Roth IRA or Brokerage

[gillstone]

We are currently saving 43% of our take-home pay and another 10% in pretax (matched to be 18% total).  I am reluctant to use our 401(k) funds as a place for additional savings.  We have built an emergency fund and have enough in cash that we can begin putting it somewhere besides our Ally account.  We want what we save to be relatively accessible as we plan on retiring before 59 ½ .  Am I better off to put it in a Roth knowing that I can’t touch earnings without a penalty, but pay no taxes on earnings or put it in a brokerage and face the annual taxes on earnings, but be able to access without penalty?  Also, was that a ridiculous run-on sentence?

[Psychstache]

If your plan is to retire early and your 401(k) options are not laughably bad, I would contribute more to that and plan to do a 401(k) to Roth conversion pipeline.

[gillstone]

I should have added on the 401(k):
I have a 401(a) that I cannot contribute any more to (becasue of blah blah blah state employee) I can do a 457 plan but it has fees and a limited selection of funds.  My wife is in a 401(k) with a 3% match (whihc we are getting) but the fees run 1.0-1.5% for any of the funds and are all managed funds. 

[matchewed]

Have your wife contribute up to match and then have her start gathering support from other employees about making changes to the 401k plan such as funds with lower expense ratios.

[Another Reader]

The 457 plan is a fabulous way to save for early retirement.  It's not a qualified retirement plan, it's "deferred compensation."  No penalty applies if you withdraw from it after separating service, just the income tax on withdrawals.  Because you are a state employee, the assets are probably held in trust, and are not subject to creditor claims in the event the state goes bankrupt.  Have a second look at the funds and the fees.  It's probably worth putting money there.

[Psychstache]

The 457 plan is a fabulous way to save for early retirement.  It's not a qualified retirement plan, it's "deferred compensation."  No penalty applies if you withdraw from it after separating service, just the income tax on withdrawals.  Because you are a state employee, the assets are probably held in trust, and are not subject to creditor claims in the event the state goes bankrupt.  Have a second look at the funds and the fees.  It's probably worth putting money there.

+1

Our 457 from a school district has some fees that make me sad, but are a great way to get tax-deferred growth and perfect for ER. (Disclaimer: I get to invest in VTSAX and other indexes from VG in my 457, so I have no complaint about the fund choices).