which is better saving off your money? 401k or putting it in IRA or Roth IRA?

Answer 1

It depends on your situation. Some things to consider...

401(k)/403(b): This is often the best way to go. Employers often match a portion of your contribution and that's a big positive. Often, however, investment choices may be limited and sometimes all of the mutual fund choices you have will charge high loads and have high expense ratios. Look at those carefully.

Traditional IRA: Same tax benefits as a 401(k)/403(b) but no employer matching. If you start it through a discount brokerage, you often have unlimited options and can choose funds with low expense ratios and zero loads such as no-load index funds. If you go through a financial advisor, often they get paid by selling the investor on loaded funds. Paying for expensive loads won't help you retire and I would probably stick to the 401(k)/403(b) rather than going to a financial advisor. Fee-only based financial advisors may be better since those advisors don't have conflicting interests. Contribution to an IRA is limited to $4,000/yr if you're 49 or younger and $5,000/yr if you're 50 or older.

Roth: For investment options and contribution limits, similar to the traditional IRA. Tax free but contribution is in after-tax dollars. Note that mathematically, the return doesn't matter if you get taxed now or when you retire. In general, most people find themselves in a lower tax bracket after they retire so the traditional IRA (and the 401(k)/403(b) ) will therefore be a bit better for return. Since the Roth is in after-tax dollars, effectively you can put more in your account to grow tax-free, however.

Answer 2

Depends on the 401(k)...if it offers decent options, and company matching (not just in company stock) then go for it, be sure to put the maximum, up to $15K or 15% of your earned income.

If you qualify for a Roth IRA, you should max that out also.

Taxable IRA only makes sense if you can't qualify for a Roth IRA, in 2010 you will be able to convert the Taxable IRA to a Roth IRA.

A regular tax deductible IRA you will not qualify for if you have a 401(k) at work.

Answer 3

401 K is good especially if the employer offers it as they participate. with a matching plan and also there's reallocation of funds in investment windows of your choices. and the taxes are offset until you withdraw it. at retireable age of 591/2 w/out penalty. IRA 's are more indiviidual no employer participation, and you have more control and independence on how to manage it . Both are in for the long haul. in other words, you can't take them out before retirement there are penalties for early withdrawal.. IRA contributions are tax deductible up to $4,000 a yr unless your employer offers a retirement plan then you can not claim it. Roth IRA can be withdrawn when you need it with out tax consequences. but of course there are guidelines. Otherwise Roth IRA funds are considered ordinary income.. IRA forces you to get a distribution upon reaching 701/2 age. Roth IRA doesn't.
Roth IRA contributions are after- tax so the amt is less. and are not tax deductible. but grows tax free. The downside of 401K you have to withdraw once you leave their employment and convert it
to an IRA or Roth IRA.

Answer 4

It all depends on the 401 K plan offered by your employer and how you are planning to use the investment after maturity. Talk to your personal banker about IRA and to your HR department at work about your 401K.

Answer 5

the best way is 401k (especially if your work contributes 50% of your share). would be better if you really wait for your retirement to take out cash so that u won't be paying penalty plus other fees that come along with it.