Problem: Should I invest through my employer's 401(k) plan or in an IRA?

        Strategy: Ideally, both.

        Crystal Faulkner, accountant and partner in Cooney, Faulkner & Stevens, says both 401(k) plans and IRAs offer significant advantages. Typically, the best strategy is to first contribute to your 401(k), especially if your employer matches a portion of what you contribute. This is free money that you give up when you don't participate in the plan.

        Next, contribute up to $2,000 annually to an IRA. Your ability to deduct an IRA contribution will be phased out if you participate in a plan at work and your income is too high. The deduction begins to phase out at an annual salary of $52,000 on a joint return and $32,000 if you are single.

        You may want to consider a Roth IRA if you are eligible. You are not entitled to contribute to a Roth if your adjusted gross income is more than $160,000 if you are filing a joint return with your spouse and $110,000 if you are single. As long as you meet certain conditions, the contribution to a Roth and the earnings on it are tax-free when you withdraw them. However, you do not get a deduction when you make a Roth contribution.

        The younger you are when you contribute, the more sense a Roth makes. If you are eligible for a deductible IRA you may want to consider it instead, particularly if you are closer to retirement.

        The important thing to remember about IRAs is that it is better to contribute early in the year so that your contribution can start earning income sooner. Even if you can't afford the full $2,000, you should try to contribute something each year because over a period of time even a modest investment program can grow to a significant sum.

        Readers: Consider Savvy Strategies as general information only and seek the help of professionals because circumstances might vary.

        Planners: Share your unique strategies with Enquirer readers. Send your Savvy Strategies to Amy Higgins, 312 Elm St., Cincinnati, OH 45202 or e-mail ahiggins@enquirer.com.

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