401K vs IRA

so, my wife is a dental hygienist and doesn't have 401 k or anything like that. I've been doubling up on my 401k since about march. Would it be smarter to put her part of that money in an IRA since my company matches up to 6% but i'm putting more like 12% in there?

 

Personally I would recommend her starting a Roth IRA with her piece of retirement savings. That way you diversify your tax advantages with both a post tax and a pre tax retirement vessel.

 

Yes. And you can also make it a ROTH, unless you really need the deduction.

 

Your money is coming out PREtax...the IRA would be deducted at the end of the year. With the ROTH you will get ZERO tax benefits NOW. But you won't pay on what you make...when you take it out!

 

i had thought about a Roth but i'm pretty fucking ignorant. Meatpile, the Roth in a nutshell please.

 

The Roth is post tax and you are limited to $2000 each per year for $4000 total.

Freak is right. Taxes are taken out now but you don't have to pay taxes when you withdraw the money later. Basically it is a means of hedging your tax liability when you retire. If you are in a higher bracket you win with the Roth. If you are in a lower bracket, you win with the 401K.

I'm pretty sure it is easier to borrow against the Roth for things such as paying your kids education or buying a home without paying taxes.

 

Roth IRAs are not deductible, like your 401k, but you pay ZERO taxes upon withdrawal.

You can put $6k per year away, maybe 12 if you file jointly?

 

They raise the limit?

 

Also easy to borrow from a 401k...

Depending on the plan...it's a pretty good deal. Say you borrow $50,000 out of your 401k and have to pay 6% interest...the 6% goes to YOU. So you are paying back yourself...plus the interest.