Yea I suggest just start funding a seperate account with each paycheck to build up funds for a trading or investing account. When you switch jobs and go IRA and your income is not too much, try to switch to a Roth IRA. After the tax penalty you will have the perfect compounding account for the rest of your life, assuming they don't badly change the rules mid-game.
Q1.) Does your employer offer a company "match" with your participation in the 401k, and what is the maximum match, if any, for the plan? Q2.) If there is a match, are YOUR contributions less than, equal to, or in excess of the amount needed to receive the maximum company match? Q1 Action.) If your employer DOES NOT offer a company match, CEASE YOUR PARTICIPATION IMMEDIATELY (unless your wages exceed income eligibility for IRA's. There are no income eligibility limits for 401k). You can replace the small 401k tax benefit you receive by opening and contributing into a TRADITIONAL IRA account through your choice of financial firms(brokers, banks, insurance companies, alternative investment firms, etc), AND have access to the financial products available through that financial firm. NOTE: Participation in a 401k AND a TRADITIONAL IRA in the same year may affect the IRA tax deduction. Q2 Action.) If your contributions are in excess of the amount needed to receive the max company match, REDUCE YOUR CONTRIBUTION IMMEDIATELY TO THE AMOUNT NEEDED TO RECEIVE THE MAXIMUM COMPANY MATCH WITH NO EXCESS CONTRIBUTION ON YOUR PART. If your contributions are less than the amount needed to receive the max company match then understand you are leaving FREE MONEY on the table. Although your investment choices are sucky, the smart thing to do is INCREASE YOUR CONTRIBUTION TO THE AMOUNT NEEDED TO RECEIVE THE MAXIMUM COMPANY MATCH. Other. 1) In ALL scenarios, you can open and contribute into a ROTH IRA. Applicable to ANYONE, with or without company sponsored 401k. As long as you have "earned income" AND fall within the income eligibility limits. Annual Roth IRA contribution limits apply. 2) You should know what kind of 401k you have. It's either a Roth 401k or a traditional 401k. When/if you leave your employer, you can do a TAX-FREE ROLLOVER of your 401k into a same-type IRA. 3) From a pure tax standpoint, annual tax deductions can be maximized by contributing into a TRADITIONAL IRA, the difference between YOUR 401k contributions and the annual Traditional IRA contribution limit, so long as you meet the "earned income" and income eligibility requirements of the traditional IRA. Again, applicable to ANYONE who meets the requirements. And remember, Roth IRA and Traditional IRA can be opened at the financial firms(s) of your choice and have access to the financial products of that firm. Trade On!