First thing I noticed is that you are missing an IRA account. Because of what I assume must be higher fees in your 401k, you should be maxing an IRA out after you get the full match in your 401k. Then once the IRA is maxed, go back to the 401k.
That is one thing I have been going back and forth in my head over. I was thinking if I did open an IRA I might throw some REIT's in there. The ER for my 401k is .88 so it would be nice to get something in a retirement account at a better rate. Thanks for the suggestion.
Since you have an emergency fund already built up, there's no need for the taxable brokerage account until you are out of space in tax-advantaged accounts. Personally, I'd liquidate $11,000 from the brokerage and contribute to an IRA (Roth or Traditional, whatever you prefer and whatever makes sense for your income and tax rate). Put $5,500 in as a 2014 contribution (you have until April 15, 2015). Then on January 1, you can make another contribution of $5,500 for 2015.
If you have a high deductible health plan, you should also open a HSA and contribute to that.
Your investment order should be something like this:
1. 401k up to employer match
2. HSA if you can
2. IRA
3. Max out 401k
4. Taxable brokerage account
For our monthly "scheduled" investments, my wife and I only contribute to our 401ks and my 457. So I have a "scheduled investment order" in our IPS that looks like this:
1. Wife's 401k up to match
2. Max my 401k
3. Max my 457 (Note: Would normally do the 457 first, but it is easier to update monthly contributions to my 457 as I can do it online versus submitting signed paper work to HR for my 401k. So we are upping the 457 contributions as our income increases.)
4. Max wife's 401k
My wife's 401k is last due to lower fees in my accounts. I don't get any employer match in my accounts.
Then we get some business income and have a monthly "buffer" built into our budget. So this money counts as our remaining cash / windfall money and gets invested like this:
1. 1 month's expenses in emergency fund
2. Max HSA
3. Max IRAs
4. 6 month's expenses in emergency fund
5. Taxable brokerage account
This extra money is currently enough to make sure we can keep our minimum of 1 month's expenses in the emergency fund and to max out HSA and IRAs. Then we'll slowly work to build up to 6 months expenses and then finally work on the taxable account.
I don't have an actual IPS, but more of a financial plan. So mine talks about our budget and our emergency fund. So I include a list of how we will pay for emergencies, especially if our emergency fund doesn't cover it. Here's my order:
1. Adjust monthly budget and/or savings (for smaller unexpected expenses)
2. Withdraw from emergency fund
3. Withdraw from taxable brokerage account
4. Withdraw qualified reimbursable expenses from HSA
5. Withdraw Roth IRA contributions
Hopefully I never need a number 6.
You have the right idea for your IPS. Just make sure it is detailed enough that you can stick to it down the road and not be finding "loopholes" to change your investments.
