I find it amusing that not too long after J.Money mentioned his fears of his awesome 401(K) company match disappearing (it didn’t)….we get the news that our match has gone the way of the dinosaur. [sigh] It hadn’t even crossed my mind that they would do that!! It was only 50% of our contributions up to 6% (total 3% match), but it was nice to have, and kept me motivated to keep contributing even though I wasn’t completely happy with the performance of my investments and dissatisfied with our options.
So…what do I do now?
I have until December 31st to decide what to do. With my limited knowledge of investing I’m not sure what the smartest thing would be. I figure I have 3 options:
1) Keep contributing to the company 401(k) at 6%. It brings me to slightly over 10% of my whole income being contributed to retirement.
Stop contributing altogether, AND
2) Increase my contributions to my Roth IRA, for a total of 10% of my income after tax.
3) Open up a Traditional IRA, and put in the equivalent of 6% of my income.
I am leaning towards “Option 3” right now for a few reasons. I haven’t done any thorough research yet, but from what I understand Traditional IRA’s differ from the Roth’s in that you don’t pay taxes on the money up front. On the other hand if I contribute it to my Roth I’d be paying a lot more taxes than I have been the past two years. (Maybe not that much, but enough to make me sad, lol) So by going the Tradition IRA route I’d be keeping 18-25% more of the money that I invest for now.
So, based on my half-assed preliminary analysis, what should I do?! Are all my assumptions so far correct, or are there any other options I haven’t thought of?
Oh yeah, and this development doesn’t exactly make me feel any better about my job security….[double sigh].