Ask Terry Questions roth ira AND 40l(k)?

roth ira AND 40l(k)?

By Terry Savage on July 15, 2019 | Financial Planning / Retirement

our son, 24 years old has a 401 K at work but wants to open a separate roth IRA as well and split his savings into these 2 accounts.
do you think this is a good idea, and can you recommend a ROTH IRA, one he does not have to be hands on with?

Terry Says

Well, first your son should contribute enough at work to get the company’s matching contribution.  That is the most sensible path.  His 40l(k) contribution is tax-deductible.

Then if he has “extra” money he can open a Roth IRA at Vanguard or Fidelity, and just make automatic contributions every month.  Remember, he doesn’t get a tax deduction for a Roth IRA — and he must have earned income to contribute.  I’m sure that at age 24 he is within the Roth income contribution limits.

Congratulations for having raised a “saver”!  (Now just make sure he doesn’t marry a “spender”!)

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