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Greetings, kjs1, and welcome. You asked:

<<I have followed the philosophy of always maximizing pre-tax contributions to tax deferred savings vehicles before investing with post tax dollars. I believe the Roth IRA forces me to re-visit this thinking.

Should I max out my 401k contributions, which are then invested in designated mutual funds, taxed upon distribution and possibly penalized for early withdrawal? Or reduce the 401k contribution to maximize a Roth contribution that would be self-directed, have the principal available without penalty in an emergency and receive distributions tax-free in retirement?>>

Obviously, you should put in enough to your 401k to ensure you receive the maximum match on your contributions your employer provides. Beyond those amounts, you may wish to use a Roth IRA for extra money after considering the tax impact of an after-tax contribution. For ideas in this regard see my Roth analysis at . Also, see Step 4 of my 13 Steps to Foolish Retirement Planning at . Both will give you a very good idea of how to approach this issue.


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