Roth IRA vs. 401(k)

NEW YORK (Money magazine) -- Q: My company stopped its 401(k) match during the downturn. Should I put money into a Roth IRA instead? I'm 41. -- D.R. Westlake, Ohio

A: Keep putting money into your 401(k).

Remember that even without an employer match, the plan lets you sock away lots of pretax dollars (up to $16,500 this year) that grow tax-deferred -- a terrific deal. Because your contributions are automatically withdrawn from your paycheck, 401(k) plans make saving a no-brainer.

"Sometimes people intend to make Roth IRA contributions but are not consistent with it, and they end up saving less," says Jean Keener, a financial adviser in Keller, Texas. And don't forget that your employer might restore the match someday.

However, it's a good idea to put money into a Roth as well, says Warren Ward, a financial adviser in Columbus, Ind.

Your Roth contributions (you can put in up to $5,000 this year) are made with after-tax money.

You pay no taxes on the earnings or withdrawals after age 59½. If your tax rate rises down the road, a Roth will generally work out to a better deal than a 401(k).

Since you're only 41, it's hard to predict what your tax rate might be by the time you retire.

So it makes sense to split your contributions between the 401(k) and the Roth until you've maxed out the Roth, says Ward.