Should I max out my tax benefits (401k, ROTH IRA) ASAP when the new year starts? Or do you foresee another large dip (similar or worse than this year)?
I generally do the 401k spread out and the IRAs in one lump as soon as I can in early January.
The 401k at most businesses is set up to be spread out. I often see that there is a limit to how much you can contribute with each paycheck (such as a maximum of 25% of your salary) so that unless you make major dough you can't put it all in at once. Or to get the full company match you often need to spread it out (such as you get a 3% match per paycheck, and if you put it all in at once you only get one match and lose out on all other matches). Or, people just don't have that money lying around and usually need to spread it out.
The spread out 401k gives you the dollar cost averaging method. So, I choose to diversify and do the IRA in one lump. In almost every analysis that I've ever seen, if you have the lump of money to invest, you do best if you invest it now. Plus the IRA portion is tiny compared to the 401k so even if you get the timing wrong, you can't get it very wrong. Suppose you invest the full $5500 IRA amount and the stock market crashes 10%. That loss of $550 is quite small compared to the $18,000 plus match that goes into the 401k. The risk is thus pretty minimal to do the IRA in a lump sum.
My only exception is that I don't like to catch falling knives. I'm waiting a few days to see how this market plunge works out. I'll probably do my IRA investments next week in a lump sum instead of doing it today. Note: I'm putting the money into a money market fund now, so that it is an instant transfer when I do decide to invest it.