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Is there any advantage to a non-matched 401K vs an IRA?
Posted by: stephen
Date: January 04, 2006 10:29AM
My company doesn't match. I probably won't be there much longer.

I just became eligible for their 401K program. Is there any reason to hop on their 401K program if they don't contribute?

I don't currently have an IRA.
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Re: Is there any advantage to a non-matched 401K vs an IRA?
Posted by: kurtzie
Date: January 04, 2006 10:48AM
Your Contributions are done pretax.
It is taken out of your check before you have a chance to spend it.

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Re: Is there any advantage to a non-matched 401K vs an IRA?
Posted by: SteveJobs
Date: January 04, 2006 10:48AM
I believe Roth IRAs you can take your money out at any time, since you invested Post Tax. The gains on it will be taxed, of course.

401K's will have to be a 'loan' or suffer penalties, IIRC. You can do BOTH, more than likely. I do. But it varies with some variables that I don't have off top of my head.

Best thing to do IMO is contact a Financial Advisor.
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Re: Is there any advantage to a non-matched 401K vs an IRA?
Posted by: Michael
Date: January 04, 2006 10:59AM
SteveJobs Wrote:
-------------------------------------------------------
> I believe Roth IRAs you can take your money out at
> any time, since you invested Post Tax. The gains
> on it will be taxed, of course.


I believe that the gains on Roth IRAs are tax free. That's the real benefit of them.
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Re: Is there any advantage to a non-matched 401K vs an IRA?
Posted by: NewtonMP2100
Date: January 04, 2006 11:07AM
401K are pretax dollars and you can rollover to an IRA when you leave the job (or leave it where it is).

Still worth it even if they don't match since it reduces your taxable income.

As I recall, you can also take a loan from a 401K (though professional say you shouldn't)


Most americans don't save enough so here is a chance. what options are in the 401k?

Some have very limited choices.





_____________________________________

I reject your reality and substitute my own!
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Re: Is there any advantage to a non-matched 401K vs an IRA?
Posted by: jawg
Date: January 04, 2006 11:36AM
You say you're "eligible." Make sure you will be fully vested; meaning you can take all your contributions out of their plan and transfer to another plan when you leave (rollover). If you are not fully vested you might not get all your contributions back. However, vesting may not apply since it is a non-match plan.
With an individual/personal IRA you don't need to worry about transferring the money out of the employers plan when/if you leave.
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Re: Is there any advantage to a non-matched 401K vs an IRA?
Posted by: NewtonMP2100
Date: January 04, 2006 11:44AM
Good point about vesting. . .since it is your contribution hopefully not vesting necessary but some places have weird vesting requirements.

Also depending on your income you might be able to take the full 401K deduction and still make either an IRA or ROTH IRA contribution (or maybe a partial contribution. . .not the maximum amount)



_____________________________________

I reject your reality and substitute my own!
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Re: Is there any advantage to a non-matched 401K vs an IRA?
Posted by: JEBB
Date: January 04, 2006 12:03PM
Per year you can put more into a 401K plan than into an IRA.

Vesting has to do with the company's contribution. If your vested you get to keep their contribution. They can't take away what you've put in.
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Re: Is there any advantage to a non-matched 401K vs an IRA?
Posted by: -jeffB
Date: January 04, 2006 01:07PM
JEBB Wrote:
-------------------------------------------------------
> Per year you can put more into a 401K plan than
> into an IRA.
>
> Vesting has to do with the company's contribution.
> If your vested you get to keep their
> contribution. They can't take away what you've
> put in.

Well, not legally. Shortly before my first employer folded, we learned that they had been withholding 401(k) contributions from our paychecks in the amount we specified, but failing to deposit those contributions into our 401(k)s. Unfortunately, by the time we learned what was going on, there wasn't enough money left to make the accounts whole. I was one of the lucky ones -- I was laid off a few weeks previously, and actually got a severance payment (along with payment for back vacation). The ones who didn't get laid off never even got their final paychecks.

Oh, yeah, and the HR person responsible for administering the program quickly accepted a new position in Saudi Arabia. I'm not sure if she's come back to the US yet; I guess I'd have to check the statute of limitations.
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