How to Contribute to a 401K and a Traditional IRA
Planning well for future retirement requires strategy. Paying yourself first is a necessity in spite of the economic outlook. If your employer sponsored 401k is not performing as you wish, you might want to take a look at supplementing your retirement savings by way of an IRA. Doing so will help you take care of your family just as well in the future as you are now. Notice the steps below.
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Instructions
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Save money by way of payroll deductions in a 401K. If your employer matches this will add significant growth to your account at no cost to you. Investments are limited to what the employer offers.
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Select the financial institution of your choice for your Traditional IRA. You will be able to better manage your asset allocation and you will have a variety of investment choices.
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Contribute the maximum allowable by your employer to your 401k during the calendar year. In 2008, you can contribute $15,500 and an additional $5,000 if you are over 50. Contributions are tax deductible, thus you pay lower taxes.
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Plan to contribute the maximum to your IRA. In 2008, you can contribute $5,000 and an additional $1,000 if you are over 50. Contributions to an IRA are not due until April 15th. This could allow you to pay less to the IRS. Contributions can also be made in a lump sum.
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Start making contributions to your IRA as soon as you apply. Contributions to a 401k can be delayed for a new employee.
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Tips & Warnings
Save money for your retirement like your life depends on it, because it does.
Ask a Financial Advisor to assist you to find the right IRA.
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Comments
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Did we really need to be told, in answer to "how to contribte", that we need to contribute? Duh!
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What! You ignore some rules that don't allow tax deductions when an employee is covered by a 401k at work. Lousy advice.
