What if your employer doesn't match ANY of your 401k contributions?
What is the point of a 401k? Why would you use a product that is so limited in investment options and has so many rules? Why not just open an IRA and free yourself from the shackles of the 401k? FREE MONEY, that’s why! But, what if there is no free money?
Many employers that offer a 401k will offer you some kind of a match. You don’t need a lesson on why the give you free money. It’s an incentive to work for company A instead of considering company B. Here’s the thing though, unless you are in the tech space right now then there really isn’t much competition among employers so many do NOT offer any match at all.
Let’s keep this short and sweet. If your employer does not match your 401k contributions then it may be better for you to have a traditional IRA, or Roth IRA. With these two options you literally can invest in anything you want to. 401k’s are limited to just a few mutual funds, and most of the time it is very difficult to know what investments are inside of those funds.
But wait! There is one reason you may want to stay with the 401k. If you plan to contribute more than $5,500 each year then stick with the 401k. While statistics show that this does not apply to most people, if it does then the 401k is your best bet. As of now you can only contribute $5,500 to a Roth IRA or Traditional. If you are over 50 then you can add $1,000 more. Max contributions in 401k’s are considerably higher and so, if you know you will contribute more, than the 401k it is.
I get questions like this from our clients all the time, and it’s easy to understand why there can be confusion. At Jazz Wealth we not only help you with these issues, but we also take a unique approach to investing the assets in your IRA’s. Using a “Buy, hold, and RENT” approach we look to improve on the traditional methods. For more information visit our website, JazzWealth.com or give us call @ 727–492–0314.