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Yes, you should definitely contribute to your 401k plan. You will gain the double benefit of defering the taxes on that money and the power of compounding interest on the money. Open a 401k account as soon as possible and contribute at least as much as you can get a match for, and more than that if you can afford it.

A traditional IRA doesn't give you much benefit, if you qualify for the 401k at work. You may qualify to put money into a Roth IRA (check the income limitations). If you qualify for the Roth IRA, you can contribute to your 401k and the Roth IRA in the same year. With the Roth IRA, you pay taxes on the money before you put it in, but not on the interest.

In my opinion, you should max out your 401k contributions before contributing to a Roth IRA.

Best of Luck,

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