Question: Where should I put my 401k savings until I am able to contribute again?
I recently switched companies and cannot contribute to my new 401k for a year. I want to continue to save and would like to put a percentage of my savings into the 401k once it becomes available to me. Is this possible? What would be the best option for me in order to save for retirement? Should I create a Traditional IRA or Roth IRA?
I would recommend starting an IRA. Please note that you can never roll money from an IRA into a 401k plan later on. There wouldn’t be any advantage to that even if it were possible. Only existing 401k balances can be rolled into another 401k. The one disadvantage of creating the IRA is that you do not get a company match like you would with a 401k. There are significant tax savings with a Roth IRA that you should read about.
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