UnThreaded | Threaded | Whole Thread (15) | Ignore Thread Prev Thread | Prev | Next | Next Thread
Author: TMFPixy Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 76421  
Subject: Re: Roth IRA vs. 401(k) Date: 9/23/1997 9:58 AM
Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Recommendations: 0
In reply to message number 389 by jvanscoy :

Greetings, Danny, and wecome to Fooldom.

<< <I would contribute to the 401K what ever is necessary to
get the company contributions. Then I would use a self directed IRA for additional investments.>

Is it this simple? For example, if I wanted to retire next year, I would want to maximize my 401k contribution to reduce taxes this year, esp. if my contribution+company's exceeds the 9500 limit, since I'll get the extra contrib.
(which is taxable) next year when my rates will be lower.

Or am I misunderstanding 401k? >>

No, you're not musunderstanding the 401k. However, things are never as simple as they may seem. When considering whether to invest in a 401k, a deductible IRA, a non-deductible IRA, and/or an after-tax regular investment account, one must evaluate all factors. Those include net (i.e., after-tax) rates of return, investment period, and marginal tax rates -- both today and after retirement. Sometimes it makes sense to invest in a 401k beyond an employer's matching level, and sometimes it doesn't. There is no pat answer applicable to everyone. IMO, though, one should almost always invest enough in a 401k to get the maximum employer match. It's an immediate, risk-free return that will take years to beat -- if it's ever -beaten -- even after you consider all tax aspects. Even so, even that advantage can pale in some instances to an alternative. It all depends, and everyone must look at his/her options individually.
Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Print the post  
UnThreaded | Threaded | Whole Thread (15) | Ignore Thread Prev Thread | Prev | Next | Next Thread

Announcements

The Retire Early Home Page
Discussion on accelerating retirement day.
Foolanthropy 2014!
By working with young, first-time moms, Nurse-Family Partnership is able to truly change lives – for generations to come.
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.
Post of the Day:
Macro Economics

Looking at Currency Ratios
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
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 "#1 Media Company to Work For" (BusinessInsider 2011)! 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