Experience with ABA Self-Directed Brokerage Account through TD Ameritrade

[MrDanno96]

After my previous post, http://forum.mrmoneymustache.com/investor-alley/should-i-focus-on-taxable-account-if-hoping-to-(semi)-retire-by-earlymid-40s, I've been convinced that I should max my 401k before pursuing other investments. My 401k is through the American Bar Association (guess what I do for a living). As I noted in my prior post, it offers a bunch of generic mutual and index funds to invest (large cap equity, small cap equity index, etc.) with expense ratios ranging from 0.65 to 0.88. However, it also offers the option of running the 401k through a "self-directed brokerage account" (SDBA) through TD Ameritrade. I had initially written this off as an option, as I had assumed that there would be significant fees/commissions associated with it. But according to this link, https://research.tdameritrade.com/grid/public/etfs/commissionfree/commissionfree.asp, it appears that Vanguard's ETFs are offered commission free through TD Ameritrade. I have a slight preference toward VTSMX/VTSAX (Vanguard Total Stock Index mutual fund), but if the choice is between the generic funds offered by my plan or VTI (Vanguard Total Stock Market Index ETF) at no commission, the SDBA and VTI seems like an obvious choice.

Is switching my 401k to the SDBA as much of a no brainer as I think it is, or is there something I am missing? Any thoughts would be appreciated. Thanks!

[matchewed]

Make sure you read all the paperwork, sometimes self directed commands fees for the self direction (>.< it hurts to type that sometimes). So do the math on the various fees you may incur in each scenario and just figure out the cheapest way to execute your investment plan.

[GGNoob]

My 401k, 457 and my wife's HSA are invested at TD Ameritrade through the SDBA. To have the SDBA with my 401k and 457, I pay an extra $50 per year. However, I invest in the Vanguard commission-free ETFs which lowers my average expense ratios by about 0.5%. Just make sure to enroll in the commission-free ETF program and don't sell any of those ETFs within 30 days of buying them.

The option also works great for me because it allows us to have Vanguard funds in all of our accounts! The only exception is that I use IVV (iShares) for my S&P 500 allocation.

[MrDanno96]

The option also works great for me because it allows us to have Vanguard funds in all of our accounts!

This was my thought exactly! Which ETFs are you invested in if you don't mind me asking?

To have the SDBA with my 401k and 457, I pay an extra $50 per year. However, I invest in the Vanguard commission-free ETFs which lowers my average expense ratios by about 0.5%. Just make sure to enroll in the commission-free ETF program and don't sell any of those ETFs within 30 days of buying them.

Is the $50 fee charged by TD Ameritrade or your employer? TD Ameritrade's list of fees is here, http://abaretirement.com/images/pdf/TDAmeritradeSchedule.pdf, and I don't see anything about a yearly fee. I think $50 is worth it to have Vanguard funds instead of the generic funds otherwise offered by my plan, but I just want to be clear on the fees I'd be committing to. Also, when you say "enroll in the commission-free ETF program," is there some additional step I have to take to get commission-free ETFs once I have the brokerage account opened?