4 ms·
Is it really wise to do 401k if my employer does not contribute anything to it?
by qwertyml 9y ago
Is it really wise to do 401k if my employer does not contribute anything to it?
- Jtsummers 9y agoYes, but in that case max out your IRA first before contributing to the 401k.
- twobyfour 9y agoYeah, usually you have more control over IRA than 401K investments, and I think the penalties for withdrawal differ. Otherwise they're pretty similar. The other benefit of the 401K is that the annual contribution limits are higher, so you can sock away MORE pre-tax than you can with the IRA.
- tinymollusk 9y agoIt's not dumb. 401k is pretax money, so you're essentially able to accrue value on the money you would've paid in taxes. When there's an employer match, it's a nobrainer, otherwise you're throwing away money. W/o a match, it's a personal decision, but I think it's a pretty good one. If you expect your salary to increase over time (significantly), you may prefer a post-tax ROTH IRA instead (that's what I'm in, after my employer move the vesting schedule to waaaay outside my intended employment period.)