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re: Traditional IRA contribution limits?
Posted on 2/13/10 at 12:55 pm to Pheeze
Posted on 2/13/10 at 12:55 pm to Pheeze
quote:
My previous thinking led me to believe that there was no reason to contribute to a 401k over the company match because you'd get the same benefits (incl. high contribution limit) with a traditional IRA but with access to many more investment options. Any problems with my logic?
It depends. If you options in your 401k are limited and high cost you might be better with a taxable account for money above the match, but it would have to take a pretty crappy plan to put you in this situation. Just remember, anything you put into a 401k will be taxed as income upon withdrawal in retirement, potentially increasing your marginal tax bracket. Income from taxable accounts have lower tax rates on qualified dividends and long term capital gains although this could change in coming years. The compounding effect of tax deferral is hard to beat long term.
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