Hi:
My current situation is that I am the sole-earner of our family. My wife is a SAHM to our young daughter. For taxes, we file married-joint. Per our income, we qualify for Roth IRAs.
My company offers a 401k @ 100% match for the first 5%, up to a yearly maximum of $1700. Hypothetically, if each paycheck is $10,000 and I contribute 5% ($500) to my 401k, then the company will match 100% of the first 3 paychecks ($500+500+500) and the remaining $200 for the fourth paycheck. Anything else I contribute will not be matched for the remainder of the year. We have the option to contribute up to 75% of our paychecks, which means that with the right planning, it's not too hard to catch up on the contributions later on in the year.
The only viable fund I see in our 401k fund list is the Vanguard Mid-cap Fund (VIMAX). I have 100% of my contributions allotted to this fund for the time being.
I also have Vanguard IRA accounts setup for my myself and my wife.
Based on our current financial situation, we will not be able to max the 401K and both IRAs. Doing so would require us to save $29,000 ($18,000 + $5,500 + $5,500), which is not feasible at this point. Realistically, I believe we can set aside around $19,000 a year.
The questions:
1. Based on the above, does it make sense to max 401K ($18,000), and then contribute as much as possible to our IRA accounts (around $1-2k) with what's leftover? Keep in mind VIMAX is the only real viable fund that there is.
2. Or would it make more sense to put enough into the 401K for the employer match ($1,750), max both IRAs ($11,000), and then put whatever is available back into the 401K? The issue I have with this is that the less I put into my 401k, the less money I actually net from my paychecks - doesn't this then mean that I might not have enough to contribute to the IRAs? Or does this require precise withholding calculations done correctly so that I get more per paycheck to invest with? Is there some kind of online calculator that will allow me to adjust my withholding correctly?
3. Any other options I haven't thought of?
One final point I'd like to make is that although we have no debts, we also don't own a home, which means that at some point in the future we'd like to purchase one. I believe it's possible to withdraw $10k from IRAs for your first home, but not from your 401k, something I'm keeping in mind.
Would love to hear some experienced opinions, thanks.
Cheers,
K