IRA & 401(k)

Tax-advantaged retirement investing

Traditional IRA

Tax deduction now

Pay taxes on withdrawal

Good if you're in a high bracket now

Roth IRA

No deduction now

Tax-free withdrawals forever

Best if you're young

IRA Limit

$7,000/yr

401(k) Limit

$23,000/yr

Early Withdrawal

10% penalty

before age 59.5

free money

If your employer offers a 401(k) match, contribute at least enough to get the full match. It's a 50-100% instant return.

The catch: you can't easily touch this money before 59.5 without penalties. Retirement money is for retirement.

Check yourself

If you're 25, which is generally best?