Personally, I think the only real advantage to a 401k anymore is if the company matches any portion of your contribution. You should of course put enough in every month so you get the maximum match the company is offering. Beyond that, I believe a Roth IRA is a much better choice for people with a long way to retirement. Now, if you have or make enough that you can max out your Roth every year and have some left over, then put the left over amount into the 401k.
Most 401k's have very limited investment options and most of those usually suck. A Roth that you open at a discount brokerage gives you the option to invest in just about anything you want. Also, if you want to take a small portion and gamble or trade with it a little bit any gain you realize is not a taxable event when it's done inside a Roth. It's not even taxed when you withdraw it, you pay the transaction fee for the trade and that's it.
If you have some money in a 401k account in a plan from an employer THAT YOU NO LONGER WORK FOR, you can convert that into a Roth IRA provided you can pay the income tax on the money (at your current tax rate) with money outside the plan. This is because the 401k contributions are pre-tax and the Roth IRA contributions are post-tax. You can't use money from inside the plan to pay the income tax either, you have to pay it with "outside" money and the whole thing goes on your tax return for the year in which you make the conversion. The money does not go through you personally or you'll pay the early 401k withdrawl penalty. What you have to do is a trustee to trustee transfer where the money goes from the old 401k plan directly to an already setup Roth IRA plan. If you don't have a Roth yet setup yet you should anyway and it should be established before you initiate the conversion.
There is some math involved to see if the conversion is worthwhile but I believe for just about anyone probably 45 or younger it makes sense to do it provided you can pay the income tax on the balance from the 401k without suffering a financial hardship. The 401k pre-tax contribution premise is based on the assumption that you will be in a lower tax bracket at retirement age but I bet if you are following an investing 102 philosophy there's a good chance you'll be in a higher bracket in which case the Roth is a much better plan because all withdrawls from it are tax free.
I'm not sure I'm aware of all the current rules so you should investigate the details further if this interests you. I just wanted to contribute a little to the overall thought process here. Any corrections or add-ons are of course welcome.
