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Investing/Strategies / Retirement Investing
|Subject: Re: What comes first?||Date: 2/16/2001 6:26 PM|
|Author: LooseChange||Number: 27946 of 78021|
My preference is to change the order from Ringfinger's ordering.
1. max 401(k) or 403(b)
2. traditional IRA (if AGI permits)
3. Roth IRA
4. Possibly other tax deferred accounts such as annuity accounts - this really depends upon your situation and should be considered closely before jumping in.
5. taxable account
I prefer to max out my 401(k) because it gives you a lot of bang for the short term buck even if you go beyond the matching percentage. Every dollar that goes into a 401(k) reduces your AGI (and taxable income) dollar for dollar. So you get to save immediate tax dollars that could then be used to fund a traditional or Roth IRA. Almost like a one-two punch. My general philosophy is to delay paying any tax as long as possible, so I strive to maximize vehicles which defer tax in the current tax year first. The other vehicles fall into place after that.
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