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Author: rjm1 Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 79088  
Subject: Re: Which is better: 401(k) or Roth IRA? Date: 10/6/2000 9:34 PM
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I have budgeted $6,000 per year for retirement savings. It is currently all going into my 401(k), and I contribute about
twice as much as I need to in order to receive the maximum matching contribution from my employer.

Would it make more sense to contribute $2,000 per year to my Roth IRA and only contribute $4,000 to my 401(k)? I
will still get the full employer match.

In other words, which is better: lowering my current taxes through higher 401(k) contributions or paying higher taxes
now and maximizing my Roth IRA contributions?

I am not planning to retire for at least 40 years.

First I would put 2000 in an IRA since you do not lose anything in the 401k. That gives you more controll over the investment. You do lose the ability to borrow and the earlier retirement age but I would still go for the IRA.

Next I would go for the ROTH. One benefit is that you can take your 2000 out without penality.
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