You also need to click the Maximum Editablity checkbox. This will not only keep your text fully editable, but also maintain any layer transparency you have set in Illustrator. It is also recommended that you to check the Anti-alias check box, and don’t forget to set your resolution to High for print work, or Screen for Web work.
Your Illustrator file is now a native, layered Photoshop file. Open your newly exported file in Photoshop and you’ll see that the layers are named just as they were in Illustrator, the text is editable and the layers maintain their transparency (where you created them in Illustrator).
While Photoshop’s Smart Objects feature is a great way to place images into Photoshop by copying and pasting an Illustrator image into Photoshop, while still allowing you to edit them in Illustrator and have the changes automatically reflect in your Photoshop document, it still requires you to “build” your document over again as far as size, placement and so forth. This simple method is perfect for Web designers who do their mockups in Illustrator before finishing the files and splicing images in Photoshop.
Placing an Image in Illustrator
Sometimes you may have manipulated an image and saved it as, say, a GIF or jpeg, and then want to bring it into Illustrator. This is where you use FILE...Place.
A good example of this is the 'Marlboro' package where the 'crest' was manipulated in Photoshop, saved as a GIF to preserve transparency and 'Placed' in the Illustrator-created package.
Find the image you want to place and select it. If you want to link the image to the document, select the “Link” box. If you want to embed the image, uncheck the “Link” box.
Remember that if you do link your image, you must include the image file when you send the file out to be printed or when your final Illustrator image is created. In addition, including 'linked' files cause problems when you create Symbols.