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Author: hberes One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 25242  
Subject: 401k/Roth-IRA allocation distribution Date: 12/8/2000 7:59 PM
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I am currently 25, and have about $12k in a 401k plan. I want to open a Roth IRA before April 15 (for 2000), and then continue to contribute $2k yearly into the Roth IRA.

Most of the funds in my 401k aren't that great (high expense ratios and poor performance), so I have most of it in an S&P 500 Index fund.

Using Morningstar.com's Portfolio XRay, my 401k is about 90% large-cap growth/value and 10% mid-cap growth/value.

My ideal portfolio asset allocation:
15% Mid-Cap Index
15% Small-Cap Index
50% Large-Cap Index (S&P 500)
20% Individual stocks

I contribute about $6k/year to the 401k (plus the maximum company match), and I hope to max out my contribution at $10k/year in about 2-3 years.

Now to my question. I am obviously contributing alot more through the 401k than through the Roth IRA every year. How can I achieve this asset allocation (or at least something not heavily weighted in S&P 500) using a combination of my 401k and a Roth IRA?

My first thought would be to contribute to Mid-Cap/Small-Cap index funds through the Roth IRA. However, just looking at the $6k vs $2k contributions, it looks kinda futile trying to achieve the asset allocation I want.

I know I could rollover my 401k to an IRA at some point and have total freedom, but I don't want to quit my job every 3 years to reallocate. :P

Any thoughts?

-H

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