2012-09-30, 08:57 PM
Fiel Wrote:Well, they're not really comparable.
There are two different kinds of accounts - traditional and roth. Traditional is pre-tax. Money goes into it before federal/state tax is counted (but you still pay FICA), and it's a retirement account that grows tax deferred. Retirement withdraws are not tax free.
Roth is post-tax. You are taxed on the income, and you put the income into an IRA. Retirement withdraws are tax free.
Tax man gets his money either way.
401(k)s are typically Traditional, but Roth 401(k)s are starting to become a thing.
401(k)s have a 17k/yr contribution limit. Roth has a 5k/yr contribution limit.
Common with a 401(k) is an employer match. If you put in 5% of your earnings, the employer will match that earnings (giving you 5 + 5 = net effective 10%).
GIYF.
Anything outside of government* Not many actually do matches anymore unless they are private companies. However government pay more in education than in private so it's really where you want to be out of high school. But yes fiel is right, traditional roth is the best way to go atm. There was some article where it said if you match your ROTH for 5-7 years straight you're a guaranteed millionaire or something. But that was back in 2009, maybe outdated