Saturday, October 21st, 2017

Follow Us

Ask the Pro: 401(k) Contributions


I just started participating in a 401(k). I think my company matches 25 cents for every dollar I contribute.

I had a rollover IRA of just a few hundred dollars with another place. Should I move my small IRA into the 401(k), or create a new rollover with the same company with whom I have the 401(k)?




Dear Elle,

Congratulations for participating in your company 401(k) plan! Pre-tax contributions, tax deferral and a company match are all very important benefits. I would encourage you to contribute as much as possible. When you get to the point where you are contributing the maximum allowed into the 401(k), then you can begin funding an IRA (either Traditional or Roth IRA). 401(k) contribution limits are as follows:

(2002) $11,000
(2003) $12,000
(2004) $13,000
(2005) $14,000
(2006) $15,000 and indexed for inflation thereafter.

Based on this information, if you are in a position to maximize your 401(k) contribution and also contribute to an IRA, then you should keep the IRA and make your yearly contribution. If not, then you could consider rolling your small IRA into the 401(k) plan if your plan allows for this. Please read your 401(k) plan documents carefully and review any fees and charges for closing or when transferring from your IRA.

To Your Success,

Thomas Kane
Financial Advisor
Raymond James Financial Services

© 2008, Young Money Media, LLC. All rights reserved.

This entry was posted in Investing Advice. Bookmark the permalink.