Should you max out your 401(k) or IRA at the beginning of the year? (via CNBCMakeIt)
Maxing out any retirement account is a good problem to have. According to data provided by Fidelity, just 9% of 401 participants max out their contributions, over 80% of whom do so in the second half of the year.Katie Taylor, vice president of thought leadership at Fidelity Investments, tellsthat there are a few downsides to the front-loading strategy to consider, the most important being a 401 match.
If your employer doesn't offer the option to true up, Taylor suggests you think more strategically about spreading your contribution throughout the year. "You want to take advantage of as much of that free money as possible." "Don't try to time the market, especially for a longer term investment like a 401," she says. "When you're constantly contributing and buying in at the different price points, that's where the dollar-cost averaging comes in."
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