Diversify your investment allocation, and diversify the tax treatment that will apply to those assets when it comes time for withdrawals. Jeff Quigley contributes the maximum to his 401(k), but an adviser suggests diverting some savings to a Roth IRA. Eli Meir Kaplan By Jane Bennett Clark, Senior Editor From Kiplinger's Personal Finance, March 2013 Jeff Quigley, 40, is a CPA at Tate & Tryon, an accounting firm in Washington, D.C. He has contributed to his 401(k) since becoming eligible, six months after joining the firm in 1996. Quigley likes the idea that the money comes directly out of his paycheck. "It's forced savings—you start living on what's in your paycheck. If it's not there, you're not going to spend it."See Also: Smart Ways to Boost Your 401(k) Quigley contributes the annual maximum allowed ($17,500 in 2013). "Initially, I just contributed enough to get the company match, but one day I thought, Why am I not maxing out? I wanted less taxable income." Of the 13 funds the company plan offers, Quigley chose four, allocating 75% to U.S. and international stock funds and 25% to bonds and short-term investments. "I've always enjoyed stocks, so that affects my allocation," he says. "I kind of live or die by the stock market. There are more risks but more potential for reward. Bonds aren't sexy. They never have been. It's a boring way to invest." Quigley also has a taxable account, with a similar allocation of stocks and fixed income. He occasionally has his broker review his 401(k) investments to be sure the two accounts work together. Advertisement The advice: Jeff should continue to meet the company match, says Jon Ten Haagen, a certified financial planner in Huntington, N.Y. But he might consider diverting some of his retirement savings to a Roth IRA (if he qualifies) in order to have access to the universe of investment choices, along with tax-deferred growth and tax-free income in retirement. For now, the 75% stock allocation is fine, but living and dying by the stock market is not a good plan for the long term. As he nears retirement, he'll want to shift more of that money into bonds and income-yielding stocks, both of which provide stability and income.