Thanks so much for the helpful replies! You both brought up points I hadn't been considering.
To answer some of your questions, GreenGuava:
*The funds in my 401K are Fidelity, and the expense ratio for the one I'm using (a target date index fund) is 0.64%. The expense ratio for a similar fund @ Vanguard is only 0.18%, so maybe I should just put the money in a (non-ROTH) IRA there, rather than the 401k? They offer the same tax benefits, right?
In any case, I only plan to work for my current company for ~2 more years, so it won't be sitting there for too long. From what I can tell, the funds are similar to the kinds I could get on my own through Vanguard, but fewer options & higher expense ratios.
Roth 401(k) and Roth IRA are the same once the money is in there, especially after you roll your Roth 401(k) to your Roth IRA upon leaving your job. However, the amounts you can put in vary.
Are there any funds in your 401(k) that have expense ratios lower than the target date fund? If so, it might be worth rolling your own target date (whether or not to include taxable in your total portfolio for this is another matter for another time). If such funds exist, I can help you out with that. If you end up investing in taxable and treating it as one big portfolio, you'll pretty much need to roll your own at that point.
*I'm definitely not at the point of having too much in my 401(k) (I only have $30k in retirement-specific savings), but I am in a line of work where in ~2 years, when I leave my current job for the next one, my income will likely increase by 30-40k. So I'm going to have a big extra chunk of money to save each year, and I'm going to have a much stronger tax incentive to put as much of it as I can in tax-sheltered retirement savings vehicles. Given that, I thought it might be wiser to save up the pre-60 retirement money now, and do the post-60 savings when the tax advantages are greater.
Alternately, do as much Roth as you can now, while you're at a lower tax rate, and do traditional later -- when you'll also be able to put aside pre-60 money. But you probably don't want to do much traditional right now (employer contribution has to go into traditional, unless you want to be taxed on it, and even then, you might not have that option). Plus, there's a limited space each year - if you fail to fill it in 2013, you don't get to fill more later, even if you can afford to do so later. This is not a restriction in taxable accounts.
Oh, one nitpick: it's Roth, not ROTH, as it's named after a person and isn't an acronym.
*My employer does offer a ROTH IRA, but my understanding is that you can only contribute $5500 total to ROTH IRAs a year, and I'm already maxing that out with my personally-held Vanguard ROTH IRA.
Big misunderstanding - this is huge, and may affect your strategy.
Your employer doesn't offer an IRA (even if you work for a company that manages IRAs). That 'I' stands for 'individual' - as in, you set it up and you manage it.
The 401(k) limit is $17,500 for under-50 in 2013 (that's for
your contribution; employer contributions don't count towards that, but the two combined have to be under $51,000 - probably not a worry, and if it is, may I send you my resume?). That's combined, traditional and Roth. There's an IRA limit of $5500 for the same people - this is independent of the 401(k); theoretically, you could put $23,000 away into both combined this year (I did $22,000 of individual contributions in 2012 - the maximum under that year's limits).
The IRA limit of $5500 is for both traditional and Roth IRAs combined, total (you're eligible for a deduction for the traditional at your annual pay, but it might not be a big help to you this year).
So... to summarize so far, it might be worth switching some or all of your employer plan money to the Roth 401(k) - and notice that this
does not affect what you can contribute to the Roth IRA. Also notice that your employer match goes to the traditional portion, as it's a pre-tax benefit.
(I suppose when you leave you could roll it to a t-IRA and that to a Roth IRA, and pay taxes on it then, but it probably isn't worth doing.)
Re: dividends, that's a good point. I wasn't thinking abt them bc I don't pay taxes on them @ my current income level, but obv when my income jumps, I will. I don't have a very clear grasp of how big a difference that will make...do you think that tips the balance towards IRA/401k over non-tax-advantaged?
Re: bonds/REITs, I don't own REITs, and I try to keep all my bonds in my ROTH for exactly this reason, so I'd only be buying stocks in the taxable account, if I were to go that route.
These two things combined show that you understand asset allocation over multiple accounts and tax-efficient fund placement... good :-)
I don't think the dividend thing makes a huge difference - it's maybe 2% tops, unless you're in a dividend-focused fund. In tax-advantaged, I focus on total return for each asset class, and in taxable, I focus on the same, but I have to deduct the taxes on dividends when determining what that return actually is.
