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« Should You Contribute to a Non-Deductible IRA? | Main | Review: The Smartest Investment Book You'll Ever Read »

November 07, 2006


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I see no reason for anyone to give you flack on the statement that “I wouldn't rate the Roth as #1 for people who have access to a 401k, especially for those who have a 401k where the employer matches part of the employee's contribution.” This is a no brainer. Free money from your employer that compounds thereafter! I can understand that maybe Kiplingers is considering the self employed or other factors. However, you investment strategy mentioned is right on target.

Agree -- 401k is better.

I have to add that the HSA (Health Savings Account) is also excellent -- I'd say better than an unmatched 401k. With it, you get an immediate deduction, tax-free spending on medical expenses, and it acts like a conventional IRA when you retire.

I'd say the Roth 401(k) is the best. I'm surprised they didn't pick that. Maybe because it's too new. All the benefits of a regular 401(k), but with higher effective contribution limits since you're contributing post-tax dollars.

That said, I think the best strategy is to contribute to both a regular 401(k) and the Roth 401(k), providing your employer offers it.

I mostly agree with you. The Roth is overrated. For the all but the top quintile or even decile even the Traditional IRA is superior as the compounding of the income tax deferral outweighs the tax they will pay. The Roth does have the edge for their intended audience though.

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