QUESTION: Bethany in Detroit isn’t sure if she should contribute to her 401(k) or a Roth IRA instead. It is a discretionary 401(k), and Bethany isn’t sure she’ll receive a match at the end of the year. What would Dave do?
ANSWER: If they match, then I would jump into it. If you feel like they won’t match, then don’t do it.
If you look up in January of next year and they’ve closed the biggest deal they’ve ever closed in their lives, then you might say that this year you’ll probably get the discretionary match. That’s when you get into it.
I would rather see you in a Roth IRA than a non-matching 401(k). Tax-free growth is better than tax-delayed growth or tax-deferred growth. That’s really what the traditional IRA and the traditional 401(k) with no match are.