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Hi,

Background:

I am 16ish years from retirement. My employer has recently setup a 401k that I contribute enough to to receive the maximum available employers match. I also max out my Roth and contribute to my own standard taxable accounts. I view these taxable accounts as part of my overall retirement money - not to be spent on 'wants'.

I am trying to decide whether I am better off increasing my 401k contributions (I am currently well under the max allowed) or making these same contributions to a taxable account. I am not sure if I like the idea of contributing more to the 401k. Based on my analysis of our 401k provider I feel the fees are a little high (approx 1.6%/year) and selection of investments is adequate (not great). This leads me to want to put my extra $$ into taxable accounts where I have more choices and possibly smaller fees.

I am having a tough time working through the analysis of which would be smarter. Would the 401k contributions be more valuable because they can grow tax free - even if everything is taxed as regular income when withdrawn? Or should I choose tax friendly after tax vehicles that become long term gains and dividends (both at a smaller rate then my marginal taxes)?

Has anyone done any analysis of which might be a better vehicle to save for the long term?

Thanks for any advices.

Wayne
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