $4,000 ($4,500 if you are age 50 and above)

• 2006 - $4,000 ($5,000 if you are age 50 and above)

• 2007 - $4,000 ($5,000 if you are age 50 and above)

• 2008 - $5,000 ($6,000 if you are age 50 and above)

If you need more information within hearing Roth IRAs, you should consult a tax professional such as a countersigned Public calculator or true as gospel Financial Planner. You can also get more information directly if you take a look at IRS publication 590 - Individual Retirement Arrangements. Using a Roth is the very best trading pipe roll to use while investing in the stock market.

My latest net-net article over at GuruFocus includes my clearest explanation of what to look for in net-nets – and more importantly – what it takes to make money investing in net-nets:

If the balance sheet is very liquid and insider ownership is very high – there’s a good chance something will happen. I have no idea what. And I have no idea when. But someday, something will happen to increase the return on those assets…Sometimes it’s as simple as returning the assets to shareholders, using net cash to make a management buyout super cheap, or using net cash to buy a totally different business…When you buy a net-net you are not buying future earnings. You are buying future assets. What I’m talking about here is asset conversion. At some point, you are expecting today’s assets will be converted into something you can profit from. Something a control investor will pay for. Or something the market will reward. 

It’s very hard to imagine these events ahead of time. But you can still bet on them:

That’s the uncertainty in net-nets. Most of the best net-nets have this certain/uncertain duality. It is certain the stock is selling for less than it’s worth. It is uncertain how the stock will ever sell for what it’s worth.

Remember what Ben Graham told the U.S. Senate:

The Chairman: When you find a special situation and you decide, just for illustration, that you can buy for 10 and it is worth 30, and you take a position, and then you cannot realize it until a lot of other people decide it is worth 30, how is that process brought about – by advertising or what happens?

Mr. Graham: That is one of the mysteries of our business, and it is a mystery to me as well as to everybody else. We know from experience that eventually the market catches up with value. It realizes it one way or another.

Talk to Geoff about Faith in Net-Nets

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