Maxing Out 401K and Roth IRA.

[SA Saver]

I max out my Roth IRA every year ($5K) and 401K up to the company match. Should I try to match the total $16,500 which is the maximum allowed? This can mean early retitrement for me and save on taxes now.

What about just getting the company match and use the extra money for an after-tax account?

I am also about 92% Stocks and 8% Bonds on my overall portfolio.
I use Financial Engines online to manage it.

Age : 33, Single, No kids. Do not plan to have kids ever, Male.

Any suggestions?

[MonkeyMama]

Personally, I would put the $16,500 max into the 401k, if at all possible.

Some reasons you would choose taxable accounts instead, is if the 401k investment options were not very good (expensive options, not very many choices). Also, if you are concerned about needing the money before retirement age.

[SA Saver]

Personally, I would put the $16,500 max into the 401k, if at all possible.

Some reasons you would choose taxable accounts instead, is if the 401k investment options were not very good (expensive options, not very many choices). Also, if you are concerned about needing the money before retirement age.

The after-tax would be for short-term investing since I trade stocks. Learning Options now.

So I guess I should max out on $18K on 401K next year and $5 on Roth and then use the extra money for my brokerage after-tax account?

[bjl584]

I own individual stocks and funds, so for me, having all of my money tied up in retirement accounts isn't appealing. For that reason, I max a Roth, put in 10% to a 401K, and the rest goes to my taxable brokerage account. I like having the freedom to invest in what I want and not be tied to the limited fund choices of a 401K. I also like having complete access to my money without penalty.

Not everyone is an active investor, so you will need to determine how you want to approach investing and saving. That will determine how much of your money that you choose to put into a 401K and how much you hold back on.

[Slug]

The conventional wisdom is to max 401k to the company match, then Roth, then finish off the 401k to $16,500 ($17k in 2012), then go into taxable accounts. Not everyone follows this approach, but I do.

[MonkeyMama]

Admittedly, I am not a big trader, but I much prefer to trade stocks in my ROTH accounts. Basically, NO tax consequences to track and figure out. Also, if I do very well - no taxes ever, since it is a ROTH. (401k won't give you the same options-stock trades-but IRAs will).

Just to say point out that you don't have to trade stocks in a taxable account.

[MonkeyMama]

The after-tax would be for short-term investing since I trade stocks. Learning Options now.

So I guess I should max out on $18K on 401K next year and $5 on Roth and then use the extra money for my brokerage after-tax account?

If you can do all 3, sure. Sounds like a plan. This sounds like you are happy with 401k investing choices. Taxable investments are fine - but generally should come after retirement savings. Doing all three is great.

401k limit is $17k next year, I believe - just FYI.

[SA Saver]

I own individual stocks and funds, so for me, having all of my money tied up in retirement accounts isn't appealing. For that reason, I max a Roth, put in 10% to a 401K, and the rest goes to my taxable brokerage account. I like having the freedom to invest in what I want and not be tied to the limited fund choices of a 401K. I also like having complete access to my money without penalty.

Not everyone is an active investor, so you will need to determine how you want to approach investing and saving. That will determine how much of your money that you choose to put into a 401K and how much you hold back on.

When you say 'all'. Does that include your emergency and rainy day funds?

What age do you plan to retire?

[SA Saver]

The conventional wisdom is to max 401k to the company match, then Roth, then finish off the 401k to $16,500 ($17k in 2012), then go into taxable accounts. Not everyone follows this approach, but I do.

It would be cool if there was no limit to 401K and Roth contributions.

[SA Saver]

Admittedly, I am not a big trader, but I much prefer to trade stocks in my ROTH accounts. Basically, NO tax consequences to track and figure out. Also, if I do very well - no taxes ever, since it is a ROTH. (401k won't give you the same options-stock trades-but IRAs will).

Just to say point out that you don't have to trade stocks in a taxable account.

Roth is your retirement account though. Do you have mutual funds or common stocks in there?

[SA Saver]

If you can do all 3, sure. Sounds like a plan. This sounds like you are happy with 401k investing choices. Taxable investments are fine - but generally should come after retirement savings. Doing all three is great.

401k limit is $17k next year, I believe - just FYI.

Well, I have to understand that 401K is a company benefit and so is the matching. Its not like I am entitled to it like Social Security so I have got to make the best out of those funds.

[MonkeyMama]

Roth is your retirement account though. Do you have mutual funds or common stocks in there?

Both.

My comment was referring to the benefits of investing in individual stocks in your retirement accounts.