Date: Tue, 14 Feb 2006 11:18:33 -0600
From: "jIM" 
Newsgroups: misc.invest.financial-plan
Subject: Re: Funding your Roth IRA before your 401k, good idea or bad idea?
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Here are some factors in your co-worker's favor:  These may not apply
to all people, these may not even apply to your co-worker

he plans to be in a higher tax bracket in retirement than he is now.
he plans to withdraw money from the Roth before retirement age
he does not like investment choices in the 401k

other issues to consider:

A person is eligible for a 401k if they work at an employer which
offers one.  There are "upper income limits" on 401k contributions, if
a person a significantly paid individual within the company.  Outside
of this issue, it is easy for a person of any age, any income level to
contribute to a 401k.  A Roth IRA has an AGI limit for single and
married people.  It is possible a person is eligible to contribute to
Roth when they are young (and making less money) and could not
contribute as they get older (and make more money).  At this inflection
point, it would make sense to start the 401k contributions (or increase
them) to reduce AGI to maintain Roth eligibility, and at some point the
Roth contributions might need to stop (because of the income limits)
and the 401k is the only vehicle of convenience available.

Roth IRA's, IMO, have much more flexible withdraw rules and investment
choices relative to my 401k.  I even rolled an old 401k into an IRA,
then converted to a Roth because of it's perceived advantages.

I would not pass up my company 401k match for a Roth, but I max out my
Roth and I am not maxing out my 401k.