I work in IT, live in U S A. I did lot of contract work with different companies. I was doing 401K in my previous job to get tax benefits plus to get the company match (Free money). In years the money grows.
At the end of the year when you do your tax return you can open & contribute $6000 towards Traditional IRA depends on your income. There are tax refund benefits to it. Do your tax return without 6K contribution & see what your tax refund $$ is then add 6K for IRA & see how much more you are getting in Tax refund if it make sense for U do it.
Tip: You can contribute in Traditional IRA up to the tax deadline April 15th for previous year
E.G: For 2020 tax year, you can contribute 6K in IRA up to April 15th 2021 tax deadline.
Rule: The 6K need to be deposited in IRA by 15th April to avoid IRS headache, you can’t take out money until you turn 59.5 years because it’s tax free money the same rule applies to 401K at work. If you take out money there will be penalty.
Note: I am not a tax advisor but over the years learn a lot to take advantages
Let me come to my point the reason I explain all above b/c I want to contribute & want to help out
At Present: I transfer all my previous years 401K job money to my existing Traditional IRA. In 401K the company only gives you limited option to invest in 10/20 mutual funds. In traditional IRA I have 8700+ stock option to invest I can buy & sell stocks what I prefer, when I want, Intraday stock trading etc.
Alhamdulillah I am happy & doing great with my Investment by myself. I am glad I did it.
I would only re-commend this option if you know what you are doing & you are confident in investing. If you believe your 401K is doing better and don’t have experience don’t worry but not to forget the overall market is great that’s why 401K is going up too there is no guarantee you can lose money in 401K too. I lost 30% in my 401K in March/April 2020 due to Covid & then back up.
401K: you can always take out 50% loan from your current job 401K not previous 401K. The maximum amount is $50K just another way to utilize the money
I want to share my experience with good intention so someone can benefit out of it.
Allah say’s do your part & leave the rest up to him & he will reward you. Giving good advice to others is also a Sadaqah. May Allah make it easy for all of us don’t forget when you make money Donate for good help out others the money will have Barakah & it always grow.
It’s your call, your money your decision.