Whats your take if you could go back and start over again?

 

based on the tax benefits, the roth would be the most beneficial although there is a investment cap per year based on income. ideally, you would have at least 6 months salary saved up. if you had additional money left over after that, invest in the 401K.

 

I put 250 dollars a month in my roth. I've been doing this since I was 19. I will be a multi-millionare by 50 something. I think that's pretty damn cool

 

Max out on 401k to take advantage of employer contributions.

 

Hmm .... so the cap on roth is based on the taxable income, I thought it was a uniform standard across the table. Time for a change

Both 401K and Roth are retirement fund investment I suppose, what are the key factors that distinguishes the good and the bad between the two?

It seems like we have 2 for Roth and 1 for 401.

 

401k - Investing with pre-tax money, tax is deffered, company match
Roth IRA - Investing with post-tax money, money grows tax free, the amount you can invest is limited

I would say, do both. The 401k is tax deffered and can be an easy way to start saving for retirement. Your money is invested before you even see it and most companies offer some sort of 401k match, so you get free money from your employer. The Roth IRA is good when you're young. Roth IRA's allow your money to grow tax free, which is huge. The only catch is you can not contribute more than $2000 per year. Once your gross income is over $95,000, the amount you can contribute to a Roth IRA begins to decrease. I think after $110k or $120k, you are no longer eligible for a Roth IRA, but I'm not sure. One of the finance nerds should be able to tell us more???

 

[QUOTE]Originally posted by boka
[B]401k - Investing with pre-tax money, tax is deffered, company match
Roth IRA - Investing with post-tax money, money grows tax free, the amount you can invest is limited

I would say, do both.

 

When you guys said "Max out 401K", I suppose it does not have a cap like the Roth IRA account. Is that right?

 

[QUOTE]Originally posted by mstw
[B]When you guys said "Max out 401K", I suppose it does not have a cap like the Roth IRA account.

 

Well, actually you can only contribute a certain percentage per paycheck which would be what your 15% is. There is a cap on 401k contributions per year which is $10,500.00 (if I remember).

Then your company most likely matches some level of your contribution. You can only contribute to the 10.5 limit. So, what most people do is contribute as much as they can possibly afford to do.

Some people that I know contribut the max per paycheck which should allow them to get to the 10.5 limit. Then the rest of the year, after they hit the limit, they then take the post-tax difference in increase on the paycheck and apply that towards some other type of retirement plan.

Again, you might want to have a tax person verify all of this.