If your employer is providing matching funds, then in my opinion it would make the most sense to fully fund your 401-K first, because you are basically getting FREE money from your employer. If you can do it, it would be great to fund both the 401-K and and individual retirement account---Roth or traditional, depending on your situation.

I like the Roth, myself. Mostly because I believe taxes will not go down, and that individuals don't use substantially less money when they retire. So the tax-exempted Roth holds much appeal.

It would also depend on the investments available in each. If the 401(k) has some good investments, then it would take priority, at least until you have maxxed out your employer match.

I also believe that we shouldn't rely on "retirement" funds -- build a portfolio that you manage yourself, pay the current taxes (you can exercise some control over this, if you want to do your own homework), and have it available when / where / how you want it.

Generally, you should fund your 401K first. Most of the 401Ks offer matching contributions get this , then you can think of the Roth. Generally if you are young and expect to earn more money in your later year, you are better off to invest in Roth. If you are not sure, you can split the money.

The only time a 401k is a better choice is when your employer matches your contributions. Even then you should only fund your 401k up to the match, and then you should stop funding the 401k. 401k's are tax deductible, but you will pay tax on the growth when you start taking scheduled deductions at retirement. So when you are retired and start taking money out the growth is taxable, and that is a bad deal.

Roth individual retirement accounts are not tax deductible, but all of the growth is tax free. The fact that all of the growth is going to be tax free is incredibly important when you consider all of the compounding your investments are likely to do in thirty or forty years.

I personally don't put much money into my Roth Ira, because I am getting ready to be FIRE in the next two or three years(financially independent retired early). When you are trying to do what I am, than it becomes much more important to invest quickly into income producing assets that are held in taxable accounts. It would do me no good to have all of my money tied up in an account I can't touch for thirty five years.

Don't get me wrong, because I do put money into my Roth, but it is mostly just going to be a nice bonus when I reach the age required to touch it. Roth accounts do allow penalty free dispensations for specific things though (like the purchase of a first home), which I might take advantage of.

What you do in order to fund your retirement is going to be a result of your specific goals, and circumstances. The best thing you can do for yourself is understand, and manage your own interests. Good luck with your finances, and retirement aspirations.

Your 401k should be funded first because it is funded pre-tax. A Roth IRA is funded after tax. Also, a 401k usually has a company match attached to it, so it has the dual benefit of being tax deferred AND has a guaranteed instant return (the match). Even if there is no match, the 401k provides a better opportunity IN that it is before tax, and because the contribution cap is also higher than the Roth and traditional IRAs EVEN IF you include make up allowances for IRAs.

Thanks to all for the information.