jlhug has an important point - the limits for how much one can earn (dividends from investments) before being taxed on Social Security were NOT indexed for inflation, so this effectively raises your tax bracket severely. Your Roth earnings are compounding tax-free, isn't that correct? You are only contributing with after-tax dollars. The general "wisdom" is that if you are at least 20 yrs from retirement, then maxing the Roth first is preferable. Then contribute to your company retirement plan with as much as you can afford. Note that if you are typical of most young workers, you will have gone through several employers as time goes on. Make the effort to consolidate your previous employer 401/403 monies into ONE single IRA. Believe me, your heirs will bless you for it, and it will be much easier for you to track your investment results overall. It's a pain, I know - I just finished doing it...but worth the effort.

"I would avoid a loan from my 401K at all costs. You pay it back with post-tax dollars so you are taxed on it twice and if you ever leave your company, or worse, get laid off, the balance is due in 60 days or so. I've seen the "taxed twice" claim about 401K loan many times, usually on the websites of big investment companies who have a stake in keeping your 401K accounts to themselves for as long as possible. It's bogus. Anyone who takes out a 401K loan will make monthly payments back into the same 401K, usually for a period of five years. Of course the payments are made with after tax dollars, but the same would be true of paying back any loan except for those tied to a mortgage, such as a HELOC. And once it's paid back, the withdrawals you take out when you finally retire will be taxed at the same rate as they would have been if you had never taken out the loan. You pay interest on the loan at a fixed rate that is set by the plan and usually lower than any rate you could get for an unsecured loan. That means the unpaid loan balance is earning returns at that fixed rate. If you happen to take out the loan at the beginning of a down market, it'll likely be earning at a better rate than the rest of your 401K, and you will actually have a larger 401K balance at the end of the loan than you would have had otherwise. In times of an up market, however, the reverse will be true. The real and best reason not to do it is if you think you might leave your employment, voluntarily or otherwise, before the end of the loan term, because you will have to pay it all back.

As sable said above, it is a choice if mutual funds offered under the 401k plan and often stock with the company (employer). When I was working, my employer contributed 50 cents for every dollar I chose to put into my 401k, up to 6% of my salary. Bingo...I immediately made 50% on my money, but there were stipulations. That 50% was not really mine until I had my account for 5 years I believe and became fully vested. The 50% that they 'gave' me was in the form of company stock, GTE or Contel at the time. These funds are NOT in the investor's control. Once your money is in, you're allowing someone else to make decisions for you--and trusting that they're as concerned about your future as you are (unreasonable, right?). Not to mention--they aren't as safe as we've been led to believe. There are people already who have LOST their investments in these instruments. Not a common thing, but it is possible. Are you speaking of 401Ks? Did those who lost everything maybe choose to put all their eggs into one basket, by just holding company stock in their 401?...not a good thing at all. All 401k that I know of, have a choice of investments to choose from...see link from my post above. The employee controls what funds their money is in within the 401, and can change the allocation at any time. Some employees just choose to do an equal mix of things...say 10 funds, putting 10% into each of them. Others maybe choose a 1/3 mix of aggressive, moderate, and conservative. Placing one's savings, whatever it is, 401, sep, IRA, is not for those who do not understand the market and its many ups and downs. Because of that, some will lose sleep over what appears to be lost, even if it is just temporarily. About 30 years years ago, I remember my (company) stock climbing a good bit in one day. I made $5,000 in one day! Boy was I ecstatic! When it later came down, did I lose money? No. Did I really make $5000 that day it climbed so much? No. I only would have made the money if I had chosen to sell it while it was up. It later came down some, went up some, came down some, etc, and has served me well to this day with its nice dividends. Often times one loses on a stock, or fund, if they choose or must sell when the market (stock or that fund) is down. Sue

Bill, In order to take advantge of IRS Rule 72(t), which does permit early, penalty-free withdrawals, you will be required to take regularly scheduled distributions from the 401K for at least 5 years. If you retire at 55, that would mean until you are 60. There are three permitted ways of determining how large each distribution must be, the specifics of which are too complicated to go into here. However, Bankrate.com does have a calculator which you can use to figure out how much you would receive annually using each of the three methods. Plugging in your numbers as best I could, I calculated that your minimum annual distribution would be about $32,000 and your maximum about $44,500. That corresponds to a minimum monthly income of about $2670 and a max of about $3790. Note that you need to input the "applicable Federal midterm rate," which is 2.44% for March, 2011. Obviously, it will probably be different during the month your plan is implemented, should you go that route. So any results you get using the calculator will be somewhat rough, but at least will get you in the ballpark. The biggest red flag that hovers over 72Ts is that these early distributions, especially if you take the maximums, may result in you depleting your account during your lifetime. If I were doing this, I'd stick with the minimums. If you have any intention of doing this, you MUST find a professional tax advisor who is very experienced in setting up these plans. It's very easy to screw things up and leave you stuck with paying big tax penalties. Here is a link that might be useful: 72(t) distribution rates