Hey All,
I've been lurking on the forums for quite some time and only recently started to contribute. Now, though, I have a question that requires a little Mustachian insight.
I have been at my current position for just about a year now. As such, I am now able to contribute to the company's 401k plan, but I am not sure I should...
A little general background: I work in a community non-profit office, and DW is a full-time graduate student. All told (between my salary and her stipend) we make just under $40,000 before taxes (we file jointly). Our expenses are around $25,000 (only debt is a mortgage), and we are 'stashing the rest in 2 Roths and a taxable account. DW is in the 2nd year of what will probably be a 5-6 year degree, depending on how smoothly a few key experiments run. Once DW is done (3-4 years out) we will move.
My employer's 401k is with American Funds (no Vanguard options, unfortunately), and the smallest expense ratio is .96% (Washington Mutual Fund). My company does match up to 5%, which is pretty nice for a non-profit. Here's my catch, though: After the first year of work, I would be vested 25% for each additional year until year 5, when I would be 100% vested. So, even if I contribute, and supposing that our move date doesn't change, I will never be able to get the full match AND I would be paying a higher fee than if I were to throw the money at Vanguard or invest in single, high-quality dividend stocks. It makes me think I should just forgo paying into the plan and invest the money I would be contributing elsewhere.
What am I missing? Is there a huge tax advantage I am overlooking? We're still in the 15% bracket. Any input or different opinion/perspective would be greatly appreciated!