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Where to stow $2,000 away: 401(k) or an IRA?

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Q What's the better investment, putting up to $2,000 in an IRA, or putting roughly the same amount in a 401(k) plan at my company? The corporate "match" on my 401(k) is very small.

T.L., Seattle

A "I'd definitely invest in the 401(k) to take advantage of the corporate match," says David Bendix, of Bendix Financial Group, Uniondale N.Y.

But once you've met the match, "put any extra monies into a Roth IRA," he says. The Roth will let you build tax-free earnings, as long as you hold the account for at least five years.

Q How long can I take a tax deduction on our 25-year-old son, who is in graduate school? He earns a substantial part-time salary - between $10,000 and $20,000. But he lives at home and we pay his full-time tuition in graduate school. He does not pay for room or board.

A.R., Queens, N.Y.

A "You've lost the deduction," says Ed Slott, a certified public accountant based in Rockville Centre, N.Y.

Once a young person reaches age 24, they cannot be taken as a tax deduction if they earn more than $2,750 per year, the amount of the standard deduction for 1999, Mr. Slott says.

Q I recently got a new credit card, which I used a few weeks ago to buy a $1,000 item. I am still not over my credit limit and I plan to pay it off as soon as the monthly bill arrives. So why has my credit-card company now put a hold on my card, even though I am up to date on my payments?

Name withheld, New York

A Some card companies impose a hold on new purchases when large-ticket items are bought with a relatively new card.

They want to ensure that you can handle large transactions. They also occasionally impose a hold when you approach your credit limit.

Call the card issuer and ask them the reason for the hold and whether they plan to lift it once you've made your required payment. The issuer's phone number is usually on the back of your card, as well as on the monthly statement.

Questions about finances? Write:

Guy Halverson

The Christian Science Monitor

500 Fifth Ave., Suite 1845

New York, NY 10110

E-mail: halversong@csps.com

(c) Copyright 1999. The Christian Science Publishing Society


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