Yes, it is. Better solution might be to establish a Roth 401k that comes into being 1/1/06 (happy new year!). That way you can put a lot more money in to get started. Another thing to keep in mind is that if you are young, you have to wait until 59.5 to take the money out tax free. Because of that, might want to ask parents/grandparents to open the account, that way you can have tax free access in a much shorter time period.