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 Because your contributions are automatically withdrawn from your paycheck, 401(k) plans make saving a no-brainer.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.
|Overnight Avg Rate||Latest||Change||Last Week|
|30 yr fixed||3.83%||3.86%|
|15 yr fixed||3.02%||3.04%|
|30 yr refi||3.81%||3.82%|
|15 yr refi||3.02%||3.03%|
Today's featured rates:
Nike is opening up shop on Amazon.com and the company plans "big shifts" over the coming year. More
The Congressional Budget Office narrows its projection for when Treasury will run short on money if Congress doesn't raise or suspend the country's debt ceiling. More
Apple is teaming up with medical device maker Cochlear Limited to allow cochlear implant users to stream sound right from their iOS devices. More
In 1998, Ntsiki Biyela won a scholarship to study wine making. Now she's about to launch her own brand. More
It's never too late to improve your chance of having a more secure retirement, but you'll need to put retirement planning at the very top of your list of financial priorities. More