Author Topic: Question Regarding Investment Order and 401ks  (Read 3476 times)

RePatriot

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Question Regarding Investment Order and 401ks
« on: July 10, 2017, 05:24:18 PM »
[Scrubbing personal info]
« Last Edit: December 09, 2023, 07:50:24 PM by RePatriot »

MDM

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Re: Question Regarding Investment Order and 401ks
« Reply #1 on: July 10, 2017, 08:53:34 PM »
Ultimately my question boils down to this: If my 401k options suck but I don't want to be limited to HSA+IRA contributions, do I bite the bullet and eat the fees, or do I have options?
See To 401k or not to 401k? That is the question. for some thoughts on this.

JohnWC

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Re: Question Regarding Investment Order and 401ks
« Reply #2 on: July 11, 2017, 07:38:37 PM »
I've opened and plan on maxing a tIRA and HSA this year.  My new job as a Texas charter school teacher also offers a 401k.  There is no match

No match? I've heard enough to recommend you open your own IRA or Roth IRA. If there's no match you just eliminated the #1 reason to contribute to a 401k. We'll get back to this.

If my 401k options suck but I don't want to be limited to HSA+IRA contributions, do I bite the bullet and eat the fees, or do I have options?
You can lobby congress for increased limits on IRA contributions :D - I really don't know all your details, but one way to do it is open an IRA, fund it to the max, and invest it using your "three fund portfolio" strategy. If you're not satisfied with the $5500 individual limit you have a variety of additional options. The 401k limit is $18k/yr if you're under 50 so you could put the difference in the 401k and eat the fees just to take advantage of the higher contribution limit. Strangely enough there are strategies for over-funding life insurance policies which go beyond death benefit to pay out in retirement as well as provide guarantees re: injury/disability - without knowing what the fees are like in the 401k it's hard to say how this compares. Chances are the LI strategy will be pricier than the 401k for providing the guarantees.

So what are the 401k fees? What are some of the funds they want to use?

MDM

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Re: Question Regarding Investment Order and 401ks
« Reply #3 on: July 11, 2017, 08:06:43 PM »
If I plan on leaving in 5-7 years, then is it better to just suck up the fees in the short term for the tax benefits?  I can then roll over that 401k into my tIRA and choose my own funds from there?
Yes and yes.

MDM

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Re: Question Regarding Investment Order and 401ks
« Reply #4 on: July 13, 2017, 08:27:41 PM »
If I am reading these fees correctly, Id be paying 1.15% for an S&P 500 tracking fund, not including any other hidden fees assessed by the sponsor?  I am very new to this job, but that kind of robbery makes me want to speak with the fiduciary and see what can be done about changing.  Or is this a common level of theft?
Unfortunately not uncommon.

See also How to campaign for a better 401(k) plan - Bogleheads.