Use IRA when 401k allows 50%?

[tetlee]

I'm just starting out so I want to double check this.
My company pension allows up to 50% contributions, so I'm wondering is it worth even having an IRA at this point?

I have the HSA and ESPP maxed out already.
Company contribute to 401k is 75% upto 10%.

[nereo]

Yes.  Fund an IRA.  You get the same tax advantages of a 401(k) (minus the match) but more control over where you invest it and the fees that it incurs. 

[tetlee]

ooo Of course! I was just bemoaning the fact I have no control over that :)

So I should only really consider the 401k (past match) once I have filled the annual IRA?

[nereo]

ooo Of course! I was just bemoaning the fact I have no control over that :)

So I should only really consider the 401k (past match) once I have filled the annual IRA?

that would be my recommendation, yes.
Step 1) Fund your 401(k) up to the match
step 2) fund your HSA and IRA to the maximum.
step 3) fund your 401(k) up to the maximum tax-deferred $18k allowed (if possible).

If you can do these 3 steps each year you will almost certainly be FI in a decade or so (depending on your expenses).

[seattlecyclone]

ooo Of course! I was just bemoaning the fact I have no control over that :)

So I should only really consider the 401k (past match) once I have filled the annual IRA?

that would be my recommendation, yes.
Step 1) Fund your 401(k) up to the match
step 2) fund your HSA and IRA to the maximum.
step 3) fund your 401(k) up to the maximum tax-deferred $18k allowed (if possible).

If you can do these 3 steps each year you will almost certainly be FI in a decade or so (depending on your expenses).

Yes, this is a good priority order in general. If you think you'll be able to max out all your tax shelters in a typical year but might come up a bit short this year, you may want to prioritize 401(k) contributions for now because the deadline for 2015 contributions is your last paycheck of the year. You can catch up on your 2015 IRA contributions all the way until the middle of April 2016.

[tetlee]

Thanks guys that's great. Good tip on the IRA funding going till April.

Having recently moved to US from the UK I'm pretty much starting from scratch learning these kind of things.

[Gone Fishing]

ooo Of course! I was just bemoaning the fact I have no control over that :)

So I should only really consider the 401k (past match) once I have filled the annual IRA?

that would be my recommendation, yes.
Step 1) Fund your 401(k) up to the match
step 2) fund your HSA and IRA to the maximum.
step 3) fund your 401(k) up to the maximum tax-deferred $18k allowed (if possible).

If you can do these 3 steps each year you will almost certainly be FI in a decade or so (depending on your expenses).

The one minor exception is if your income is high enough to start hitting IRA deductibility limits (at which point you would probably have enough to max both accounts anyway, but), 401(k) contributions may actually help open up some room to deduct more of your IRA contributions.

It would stink to not be able to fully deduct your IRA contributions yet still have had room to contribute to your 401(k) which would have allow you to deduct more of your IRA contributions.

Clear as mud, right?  If this doesn't make sense, maybe someone else can explain it better...