Going to Grad School: So Invest in 410k or IRA or Anything Else?

Question

So I have just landed a job out of college, but I am planning to leave in 2 years in order to go to Grad School (MBA).

My company offers me 410K, however I won't get the benefit of matching fund if I leave before 2 years, and only 20% of the amount invested if i leave 2-4 years.

So these lead me to possibly do an traditional IRA investment, which I can play around a little in what I can invest in so. Also I heard that there are exceptions for higher education so I won't get the 10% penalty.

However, I'm still not sure what the best options are. I'm not expecting huge returns b/c I'm only investing for a short term: but I do want to do what I can in terms of earning/saving some extra money for college.

Thoughts? Suggestions?

Thanks.

Answer 1

Well you might as well invest in the 401k upto your co's matching percent because it's free money. Also put what you can in a traditional IRA and yes you would get the education exemption.

Answer 2

It's your first job, so I'm guessing that you won't be making gobs of money.  I'd recommend that you invest in a Roth.  You won't get the tax break now, but it offers you better options for withdrawl down the road.  Stay out of the 401k since there is no matching you will qualify for.

Good luck