Max out simple IRA with Edward Jones, or contribute to trad IRA

[Oliver]

My employer has a SIMPLE IRA with Edward Jones (a 5305 SIMPLE) and I’m contributing 3 percent, which is what my employer matches. I’d like to get more tax-advantaged retirement savings, but I'd also like to avoid Edward Jones as much as possible.

I’m thinking I’ll open a traditional IRA with Vanguard and max it out.

Is there any reason I should consider just contributing more to my SIMPLE IRA with Edward Jones, rather than opening a separate account?

[boarder42]

Depends on what the fND options are. Mainly expense ratio and load fees. If you have EJ you are likely a small company why not talk to your 401k fiduciary (someone at your company has to be this and if they are using EJ they aren't doing their job and I'd say could face law suits. )

[Oliver]

I'll try that but I have a feeling I won't get anywhere by trying to convince my boss that she's not doing her job and could face lawsuits by having a SIMPLE IRA plan through Edward Jones.

[cincystache]

I would continue to contribute 3% to SIMPLE then max out a traditional IRA (or Roth depending on income). Then if you still have money, you can go back and add more to the SIMPLE depending on how bad EJ is with fees.

[theolympians]

My prediction is there will be more pressure for smaller employers to over the plans you mention. Whatever the case, it is what you have, and you should understand it better. Talk with the Edward Jones accounts manager (or their rep that deals with the employee plans with your business) and directly ask what fees are associated with it, commissions, cost to own the fund(s) you selected etc. That will help you decide to max out the simple, or get a separate account with another company.

You are talking the company three percent, excellent! Continue that.

As an aside, I work for a large organization that offers generous matching funds. It surprised me to learn a significant number of employees were opting out of the plan and losing the money that came with it!

[mskyle]

I would continue to contribute 3% to SIMPLE then max out a traditional IRA (or Roth depending on income). Then if you still have money, you can go back and add more to the SIMPLE depending on how bad EJ is with fees.

I agree with this! And remember, you can (usually) roll over the funds in a SIMPLE into another IRA after two years, even if you're still working for the same employer. So just avoid funds/etc. with a large upfront fee (sometimes called "load"), even if that means keeping your money in a money-market fund for two years and then moving it to Vanguard.

[Goldielocks]

The main advantage is that if you have a small account, under $30k, it is more important to reduce trading fees and contribute monthly to build it up.   a 1% MER on $1k is only $10 per year.... 

Nothing is easier than automatic paycheck contributions, which put the ENTIRE pretax amount into retirement savings and does not return a tax refund to you.  (most of us spend some of our tax refunds, and don't invest them after all).

Many employer plans have zero fees to trade between accounts, for me, my employer account is the only place where I can transfer funds and rebalance for free -- BUT you need to check with EJ and the fine print.   They could actually have HUGE rear end loads to sell / transfer funds (like EJ for the private non-group plans used to).

[NoStacheOhio]

The main advantage is that if you have a small account, under $30k, it is more important to reduce trading fees and contribute monthly to build it up.   a 1% MER on $1k is only $10 per year.... 

Nothing is easier than automatic paycheck contributions, which put the ENTIRE pretax amount into retirement savings and does not return a tax refund to you.  (most of us spend some of our tax refunds, and don't invest them after all).

Many employer plans have zero fees to trade between accounts, for me, my employer account is the only place where I can transfer funds and rebalance for free -- BUT you need to check with EJ and the fine print.   They could actually have HUGE rear end loads to sell / transfer funds (like EJ for the private non-group plans used to).

Also, there should be a low cost cash or cash equivalent fund (sometimes called stable value). If all the mutual fund choices have loads or truly insane fees, just keep the money in cash until you can transfer it out.