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Financial Planning / Foolish 401(k)s


Subject:  Re: to 401k or not to 401k? Date:  4/2/2001  9:58 AM
Author:  pauleckler Number:  11431 of 26270

It all depends. For most people, the tax deferred advantages of a 401K plan make it quite attractive. Even if the plan itself is less than excellent, at some time in the future you may change jobs. Then the funds can be transferred to an IRA. That $10.5 max contribution in the 401K is much larger, so more money can be involved.

Of course, you will want to fund your Roth IRA to the max first.

After Roth IRA, long term buy and hold in taxable investments is an excellent option. You have great flexibility and current tax and inheritance laws make them better than IRAs when done correctly. The trick is to find investments that you really can hold long term. Not everyone will succeed at this, whereas the IRA/401K plan is virtually a sure thing.
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