Blanca

If your employer is also contributing to the 401K then definitely the 401K.

If all the money going into the 401K is YOUR money, (no employer contributions at all) the the Roth is probably a better option.

By the way, there is a maximum you can put in any IRA in any tax year. It is currently $4,000 if you are 49 or under so if 10 - 15% of your pay is more than $4,000, your plan won’t work.

Kaitlin

i say the roth ira it is safer i can send you a people over the flaws in the 401k

Reid

If your 401k offers a company match, then definitly contribute at least enough to get that. It’s free money and a guaranteed return.

If they don’t offer a match then just skip the 401k and max out a Roth IRA. You can pick your own investments and it’s better tax-wise anyway, in my opinion (tax rates can only rise over our lifetime; they’re at historical lows; pay now and never worry about taxes again on those funds).

Once you can afford to max the IRA though (as well as accumulate cash for other goals like a car, home, etc), you should contribute to the 401k as well. You get a tax deduction and you can never save too much for retirement.

Connor

Why can’t you do both? Why can’t you split up the contribution? I have a 401K and a Roth IRA.

I have a 401K with my company and they match up to 6% of my contributions. I like that my company matches my contribution, what I don’t like is that I have a hand full of mutual funds to choose from. However, I still have money taken from my paycheck to contribute to my 401K. I currently contribute 9%.

I also have a Roth and I contribute the maximum to that every year ($4000) and what I like is that I can control more of my money. I can buy mutual funds, stacks, bonds, etc. (Scottrade has a no fee Roth - I recently moved my Roth from Ameriprise).

I have no children right now, so I am maxing out my retirement.