Roth IRAs vs. 401(k) / Traditional IRAs

[rrs2143]

My question pertains to how people view their Roth IRAs in their overall retirement planning. The "people" I'm speaking about refers to those with both a Roth IRA and a traditional IRA or a Roth IRA and 401(k) (or comparable) plan. Considering that Roth IRAs grow tax-free and are more limited in their contribution amounts, are people more guarded in how they invest their Roth IRAs as compared to their 401(k) portfolios or traditional IRAs? In other words, do people accept greater volatility, take or more risk, and/or take on speculative investments in one retirement vehicle as compared to another; and, equally as important, should they?

[kork13]

I have a Roth IRA and a 401k-type plan (TSP). But I don't consider the two as separate entities-- they're both part of the same overall portfolio. Personally, my Roth is a higher priority to me, though due to the limits, I do contribute more to my TSP.

I suppose it could be a valid strategy to use the Roth for more risky, potentially higher-earning investments (which are tax-free) and using the 401k for lower-yielding investments in the 401k, since the gains will all eventually be taxed... But personally, I wouldn't mess with it to that extent.

[GrimJack]

I expect most of my retirement (such as it is) will be from dividends which are taxed at 15% (for now) so I put like 25% of my salary into my TSP and fund IRAs when I can and Roth last when I feel really flush.

[GREENBACK]

One big advantage to IRA's is that you can invest anywhere you like. With 401k plans you pretty much have to go for what your employer offers. Of course, There are no employee matches in an IRA (read: free money in a 401k). I don't think risk has much to do with it. They can be equally "risky" depending on the investment choices. I think it comes down more to your income and the quality of the employer offered 401k. That's my approach.