The Help Desk

Your tough questions. MONEY's smart answers.
Presented by

Should I contribute to my 401(k) beyond the amount of my company match?

January 17, 2012: 5:05 AM ET

I have contributed 401(k) to the maximum the last 10 years. Knowing that my tax bracket will be higher in the future, it is better to reduce my 401(k) to the company match and invest the rest in the taxable account which is subject to 15% long term gain? –Name withheld, Lincoln, Nebraska

If you're absolutely certain that you're going to move up into a higher tax bracket in the future, then diverting some of your overall contribution to other investments might be the best strategy, according to Red Bank, N.J. financial planner Helen Hogan. But as you suggest, you should still contribute enough to your 401(k) so you can take advantage of the maximum match provided by your employer.

It's also important to adjust your portfolio to take into account how close you are to retirement, adds Hogan. For instance, if you're near retirement, you'll likely want a fair amount in safer, income-producing assets. If that's the case, earmark assets in your 401(k) for income and let your non-qualified investments focus on capturing capital gains.

Hogan also urges you to consult a tax professional to weigh the specifics of your situation and determine the best course of action, both from a tax standpoint and with an eye toward building as large a retirement nestegg as possible.

-- Jeff Wuorio

Got a question for the help desk? Send it to

Posted in: Investing, Uncategorized
Join the Conversation
Help Desk

Got a question about your money? We want to hear it! Each week we're answering your questions on CNN, Headline News and CNNMoney.com.

Your email or phone number won't be published; we'll use it to get in touch if we need more information about your question.
Help Desk Video
  • NEXT
    Not enough money in America's 401(k)s
    Despite the surging stock market bringing balances to record highs, the average Fidelity 401(k) account has less than $100,000 in it. That's just not enough. Play
  • NEXT
    BACK
    Explaining Obama's myRA
    President Obama unveiled a new savings plan for retirement accounts, aimed at encouraging people to start building their nest egg. But how exactly does it work? Play
  • NEXT
    BACK
    Tricks on how to save in your 20s
    Saving for your retirement in your 20s doesn't have to be a financial burden. Prioritizing your expenses is usually the first step in building a nest egg. Play
  • BACK
    Don't get fooled by Black Friday sales
    Here are some of the tricks that retailers use to make you think you're getting a deal. Keep an eye out for them while shopping this Black Friday. Play
Best Tips
Some of the nation's leading business owners, investors, and thinkers share their thoughts on rebuilding your wealth. More
These strategies can help you manage the challenges -- both emotional and financial -- of helping an aging parent from afar. More
You don't need to be fanatical to get to 780. Those in the know say these moves matter most. More
Featured Newsletters

Tips for saving and spending smarter.

Search This Column
View all entries from this: Week, Month
Help Desk
More help for your career, your investments and your budget.
Powered by WordPress.com VIP.