Work 401k or IRA?

[StructureMan30]

Recently I just changed jobs to a small growing company. The company offers a 401k but no matching. What is a better option; adding to my work 401k and pick one of the very few mutual funds available or set up a IRA with Vanguard and select a target retirement fund? I have my Roth IRA with Vanguard and my prior employers 401k with Fidelity. If it helps, I'm 30 and married with dual income at 200k and no kids or debt.

[forummm]

With your high income you should be able to max out ($18k) your 401k and the Roth ($5500) for you, and do the same with your spouse.

[MDM]

With your high income you should be able to max out ($18k) your 401k and the Roth ($5500) for you, and do the same with your spouse.

+1

See also http://forum.mrmoneymustache.com/taxes/the-mustache-tax-guide-(u-s-version)/.  It will give the same advice, plus more.

[Cheddar Stacker]

With your high income you should be able to max out ($18k) your 401k and the Roth ($5500) for you, and do the same with your spouse.

And with your high income you will not be able to deduct a Traditional IRA contribution. The tax deferral is a big factor here, even if you have to pay higher fees and have a limited selection.

Someone (madfientist, MMM, JLCollins??) wrote a nice blog post analyzing whether you should skip your 401k simply because of the fees and/or funds available, but I can't seem to recall who it was because I can't find the post. The general point though was most of the time you will overcome the shitty options with the great tax break, as long as you don't plan to stay in the job forever.

If found this, but I don't think it's the post I was thinking about:
http://jlcollinsnh.com/2013/06/28/stocks-part-viii-b-should-you-avoid-your-companys-401k/

[MDM]

Someone (madfientist, MMM, JLCollins??) wrote a nice blog post analyzing whether you should skip your 401k simply because of the fees and/or funds available, but I can't seem to recall who it was because I can't find the post. The general point though was most of the time you will overcome the shitty options with the great tax break, as long as you don't plan to stay in the job forever.

To quantify "bad 401k fees vs. taxable", consider using the "401k vs Taxable" tab on the case study spreadsheet. 

There is a "rule of thumb" in the Bogleheads' 401k wiki entry: ''consider investing in a taxable account if the product of the extra costs and the number of years you will stay in the plan exceeds 30%."  Unfortunately the conditions under which that rule is appropriate aren't given, so caveat user. 

The Bogleheads wiki also links to http://thefinancebuff.com/alternatives-to-a-high-cost-401k-or-403b-plan.html, from which one can access an online evaluation tool.  The linked article was written in 2008, when things such as backdoor Roths weren't in use.  The online evaluation tool doesn't allow one to see calculation details, but it and the case study spreadsheet match exactly for traditional 401k and taxable account calculations over a variety of inputs.  Ease of use is in the eye of the beholder, so use whatever is easiest for you.