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What is the recommended approach (if there is a consensus) on maxing out 401K to get match and then applying excess elsewhere vs maxing out 401K completely?

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gremln007 said:   What is the recommended approach (if there is a consensus) on maxing out 401K to get match and then applying excess elsewhere vs maxing out 401K completely?
 Depends on what choices you have in your 401k. If you have access to a large variety of funds (incl. many diversified index funds) with low expense ratios, you could max out 401k first before contributing to an IRA. One other benefit of a 401k is (if the plan allows) the ability to get loans --- this is usually not recommended but in extreme situations, a 401k loan is an option to consider.

If the 401k investment options are fairly limited and/or have high expense ratios, go with an IRA after contributing just enough to the 401k to max out employer match.

If you qualify, HSA is also something to contribute to --- you get a deduction and the distributions are tax-free if used for qualified medical expenses.

ETA: One other consideration: If you care for making pre-tax contribution, your ability to take a deduction for an IRA contribution is fairly limited if you are covered by a retirement plan. If you dont qualify for an IRA deduction, and do want to make pre-tax contribution, 401k is the way to do.

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Could someone please comment on Personal Retirement Annuities?

Fidelity is billing it as a means to invest tax-deferred without any IRS contribution limits. What's the catch?

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bicker1 said:   Could someone please comment on Personal Retirement Annuities?

Fidelity is billing it as a means to invest tax-deferred without any IRS contribution limits. What's the catch?

  Usually the fees cost more than taxes would.  A three fund portfolio of index funds held in a taxable account is pretty efficient, especially if you go the ETF route.

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gremln007 said:   What is the recommended approach (if there is a consensus) on maxing out 401K to get match and then applying excess elsewhere vs maxing out 401K completely?

There is no consensus because many factors at play (eg your tax rate/income/investment options/plan accepting post-tax and allowing post tax rolover etc).

There is no one-size-fit-all answer.

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bicker1 said:   Could someone please comment on Personal Retirement Annuities?

Fidelity is billing it as a means to invest tax-deferred without any IRS contribution limits. What's the catch?

 
Not necessary when capital gains is only 15% for most. Typically the fees are pretty high too.

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