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Should I invest in a Roth IRA or my DC plan?
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Our first words of advice: Follow the money! If your company offers you a match for your DC plan contribution, you should keep investing in the account up to the maximum percentage they'll match. This is free money, and you won't find a better deal anywhere.
To sum up:
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After you've maxed out on the match, it's probably wise to invest any remaining money in a Roth IRA. You can put in up to $ in (or $ if you are 50 years or older), as long as your income doesn't top certain levels. You won't get any tax deductions when you invest in the Roth, but you won't have to pay any taxes on it for the rest of your life, which can turn out to be an advantage over a DC plan. Another plus for the Roth is that you can keep your money there forever, as opposed to a plan like a 401(k), where you have to start taking withdrawals by age 70 1/2.
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With a Roth IRA, you can also take out money with no penalty--but only from your original contributions, and only after five years. Dip into your investment earnings before you turn 59 1/2, though, and you'll have to pay a 10% penalty. If you withdraw assets from an employer plan before retirement, you'll pay a penalty and taxes, but many companies offer employees the option of taking a loan from their account.
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If you're fortunate enough to still have money to invest after you've maxed out on your Roth IRA, then by all means start plowing it back into your DC plan. In general, it's a good idea to have retirement money in different types of accounts, because you never know what the tax laws will be 30 years down the road.
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1. Start with your employer plan, up to the match.
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2. Invest up to $ in a Roth IRA ($ if you are 50 or older).
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3. If you can still afford it, max out on your company plan
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