Ok, I have two questions.

1) I'm graduating in May and starting my new job on May 17th. My company's 401(k) matches $.50 for the first $1500 I contribute, not matter how much I contribute. I was planning on contributing 15% to my 401(k), but since their matching is so low, I decided to do it this way:

First, I'll contribute $1500 to 401(k).
Then, I'll save $2000 to put in a Roth IRA. Last, I would contribute the rest back to the 401(k) plan.

For example, if 15% of my salary was $15,000 (it's not), I would contribute $13000 to my 401(k) ($1500 + $11500) and then the other $2000 to the Roth.

Does this seem like a good idea?

2) If I get paid 15 times at my new job (once in May, twice a month in June through December) and I save $268 each month, I'll have the $2000 to put in to the Roth. What I don't understand is this: Can I open up a Roth with nothing in it and make monthly contributions of $268 (up to $2000) or do I have to open and/or contribute to a Roth between Jan. 1 and April 15th? That I guess is what is confusing me.

Thanks for any info.

Keep in mind that the law limits how much you can defer to a 401(k). The limit this year is $10,000. It is indexed for inflation, so it may change in future years. In the recent past the limit was $9,500. So even if the plan allows you to defer up to 15%, if 15% is over $10,000, you actually have a lower percentage limit that other employees.

With regard to question #2, my under-
standing is that there is no specific
limitation with regard to WHEN it per-
missible to open a Roth IRA.

The minimum amount needed to open a
Roth IRA depends on the institution
which is handling your account. You
will need to ask them directly about
this.

If you open up a Roth and have $2000
up front to contribute, do so. If
you open it with a smaller amount,
do NOT wait until you reach your
$2000 balance before contributing
more funds. If you can contribute
incrementally (i.e.; monthly), this
will result in more rapid growth of
your account, as there will be more
principal money available to accrue
interest and profit. If you wait
until you have a full $2000 before
contributing to the account, you
miss out on the extra interest/profit
you would have accrued had you con-
tributed on an incremental basis.

Hope this helps!