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Subject:  Re: Roth IRA vs. 401(k) Date:  9/21/1997  10:29 AM
Author:  TMFPixy Number:  367 of 87983

Greetings, DD, and welcome to Fooldom.

<<I'm covered by a 401(k) plan at work that doesn't have an employer match, they contribute 2.3% of annual gross. But I believe the Roth IRA is the best retirement option available at this time. I'm in the process of opening a self-directed IRA at PCFN. ... Any comments on my plan? Anything I may be missing?>>

Because you said your employer has no match, I assume the 2.3% goes into the 401k regardless of whether you contribute anything or not. That being the case, then IMHO (and given the conservative nature and expense of most 401k plan options) you can do better for yourself outside the 401k when the Roth goes into effect next year. Depending on your AGI and filing status (See IRS Pub 590 for details), you may not get a deduction for an IRA deposit this year. Even so, it will be eligible for a rollover to a Roth next year. That means you could start off 1998 with up to $4k+ in the IRA (old IRA, its earnings, and new deposit in '98). Not a bad way to start many years of compounding to my way of thinking.

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