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Dom · 07-26-05, 11:37

Teck,

I thought there were penalties for both IRA and 401k for withdrawal, regardless. My learning was to do 401k first then IRA (401k max = $14,000, IRA= $3,000, and I think both will increase again this year). Typically this is because of company match. Also, your traditional IRA may not be deductible if you have a company 401k plan. Roth IRA is a different vehicle, you can't get a deduction for funding it. Roth vs traditional IRA is probably something people should read up on to decide which one to fund. I currently fund both a 401k to the max, and a traditional IRA to the max. I may be better off with a roth-IRA in my position, but that is something I am considering. And, like I said, I wish I had started earlier.

I agree with all of your other advice. Just to add some things:

By using a monthly auto purchase plan, you are in essence doing a type of dollar cost averaging. On months when the price is down, you purhcase more shares for your given amount, and on months when the price is up, you purchase fewer shares.

For low expense ratio no-load funds, Vanguard is a good bet, but they do have fund minimums.

07-26-05, 11:37	#12 (permalink)
Dom Registered User Dom is offline Join Date: Aug 2001 Location: Orange County, CA Posts: 136	Teck, I thought there were penalties for both IRA and 401k for withdrawal, regardless. My learning was to do 401k first then IRA (401k max = $14,000, IRA= $3,000, and I think both will increase again this year). Typically this is because of company match. Also, your traditional IRA may not be deductible if you have a company 401k plan. Roth IRA is a different vehicle, you can't get a deduction for funding it. Roth vs traditional IRA is probably something people should read up on to decide which one to fund. I currently fund both a 401k to the max, and a traditional IRA to the max. I may be better off with a roth-IRA in my position, but that is something I am considering. And, like I said, I wish I had started earlier. I agree with all of your other advice. Just to add some things: By using a monthly auto purchase plan, you are in essence doing a type of dollar cost averaging. On months when the price is down, you purhcase more shares for your given amount, and on months when the price is up, you purchase fewer shares. For low expense ratio no-load funds, Vanguard is a good bet, but they do have fund minimums.