Stock Markets Exposed

No-match 401k w/ stock options or an IRA?

My new job offers a no-match 401k with stock options that pay out three times per year. Am I better off investing in the 401k or establishing an IRA? I'm 28 years old and make 40k/year. Thank you!

Public Comments

1. I would max out my Roth. I will say one nice thing about a 401K. The money comes out before taxes and you never see it so you are not tempted to spend it!
2. I'm not quite sure what type of 401k you are describing? BUT you can do both. IRA limit is $4k/yr (or $5k/yr over 50 yrs old). Depends how much you plan to save. Hopefully at least 10%, but try for 20%. (depends on your lifestyle expenses)
3. First, max out the Roth. The Roth IRA is after tax. You can actually withdrawal the principal from the Roth without penalty (you should not do this unless it is an emergency). Then whatever you can afford to contribute above the 4,000 limit you should put in the 401k.
4. One would have to know more about the stock options to judge for sure, but I'd be inclined to max out a Roth IRA first, then put anything else into the 401(k) since there is no match. Be careful not to accumulate too large a percentage of your 401(k) in the stock - diversification is vital.
5. I would disagree with the other answers and say put the money into your 401k because nobody know how they will change taxes in the next 40 years. Also the 401k would be a better way for 99% of people to dollar cost average and it is automatically done for you. As for the Roth IRA ... what do yall think is going to happen to your Roth if/when they change the tax laws so we have a flat/fair/national sales tax instead of an income tax ?