tiaa-cref and safe harbor

[Lori H]

a partner in a medical practice has a tiaa/cref annuity from a former medical group that he wants to rollover to a ira. half of the present tiaa account must be paid out in a taxable annuity payment to him, which will be about appx. $10,000 per year. he is 56 so he would have taxable income plus, i think the 10% penalty for about 3 years.

his current practice maintains a safe harbor 401(k) and he wants to maneuver his income from this practice to help offset the taxable income from the annuity. i understand the max he could defer for 2006 is $20000. any thoughts on helping him save a little more? should he elect to defer that $20000 as roth 401(k)?

thanks

[WDIK]

There are probably too many unknown factors to make an appropriate recommendation for this doctor, but I do have one observation.

Electing to defer his salary under the Roth 401(k) provisions seems to defeat the stated purpose of "maneuver[ing] his income from this practice to help offset the taxable income from the annuity." This observation does not mean to say that the Roth approach wouldn't be beneficial.