Tuesday, August 12, 2008

401k or IRA

I watch the Suze Orman show when I can. She prefers folks to contribute to their 401k only up to the company match and put the rest in Roth IRA. Now I had already planned to bump my 401k contribution from 6% to 7%. But maybe I drop it down to 5% for just the company match.

Orman has various reasons for this approach. But for me the I'd say I still like the tax shelter of an IRA over a Roth. So, I'll likely move this money into my Schwab IRA which offers low cost index funds that my Fidelity 401k can't quite match. That is the key. In a few years I can switch to the Roth strategy for the long term growth potential.

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