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Subject:  Re: IRA vs. HSA? Date:  12/7/2004  11:47 PM
Author:  yobria Number:  43461 of 88495

What I'm getting at is that you would stop contributing to a 401k after contributing the amount the employer will match and then move on to a Roth IRA. I don't mean to just stop cold. It's a matter of priortising your contributions


I agree with you in theory . In practice though, I think most people who try your strategy will end up with smaller retirement nest eggs than they would otherwise. Here's what I think would happen:

Person who never heard of stopping at the 401k match point, then doing the Roth: Gets used to the invisible, automatic 401k deduction year after year. Learns to live below his means subconciously since the 'k shrinks his paycheck with no work on his part. This is easy forced savings.

Person who decides to stop at the 401k match point: Contributes for a couple of months, hits the match limit, stops contributing, starts saving for his Roth contribution, decides to buy a big screen TV instead, plans to start contributing to his 401k again, someday...

I think it's just human nature.

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