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Contirbute up to the match and don't look back?
Start a Roth IRA and have control with stock picks?
Suggest to the Company that the Fund Company is too expensive?
Start a Rot IRA and invest in a Vanguard Fund.

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I voted for the first option, but would suggest a couple of things:

1) Double check and make sure that the 5.75% front end load charge is charged for tax defferred accounts. My 401(k) plan has the Munder Index 500 fund as an option, but the front end load for the fund is waived for our 401(k) plan. By the way, is the front end load charged for every fund offered in the 401(k)?

2) If the 5.75% front end load is indeed being charged, I would consider contributing the 5% (in order to get the maximum match) but no more. Put the remainder you plan to invest in a Roth.

MrDP
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Gotta agree with the previous post. Check to see if this load is being charged , I doubt it . If not contribute to the match. If so , stay away.
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cvkiekhafer,

From what I understand there is 5.75% front-end-load charge and a $36 annually fee. I'm not sure what the fee is for yet. She also gets a 50% match on the first 5% of her salary.

I would expect that the 5.75% fee would be waived, because of the size of the employer's account. That could vary, depending on the number of employees involved.

To help you analyze the advise you have received so far, let's look at some of the numbers.

Let's say a person has an annual salary of $20,000. If they contribute $1,000 to the 401(k) account, their employer is willing to chip in $500. And let's say the worst case applies, and the account is charged 5.75% for all new money going in, even the employer's matching funds, plus $36 per year. This says the first year's $1,000 turns into $1377.75 if the Scudder funds just break even after a year.
  Employee's contribution:  $1,000.00
minus 5.75% - 57.50
Employer's match: + 500.00
minus 5.75% - 28.75
Minus annual fee: - 36.00
---------
Net amount after a year: $1,377.75
In rough numbers, this is a return of over 37% just for taking part in the plan. Someone who advises you to avoid this plan seems to be asking you to act out of spite -- "Because you would be paying $122 in fees, forget about collecting that $377".

The decision is up to you and your wife, but I think I would have to do with MrDP: contribute enough to get the full match, then look for other tax-advantaged methods for any more money that's available for long-term savings.

Good luck -- and I hope you find out that the front-end load does not apply to your 401(k) plan -- that would make your decision even more of a no-brainer!

Phooley
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