I have enough retirement savings to max out an HSA, then either a Roth 401(k) or the Roth IRA. When it comes to the 401(k) or IRA, which one would you max out first?
I am thinking the IRA, but it is easier to max the 401(k) through payroll deductions. Eventually, I will roll over the 401(k) into the IRA.
Thoughts?
If it matters the IRA would be target date 2055 and the 401(k) is in a SP 500 Index fund. But sub .1 expense ratios.
The 401k is a good choice assuming that your 401K does not have any significant administrative expenses in addition to low expense ratios of less than .1%. A “side” benefit is that 401k have better protection from lawsuits than IRAs.
I am curious as to why you would only choose a S&P 500 fund if you contributed to an 401K but choose a Target Date fund, with both equity and bond components, if you contributed to an IRA.
I chose to keep the target date to keep a variety of investments. Also, it will be a landing place for all of my 401(k)s. Eventually everything will go into a target date. But then expense ratios at generally higher and the returns are better with my index funds.
I am in my 30s now. once closer to retirement, I’ll focus on have more stability.