New job, 401k and IRA questions

Okay, so I started a new job on Jan 3rd. It pretty much is a dream job for me. Very interesting work, very good pay, and a very well respected company. However, I'm only a contractor right now (but on a W2 rather than 1099 through my recruiter), so I'm not contributing to a 401k anymore.

I've read that IRA contributions are not eligible for any tax deduction if you have a qualifying plan and make over X amount per year. Well, last year I made about $65k and had an employer plan, so I didn't contribute to a 401k. This year, however, I am not currently eligible for a 401k plan (not offered by my recruiter), but may be eligible around September, assuming I go permanent with my new company (which I plan on doing). I will be making around $85k this year.

So, since I'm not eligible right now for a 401k, and knowing that I will be eligible later in the year, and that I will exceed the AGI limit for deductions...Can I deduct a 4k IRA contribution as long as I make it prior to being eligible for my company 401k?

2005 Year in Review

I've been really bad about updating for the last few months, but here is my net worth as of 12/31/05. As you can tell by looking at this entry, I missed my goal by about $2300. Also, you'll notice that my money ended up allocated a little differently than I originally planned.

I ended up putting $2k more in my 401k than I originally planned, and saw a small return on my Scottrade account and Roth IRA. However, I was not able to put as much into my savings as I liked. Several reasons contributed to this, but the big ones were spending $4.5k on a new laptop for myself and a new desktop for my GF. Also, my budget for my winter vacation was $2k but I ended up spending almost $3k. Luckily most of these expenses were offset by a consulting project I did.

Despite the miss of my my goal for the year, I was able to increase my net worth by $26k in 2005, which is a very big gain for me. Remember that I was only making $43.5k and living almost check to check as of 11/2003. So the new job really made all this possible.



¹Denotes a temporary balance earmarked for a specific purpose. This balance is not included in Net Worth.

As for other points of interest for 2005, the big one was that I now remember how expensive being in a relationship can be. While I tend to be pretty good about controlling spending on myself, I must confess I have a terrible time controlling how much I spend on my GF. However, it has been an incredible experience and I am determined not to let my frugality (read: cheapness) become a burden on our happiness! She truly is the most important thing in my life, and I would happily give up everything I've accrued to make her dreams become a reality.