talk about legitimate ways of sheltering money

[lookout123]

i'll take a 401K over a pension any day of the week.

your taxdeferred earnings compounding over a long period of time is incredibly powerful. Keep in mind that you aren't going to take your entire 401K balance out at once at retirement. You will leave your company, roll the 401K to a traditional IRA and begin withdrawing only what you need - you control the taxes. In fact, you should meet with your planner and accountant to run numbers on converting your traditional IRA to Roth so that you have even greater long term gain and control your money even further.

If you aren't funding a Roth (and you're eligible) do it, even if that means not putting as much into your 401K. Hopefully you can fully fund both, but if you can't fund your 401K to the amount you need to get any available match, then fund your Roth, then finish what you can in your 401K. Obviously I don't know, your particulars so talk to your planner, accountant, and grandmother.

<insert a bazillion disclosures here>

[glatt]

I'm funding my 401K enough to get the full match, plus an additional couple percent. Are you saying it's better to put that additional couple percent into a Roth instead?

edit: I acknowledge receipt of all the disclaimers, etc.

[lookout123]

Originally Posted by glatt

I'm funding my 401K enough to get the full match, plus an additional couple percent. Are you saying it's better to put that additional couple percent into a Roth instead?

edit: I acknowledge receipt of all the disclaimers, etc.

the questions you need to ask yourself are:
1) Do I really need the tax deduction on a couple thousand this year, or would i rather have that money grow tax-freeeee forever more?
2) Do you have better (more) investment choices available to you inside of your 401K or in your Roth?
3) Do you like having the money unreachable in your 401K or would it be comforting to know you could get at it penalty free in case of an emergency.

I can't give you the answer, but those are the questions I would ask you if we were speaking privately.

[lookout123]

also you should consider any of the 'custodial fees', expense ratios, backend loads, etc. that may apply.

Those will most likely be the same regardless of account type as those are related to the investments themselves, not so much the type of accounts.

[barefoot serpent]

Originally Posted by lookout123

Those will most likely be the same regardless of account type as those are related to the investments themselves, not so much the type of accounts.

But aren't some fees waived for institutional investors (401Ks) vs. an individual account?

[lookout123]

not generally.

annual fees per account are charged regardless - more generous companies just pay it for their employees. Otherwise the standard is $40/year.

commissions/transaction costs - most 401k's are full of no load funds, so that would be the same. Other choices are A/B/C sh, each has pro's and cons.