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Here is a short answer...

My wife and I both contribute maximum contributions to our 401K's (no employer match). This is ~$16.5K/year, and we pick the funds the 401k allocation is invested in. Like any 401k plan, the options are relatively limited anyway.

Our larger savings and retirement funds, and some other assets, are managed by a professional. We both have a higher-than-average amount of investment knowledge and experience, but it is really a full-time job. We don't have the time to obsessively watch market trends, do research, and then move investments around to maximize our gains.

We also keep (depending on various other factors) ~$70-$120K liquid at any given time. This is money in a decent interest-bearing money market account, short-term CDs (3-6 months), that sort of thing. It's basically our funds for emergency stuff, cover a job-loss (we both work in startup type businesses), buy a car, or things like that.



If there's no match, it's generally advisable to not do this simply BEACAUSE the usually crappy fund selection.

You can open your own tax-advantaged IRA.


Actually, this year she switched hers to an IRA.

The other issue we've run into is that there is some law that says (and I forget the exact details) 401k contributions from the highly-paid employees can't be more than x% greater than the average employee contribution in the company. So if you work someplace where several other people are not doing 401K allocations, you get a "refund" at the end of the year (has happened to both of us).


Which is limited to $5,000 per year at best (if not old enough for accelerated contributions), isn't it? Or am I missing something?


Only Roth IRA is limited to $5k a year.


This doesn't agree with my understanding of the tax code as reported on IRS.gov. For example:

http://www.irs.gov/retirement/article/0,,id=202510,00.html:

"The maximum contribution that can be made to a traditional or Roth IRA is the smaller of $5,000 or the amount of your taxable compensation for 2011. This limit can be split between a traditional IRA and a Roth IRA but the combined limit is $5,000.The maximum deductible contribution to a traditional IRA and the maximum contribution to a Roth IRA may be reduced depending on your modified adjusted gross income."

Also, this table seems to agree:

http://www.irs.gov/retirement/participant/article/0,,id=2025...

This is for 2011, but my recollection is that 2010 had identical wording.


Yes, but a 401k has an annual contribution limit of 16.5K while an IRA allows only 5.5K in annual contributions.

Ideally, having both accounts would give you 23K of tax-advantaged savings.




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