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Dave Ramsey says: Put money into matching retirement account

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Dear Dave,

I’ve been following your plan, and I’m ready to start investing.

Do employer contributions count toward the 15 percent you recommend putting into retirement?

— Brenda

Dear Brenda,

Investing 15 percent of your income in retirement accounts is Baby Step 4 of my plan.

That means you’ve already paid off all your debt, except for your home, and you’ve increased your $1,000 beginner’s emergency fund to a fully-funded emergency fund of three to six months of expenses. Way to go!

I want you to control your destiny, so employer contributions do not count toward the 15 percent I recommend setting aside for retirement.

The first thing you should put money into is a matching retirement account.

If you’ve got access to a 401(k) — and your employer offers a match — you should do that up to the match before anything else.

It’s nice if your company will match up to a certain point, but chances are that will still mean you’ve got some work to do.

To make up the remainder, you could look at a Roth IRA.

Then if the Roth, plus what you invested previously to get the match doesn’t equal 15 percent, you could see about a 403(b) or go back to your 401(k) to complete the 15 percent.

You’re doing great, Brenda. Keep up the good work!

— Dave

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