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She wants to invest about $100 per paycheck, and she isn't sure if she should open a 401K or put the money into the Roth IRA.

If the employer offered matching funds, that would make this decision a slam dunk. Even so, I'm going to suggest that the 401k might be her better bet. Yes, the 401k may leave her with a higher tax bill overall, but there are other considerations.

Her employer will deduct the 401k funds before she gets her paycheque---she won't have the option of "forgetting" to invest...passive savings And I have found it is a lot easier to save if the money never passes through your hands. Out of sight, out of mind.

Also, the fees for the Roth IRA (load fees, transaction fees, account maintenace fees) may eat up any tax savings, if her employer's 401k plan waives all such fees, as many do.

As she is just starting out, she should also be building up some cash savings for an emergency fund.

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