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My company allocates stock as tax-deferred retirement funds. The company also has a 401(k) plan to which I contribute. Unfortunately, the 401(k) contributions are typicallly refunded in full at the end of the year, apparently because the maximum limit of tax-deferred contributions has been reached (401k + ESOP stock). My question is, which of the following decisions makes the most sense? (1) making tax-deferred contributions to my 401(k) each year, then taking the refund (contributions and earnings) and putting it into an IRA; (2) Avoiding the 401(k) and instead contributing taxed dollars into an IRA? Is there any way to defer the taxes on the 401(k) refund??? Is my company doing more harm than good? Frankly, working for a major airline, I'd rather have matching 401(k) dollars than stock any day, but sadly that is not an option. Please advise. Thanks.
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