I’m starting a new job at the end of next month with a significant increase in salary. Yay, me!
But…
They use Principal Financial to service their 401(k). I don’t have the paperwork yet, but I know from previous experience that Principal has ridiculously terrible fees and expenses.
The new company automatically enrolls employees with a minimum deferral and annual increases of 2% until a deferral of 10% is reached. While it's commendable to enforce retirement savings; I suspect this is something that Principal encourages so they can appear concerned about employee financial health while, actually, they're just concerned about collecting even more money through their outrageous fees. ...but maybe I'm just cynical.
We’re already maxing out our IRAs. Contributing to the 401(k) isn't a question, it’s a foregone conclusion. But how much to contribute is still up in the air. I had always intended to max out my 401(k) but I've been trying to decide if that’s still a good idea despite being stuck with Princi(not my)pal.
I did a search here and found a thread pretty much confirming what I already know about my unfortunate luck with 401(k) options.
I also checked out other favorite financial sites and found this wonderful post with insights from two very wise men:
http://jlcollinsnh.com/2013/06/28/stocks-part-viii-b-should-you-avoid-your-companys-401k/If it weren't shooting myself in my own foot, I’d prefer to send a Fuck You card to Principal and send all my money to my taxable Vanguard account. But, based on the above post, my inclination is to go ahead and max out the 401(k), investing the money in the lowest cost index fund I can find, and then FIRE and get that money out of dodge and into Vanguard as quickly as I possibly can.
If, by some miracle, the company lets me convert 401(k) money to an IRA while still employed (and younger than 59 ˝), I’ll plan to do that regularly ~but I highly doubt it’s an option.
Anybody care to weigh in with advice? …opinions? …condolences?