No. of Recommendations: 0
Hey, Fools. Last year, when I embarked on my career, I started socking
away 10% into my 401K immediately. (The first 4% of which is matched
with an additional 2%). Then I opened an IRA, and rolled it into a Roth
IRA conversion. (I'm young and saving for a house someday, so the Roth
IRA looks good.) This year I still put away 10% into the 401K, and I just
opened a new Roth.

Now, I'm thinking... tax-wise... wouldn't it have been better to MAX my
tax-deductible 401K contributions to the full 18% my employer allows (up
to $10K or so) before investing anywhere else?

Insight...? --AliFool


Invest in the 401k so that you get the full match. Then go to the Roth IRA. Any extra money goes back to the 401k. Be sure your short term and emergency funds are covered before you max out the 401k.

The reason to put money in the Roth is that the earnings are never taxed, but the 401k will be taxed when you retire.
Print the post  

Announcements

The Retire Early Home Page
Discussion on accelerating retirement day.
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.
Advertisement