Retirement Savings

[LuckyTaxi]

Just started a new job so I need to look into 401k and stuff.
I left a job and had a 401k w/ them which I will need to roll over pretty soon.
I have 3 months before I'm eligible for the 401k at my current job. Anyways, I've noticed a lot of people have IRAs as well as 401k. What's the benefit? Many employers match on the 401k so why put money into an IRA?

Sorry, it seems like a dumb question but I figure I would learn more. I'm 27 and would like to save a little better.

 

[Legend]

With IRAs you have a lot more control over which funds you can select from. So if you're wanting to invest in various index funds, you can select the ones with the lowest fees.

Other than that, it's another tax shelter to fill up after you've put a bunch into 401k.

 

[iversonyin]

You can take out $10k for your first house from your IRA- penalty free. And its tax deductible ($4k/ a year).

 

[munruss]

Look into a Roth IRA.

 

[vi edit]

Roth IRA's are very cool in that it's all "post" tax money and every dime you earn on it is tax free when you go to cash out when you retire. There also are not any required minimimum distributions once you hit 70.5. You can just let it keep growing. Another advantage of the Roth is that you can take out the principal at any point without penaly(think emergencies). Income earned must remain in the account or you are penalized.

A traditional IRA and a 401k are both very similar in nature. They are "pre" tax money and have a tax levied on them when you go to cash out at the end. How much you pay depends on how much you "make" off your investments.

One problem with the Roth IRA is that once you hit certain income limits (individual or joint) you can no longer invest in it.

IMHO, that means that the government is getting less money from them...that means I keep more. That's a good thing.

Ideally, I would invest in a 401k up to the point of the company match, then max out my Roth IRA, and once that is done, if you still have extra left over, head back and keep adding to the 401k.

 

[vi edit]

https://flagship.vanguard.com/VGApp/hnw...s/retirement/ATSCompareIRAsContent.jsp

 

[rufruf44]

Don't forget Roth 401K (if available).

 

[her209]

Also keep in mind that you can only put in $4000 into an IRA (combined if you have both a tradition IRA and Roth IRA) per year. Its $15500 for a 401k. Also, its common for an employer to match you contributions to a 401k up to a certain percentage.

 

[alrocky]

Ideally, I would invest in a 401k up to the point of the company match, then max out my Roth IRA, and once that is done, if you still have extra left over, head back and keep adding to the 401k.

:thumbsup: There's your basic rule of thumb. Time is on your side so you should endeavor to invest as much money as you can, assuming you'd like a princely sum come retirement. Current IRA and 401(k) max are $4000 and $15,500.

I left a job and had a 401k w/ them which I will need to roll over pretty soon.

You may be better off moving that into an IRA with Vanguard or another no load, low expense ratio mutual fund family.

Bernstein: The Four Pillars of Investing
Ferri: All About Asset Allocation
Belsky & Gilovich: Why Smart People Make Money Mistakes & How to Correct Them

 

[Safeway]

401(k) > * with employer match.

 

[LS20]

generally - and this is very generalized - Roth IRAs are a bit more flexible than 401k's
so if youre big on saving for retirement, use a 401k BECAUSE you get employer matching. instead of contributing above your employer match, if you wanted to put more towards retirement anyway, put the additional amount in an IRA instead

personally, id rather have my additional money in a taxable, but more flexible account. fck me when im retirement age. at 65, i think ill blow a gigantic line of coke and jump off an airplane. that, or have rich gracious kids

 

[patentman]

Originally posted by: lilcam
Just started a new job so I need to look into 401k and stuff.
I left a job and had a 401k w/ them which I will need to roll over pretty soon.
I have 3 months before I'm eligible for the 401k at my current job. Anyways, I've noticed a lot of people have IRAs as well as 401k. What's the benefit? Many employers match on the 401k so why put money into an IRA?

Sorry, it seems like a dumb question but I figure I would learn more. I'm 27 and would like to save a little better.

google is your friend

http://www.fairmark.com/rothira/rothvemp.htm

 

[spacelord]

I was advised to put 100% of my retirement 401k savings from this point on into the Roth 401k, as opposed to the traditional 401k. The way I understand it is that 7 years is about the break even point. So if you have less than 7 years until retirement you're better to do traditional 401k and take the tax savings up front.

I have no idea what the tax laws will be like when I retire, but I imagine it's not going to get any better.. with funding wars, soc security, etc, etc. so I think Roth 401K is the way to go so that my money earned is exempt from being taxed.

 

[thomsbrain]

the conventional wisdom is to invest in the 401k up the match, then max out your IRA, then max out the 401k from there. if you can max all that out and still have money to save, you should share some with me.

 

[Elbryn]

Originally posted by: alrocky

Ideally, I would invest in a 401k up to the point of the company match, then max out my Roth IRA, and once that is done, if you still have extra left over, head back and keep adding to the 401k.

:thumbsup: There's your basic rule of thumb. Time is on your side so you should endeavor to invest as much money as you can, assuming you'd like a princely sum come retirement. Current IRA and 401(k) max are $4000 and $15,500.

I left a job and had a 401k w/ them which I will need to roll over pretty soon.

You may be better off moving that into an IRA with Vanguard or another no load, low expense ratio mutual fund family.

Bernstein: The Four Pillars of Investing
Ferri: All About Asset Allocation
Belsky & Gilovich: Why Smart People Make Money Mistakes & How to Correct Them

what they said.. except i'd add the bogleheads guide to investing as a potential first read. it is more general and covers some wider topics like insurance but is an easier first read than the 4 pillars or asset allocation.

 

[Scarpozzi]

I have a 401a through ING.

I'm considering a Roth IRA or a 403B through ING. The 403b gives you more options and accounts to choose in your portfolio.

 

[SuperNaruto]

Some people dont qualify for a roth ira... so thats where people like me get screwed.. so 401k and roth 401k for me..