[jively]

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Once you've "maxed out" your employer match, there's not much reason to continue adding to the 401k until you've exhausted other tax-deferred or tax-free options. A 401k and a traditional IRA work about the same for tax purposes, but the IRA gives you virtually unlimited investments to choose from.

Also, you may want to consider a Roth IRA where the tax is paid now and the growth is tax free. This is advantageous for anyone who believes their tax rate will be higher when they retire than it is now. If this is the case for you, you'll also want to see if your employer offers the new Roth 401k.

If I were you, I would plan on investing at least 15% of my gross pay. Start with the 401k up to the max (Roth 401k if possible), max out a Roth IRA for the year (max one out for your spouse too if you can), and then go back with whatever is left over and add that to the 401k as well.

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All of the suggestions in this thread were good, and this post is spot on. If you think about what kind of tax rates we've had for the last 40 years, we are probably near a low in the cycle. Tax rates will probably be higher in 20-30 years. That makes Roth accounts a better deal.

-Tom