Just about every financial expert I know advises savers to contribute to their company's 401(k) plan -- at least enough to receive the employer's matching contribution.
I can't argue any differently.
That company match is free money -- a bonus from the boss -- so why not cash in if you can?
And, of course, the tax breaks are another bonus. Because the money comes out of your paycheck before taxes are calculated and compounds every year without a bill from Uncle Sam, investing in a defined contribution plan is bound to make April 15 more tolerable.
Not a bad deal, right?
Until you're ready to retire, that is. That's when a 401(k) (or 403(b) or traditional IRA) suddenly becomes the worst possible retirement plan, from a tax perspective, a saver could have. Here's why:
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Written by Michael Reese, CFP®, the founder and principal of Centennial Advisors LLC, which has offices in Austin, Texas, and Traverse City, Mich. Michael's vision is to help American retirees "re-think" how they manage their financial portfolios during their retirement years.
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