[wrs0030]

My employer offers no retirement plan; is there any other way to save more tax deferred money other than a traditional IRA?

[ebaines]

I would suggest putting money into a tax-efficient mutual funds - these are funds that while not exactly "tax-free" try to invest in such a way as to minimize the taxes you owe until you cash them in. Typically these are funds that use buy-and-hold strategies, so the bite each year for capital gains distributions tend to be lower than most stock funds. Typical examples include index funds (offered by all the major mutual fund houses). A couple of other advantages of these types of investment are that their annual fees tend to be much lower than most actively managed funds (hence your fund keeps grows faster), and when you do take a withdrawal years from now you will be taxed mostly at capital gains rates. Your IRA distributions (and 401(k) if your employer offered one), on the other hand, are taxed at standard income rates, which are generally higher.

The only other truly tax-deferred vehicle I am aware of are the various dreaded insurance company products such as whole life, universal life, and variable annuities. My advice is stay away from these as investments - they tend to be very restrictive in what you are allowed to invest in (or change down the road), have high fees, and often invest in funds that you can't really track an compare. Plus, if your investment loses value, and you sell at a loss, you can't deduct the loss (as I found out the hard way recently). If you need life insurance, buy term.

In both cases these investments are using after-tax money, as opposed to the money you put into your traditional IRA which you should be able to deduct (assuming you go w/ a traditional IRA and not a Roth IRA).

If you need more help in finding tax-efficient funds I suggest looking through the web sites at Fidelity, Vanguard, T Rowe Price, etc. I believe the Forbes web site also has some good info on this.