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Author: ziggy29 Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75377  
Subject: Re: 401k problems Date: 12/7/2004 6:18 PM
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>> 1. My employer does NOT match funds at all. And currently has no plans to do so. <<

Makes it less of a deal. A Roth IRA would almost certainly be better. It also makes taxable accounts with long-term holdings look better, too.

>> 2. I was under the impression that I could only contribute $2000 per year in an IRA. <<

For a long time, yes. Now it's $3,000 for 2004 and $4,000 in 2005 through 2007. It jumps to $5,000 in 2008.

>> 3. Isn't a ROTH IRA an account with Taxable $$? What is the disadvantage to not having money taken out of my paycheck before taxes here? We are talking $12,000+ per year... <<

Keep in mind that with a Roth IRA held according to the rules, all earnings can be withdrawn *tax-free*. So in a sense, the Roth IRA is just a "reverse conventional IRA" -- a conventional IRA lets you put in tax-free income to be taxed when withdrawn, and a Roth lets you put in already-taxed contributions to withdraw tax-free. Both also give you the power of compounding returns without intermediate taxes eating into it.

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