CNN Money Article – Roth IRAs vs. 401(K)s
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Today I stumbled upon this article over at CNN Money by Walter Updegrave. He answers a readers question about the choice between a Roth IRA and a 401(K):
“I’m 25 and recently switched employers. Although my new company provides a lucrative profit-sharing plan that everyone is automatically enrolled in after one year of work, my new employer does not offer a match in the 401(k). I can budget approximately 20 percent of my income for retirement savings, but I’m confused about how to allocate those savings. Should I max out my Roth IRA and then put what’s left in the 401(k)? Should I put 10 percent of income in each? Or is there something else I should be thinking about?”
Read Walter’s article for his answer. Personally, I have a 401(k) match, and so I start there, and get the match. After that, I usually continue contributing to my 401(K). I love not paying taxes NOW on that money. Who knows what will happen in the future…if I know I can avoid a tax now, then I feel obligated to do it. I think I’ll be considering the Roth once I begin maxing out my 401(k) contributions, which is one of my goals for next year.
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