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2) 401K allows more tax free contributions than IRA. If you can afford to contribute more money towards retirement, I'd prefer 401K.

That might work for folks in high marginal tax brackets, but we don't know what bracket the OP is in now, nor what bracket they'll be in at retirement (virtually 'unknowable'). If the OP is young, and at a low marginal rate now, if he salts away enough money, he might wind up at a higher rate during retirement.

I am not aware of any flaws in keeping 401k contrib max.

Again, if the OP is young and at a low marginal tax rate now, there is something to be said for gains earned over a long time period to be tax-free, rather than just tax-deferred (and at ordinary income rates to boot!)

I am also a firm believer in having various accounts that are treated differently from a tax viewpoint, as I believe it offers more flexibility during the retirement years. For example, if you need to buy a car for $20K, withdrawing that amount of money to be taxed at ordinary income rates might bump you into a higher tax bracket, while also forcing more of your SS into taxation. The same would not be true if you withdrew it from a Roth.

That said, IMHO, it's best to both max the 401k AND contribute to a Roth. If there's anything left after that, I'd put it in a taxable account.

Just MHO,
2old
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