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I must admit I was just taken back a bit when you said you couldnt purchase stocks because of your age. But I will say that you are absolutely correct about losing a year. If its means opening a passbook savings account and designating it your IRA until you are 21 it would be worth doing. Of course I say that in jest, I am sure there are many better alternatives. I would definitely put in the full $4K for this year and last year since you have it.

You ask about the funding of your 401K and is there a better way to distribute it. There is only person that can answer that question and I think you know who that is. Most people consider 20 an age at which you can take more risks and would consequently put most of their funds in the Aggessive Growth. But there are also those that say by starting at age 20 you need not take any risks at all and should only invest in the S&P and hope that the past returns of approximately 11% will continue in the future.

The bottom line is you will have to determine your own risk tolerance and then make the decisions that allow you to sleep well at night.

Good luck to all.

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