Close taxable to max 401K or just move from Betterment to Vanguard?

[Esquinkle]

Hi all. Thanks in advance for helping me sort through this decision.

I'm MFJ with roughly equivalent incomes of 55K - we currently keep our finances mostly separate but may move toward combining in the future. We live in a HCOL, so those incomes don't go quite as far as I'd like. My spouse has no access to a 401k but does have a Roth IRA (does not max, focusing on paying off student loans). I also have a Roth IRA (I do max), a 401K through work, and a taxable account that I opened a few years ago when I didn't have access to a 401K.

Roth IRA 1: 80K
Roth IRA 2: 6K
401K: 7K
Taxable: 10K
TSP account: 6K (I can no longer add to, but have not yet transferred).

I am trying to choose between two options: (1) transferring my taxable account, which is at Betterment, to Vanguard and purchasing only VTSAX; or (2) closing my taxable account and paying capital gains, but then drastically increasing my 401K contributions (which are currently set at 6%). Even if I keep the taxable account open (option 1), I would stop contributing and instead throw 100-200 bucks a month toward helping my spouse max their IRA.

Here are the complicating factors: I will likely only be at this job for another year, and the 401K is quite rigid - you choose your allocation in December of the previous year and then your only option is to stay the course or stop all contributions. No flexibility. I'm already planning on pushing my contributions to 14% next year  based on a recent raise. It's got some decent funds; mine is currently in an total stock market index with an ER of about .5. I'm nervous that if I cash out the taxable, I won't be able to put it all into the 401K before I switch jobs. It also seems more "locked up" - a consideration since we are trying to have our first baby and have an emergency fund of about 5 months. On the other hand, if I keep the taxable account open, I'm not sure how complicated that will make filing our taxes going forward and it may not be worth it for a (comparably) small amount.

Please let me know if any further information should be added! I'm looking for perspectives on 1 vs. 2, or other information I should be taking into account, or even unconsidered options 3-5. Thanks again!

[matchewed]

Feel free to transfer your taxable to a lower cost option, but why do you need to close it out in order to save more in the 401k?

You can save more money by saving within the 401k.

[Esquinkle]

Thanks for the response. I guess I should have been clearer - right now, I'm saving as much as I can given my current expenses. Given that, maybe the more appropriate question is - does it make any sense to keep open a small taxable account when I'm not maxing out my tax-advantaged accounts currently - or should I just cash out and use that to max my 401K next year.

[MDM]

Feel free to transfer your taxable to a lower cost option, but why do you need to close it out in order to save more in the 401k?
You can save more money by saving within the 401k.

+1

See below for a guesstimate based on the OP.  Appears you (plural) would have >$60K/yr available for food, housing, loan payments, taxable investing, etc. even after maximizing the retirement accounts to which you have access.  See the case study spreadsheet if you would like to enter more details for your situation.

Category	Monthly	Comments	Annual
Salary/Wages for earner #1	$4,583		$55,000
Salary/Wages for earner #2	$4,583		$55,000
401(k) / 403(b) / TSP / etc.	$1,167	Room to increase?	$14,000
Income subject to IRS tax	$8,000		$96,000
Federal Total Income	$8,000		$96,000
Federal tax	$864	2016 rates, MFJ, stand. ded., 2 exempt.	$10,368
State/City tax	$0	Guess, using 0.00% * (AGI - Exempt'n)	$0
Soc. Sec.	$568	Assumes 2 earners paying	$6,820
Medicare	$133		$1,595
Total income taxes	$1,565		$18,783
Income before other expenses	$6,435		$77,218
Monthly Average Expenses:
Other tax-advantaged investments:
Roth IRA	$917	At maximum	$11,000
Roth 401k/403b	$333	Room to increase?	$4,000
Total Expense	$1,250		$15,000
Total to invest	$5,185		$62,218
Summary:
"Gross" income	$9,167		$110,000
Income taxes	$1,565		$18,783
After-tax income	$7,601		$91,218
IRA+401k/403b/TSP/457 (Savers' credit)	$2,417		$29,000
After-tax investable	$5,185		$62,218

Filing Status	2	1=S, 2=MFJ, 3=HOH
# Exemptions	2
	Adult #1	Adult #2
Age	35	35
# of earners	2
Total Income	$96,000
Std. Deduct.	$12,600
Act. Deduct.	$12,600
Exemption	$8,100
AGI	$96,000
MAGI	$96,000
Taxable	$75,300
1040 Tax	$10,368
AMT adder	$0
Saver's credit	$0
Tax after n-r credit	$10,368
Net Tax	$10,368
Monthly	$864
Version	V8.09