2007-11-27 14:10:14 · 6 answers · asked by Snoopy L 1 in Business & Finance ➔ Investing
Stay with the 401 (k), and yes, an IRA is the way to go. Being 50, you can contribute the max (4,500) for the 2007-2008 tax year, but make it before April 15, 2008.
2007-11-27 14:15:56 · answer #1 · answered by Anonymous · 0⤊ 1⤋
There is no clearcut answer to that.
Both are tax-deferred accounts. The 401k has two potential advantages. You can contribute more to it. It also reduces your immediate income tax because your contributions are not counted as taxable income. If you think that your marginal tax rate will be lower in retirement, then this may be the best option.
A Roth IRA limits you to $5,000 a year and you don't get an immediate tax break. However, your withdrawals will be tax free if you meet IRS guidelines. If you think that your marginal tax rate will be higher in retirement, and if you can't afford to contribute more than $5,000 anyway, then this may be the best option.
Also consider the types of investments in your 401k account. If there are good performing funds with low expenses, then you may want to stick with that. If you're unhappy with the choices, consider opening an IRA with a fund company that offers the types of funds that you want.
Of course, you can have both. You don't have to choose between them.
2007-11-27 22:24:29 · answer #2 · answered by The Shadow 6 · 0⤊ 1⤋
The general rule that seems to be around the Diehards website is...
1. 401K to Max of Company Match....
2. Max a Roth IRA
3. Max your 401K
4 Taxable Investmants.
You should start with # 2.
Good Luck Gerry
2007-11-27 22:20:01 · answer #3 · answered by tndiehard 2 · 1⤊ 0⤋
I agree with Shadow. Also some 401k's suck. It may be even best to stop contributing to the 401k. Get your own IRA or Roth IRA
2007-11-28 01:02:57 · answer #4 · answered by Agency Builder w/ BTID 2 · 0⤊ 0⤋
Both the IRA is limited to $5,000 so not enough to retire with just that. Put the rest of your retirement savings into the 401K.
If you do have enough saved to retire before 59.5 you can get it out of the 401K if you retire after 55 without the penalty.
2007-11-27 22:16:28 · answer #5 · answered by shipwreck 7 · 0⤊ 0⤋
You at least 16 years before retirement, I suggest you invest in growth stock, growth mutual funds. Re-evaluate your investment every 6 moths to see if your target goal is on line. A good mutual funds should give you 8-12% return.
2007-11-27 22:25:13 · answer #6 · answered by Goodhead 3 · 1⤊ 1⤋