401(k)s and IRAs: Grow your money, shrink your taxes

How to invest for retirement so that you get rich - and the IRS doesn't.

Grow It
MONEY's best savings strategy
In addition to saving as much as you can for retirement, you want to make sure your savings are tax diversified so that you hedge your bets against the prospect of tax rates going up or down by the time you retire.

Money you pull from a 401(k) and traditional IRA will be taxed as ordinary income, so if you anticipate you will be in a lower tax bracket than you are today, this is to your advantage.

Money you pull from a Roth IRA will be tax-free, which is to your advantage if you anticipate being in a higher tax bracket than you are today or if you anticipate lawmakers will raise income tax rates by the time you retire.

If you have a 401(k) at work and you qualify for a Roth IRA, one of the best ways to maximize your savings tax-wise is first to put enough in your 401(k) to get the full match and then contribute up to the limit in your Roth IRA.

If you can save even more after doing both of those things, you can put the rest of the money you've earmarked for retirement savings into your 401(k) up to the maximum allowed.

Your 401(k) A top priority Go for an IRA MONEY's best savings strategy Take your 401(k) with you When is converting to a Roth IRA the right move? Withdraw money sparingly, if ever, and never pay a penalty First things first Tax-deferred accounts come next Ready for the Roth IRA
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Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer LIBOR Warning: Neither BBA Enterprises Limited, nor the BBA LIBOR Contributor Banks, nor Reuters, can be held liable for any irregularity or inaccuracy of BBA LIBOR. Disclaimer. Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.