Commission job and roth vs 401k

[brg1875]

Ok I am 23 and just starting my life long investments, trying to figure out which is better 401k or roth ira on a 100% commission job. I'm on a quota based job where if I hit my quota I will hit my target of 140k per year, if I exceed my quota in one month I will be taxed at a higher rate as if my income was greater than 140k. Does it make sense to have this money tax deferred now (401k) or taxed later (roth)?

[bjl584]

This came up before. The general consensus seems to be a blend of both is optimal.

Does your company offer a match on the 401K? If so, definitely contribute up to the match at least. Take the free money.

The Roth is a good idea because all income it generates is tax free, and you have much more flexibility to invest in it. A 401K will lock you into a selection of a few funds, but you can invest in almost anything within a Roth.

[disneysteve]

if I hit my quota I will hit my target of 140k per year

For 2011, the ability to contribute to a Roth starts phasing out at 107K if you are single and disappears completely at 122K, so you may not be eligible for a Roth.

[jpg7n16]

...if I hit my quota I will hit my target of 140k per year.

Does it make sense to have this money tax deferred now (401k) or taxed later (roth)?

I think you just made a typo, but just in case - Roth money is taxed now. It's tax free later.

And like DS said, you may not even qualify for a Roth, so that makes your decision super easy