If I have a 401(k), do I need a Roth IRA as well? If so, how do I decide where to concentrate my money?

Answer 1

If you have money available, you should put the maximum amount into both your 401(k) and your Roth or Traditional IRA. If your employer adds any matching funds to your 401(k), you should contribute fully to your 401(k) before thinking about the IRA. The matching funds are usually a percentage of what you contribute, and it's like getting free money.

After you max out the 401(k), if you want to set even more money aside for retirement, you should choose either a Roth or Traditional IRA. Presently, you can contribute up to $4000 a year ($5000 if you are 50 or older). If you're in a low tax bracket right now, most likely choosing a Roth IRA is better. You will be taxed on the contribution now, but not when you receive distributions from it after you retire. Depending on your income, you may be able to receive a tax deduction for contributing to a Traditional IRA, but distributions of a Traditional IRA are taxed. Choosing one or the other depends upon your unique finanical situation.

Answer 2

Your employer will match your 401k (whatever you put in). Otherwise, you do not need an IRA also. Check them both out to see which one is best for your needs.

Answer 3

A Roth is a good deal. If you can afford it, do both.