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Author: TMFPixy Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75523  
Subject: Re: Investing in a Roth IRA Date: 12/2/1998 4:40 PM
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Greetings, Jokey88, and welcome. You asked:

<<I am total novice when it comes to investing and planning for my retirement. I am 26 years old and just starting out in the married life. I am the only one working and I just started my first job after college. I have acquired plenty of debt during college and I am trying to go through the fools 13 steps to set myself up for investing in the future. I am presently on the 2nd step. My question is two fold. Should I even start looking at the Roth IRA at this present time or just concentrate on my 401K plan at work. And do I contribute to the Roth IRA at the end of each year in a lump sum or can my job take money out of my check and contribute to the account for me.>>

Zev aka Zgriner gave you an excellent response. I hope you read it because I echo his comments. IMHO you should make every effort to achieve a balance in your debt reduction and retirement savings. As to the latter, make every sacrifice to get enough in your 401k to obtain the maximum possible employer match on your contributions. That's free money Fools never turn down because it represents an immediate untaxed, risk-free return on your investment. If you still have money left over, then you might want to take advantage of the Roth IRA. Remember, though, that a $2K after-tax deposit in a Roth is the same as a $2,778 pre-tax deposit in the 401k. However, all gains in the Roth will be untaxed in retirement whereas money taken from your 401k will be taxed at ordinary rates. That means you need to do some analysis before you decide to eschew or continue with the 401k. Step 4 of my 13 Steps to Foolish Retirement Planning provides some guidance on how you can approach such an analysis.

Regards….Pixy
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