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.

By Walter Updegrave and Asa Fitch, Money Magazine

1 of 9

Grow It

Your 401(k): A top priority

The first step in building a retirement nest egg should be investing in your company's 401(k) plan if your employer offers one.

What's great about it:
• You don't have to remember to save: The money is taken directly from your paycheck.
• You pay no taxes on the dollars you invest and the funds grow tax-free until withdrawn.
• You get free money: Most employers match a portion of what you invest.

If you do enroll, make sure you put enough in your 401(k) to earn the full company match. The most common practice among employers is to offer 50 cents on the dollar up to the first 6 percent you save.

Retire Early: Are you on track?

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

More stories on retiring early

Build the big sum

Shawn Larsen, 47, has spent his career as a seismologist. Now he's thinking about biking and backpacking. Here's how he's saving to reach his goals. (more)

Fill your riskiest gap: insurance

Before you even think of leaving your job, be sure your family is covered. (more)

What will you do when work is over?

Otis Braswell, 50, retired five years ago and cherishes the extra family time. But he's also learned an important lesson - golf isn't as much fun when all your friends are working. (more)

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