No. of Recommendations: 0
My husband contributes to his 401K at work. I think the choices in the plan are horrible, with low performance and high fees. His employer makes no matching contributions. What should we be doing instead? Do you think we should be putting our money somewhere else? I hope it's okay to ask these questions here. If not, sorry. But this is his only retirement, except for social security, when the time comes. Thanks for any all input.
Sherry

Here are the plans choices:
MYIAX CLASS A
MCSAX A
MVAAX A
MCOAX A
MHCAX A
MGVAX A
MMAXX A
MSEAX A
MTRAX A
MASAX A
MSBUX A
MGHAX A
MSOAX A
MSMAX A
MCSCX B
MKHCX B
MCSGX B
MKMXX B
MKTRX B
MAPAX A
MBNAX A
Print the post Back To Top
No. of Recommendations: 0
Welcome to the Fool jstblush,

While I can't comment on the funds, if they do have high fees and there is no employer match, then you are probably better off contributing first to a Roth IRA (if eligible) and then to a taxable account where you can choose low cost funds. With the new lower long term capital gains taxes in effect, taxable accounts have become a good choice in many cases.

Look at comparable funds at Vanguard, TIAA-CREF or Fidelity and see the difference in fees. If it is significant, then it may be time to ditch the 401K. The other option is to for your husband to lobby his employer for better 401K choices.

Adenovir
Print the post Back To Top
No. of Recommendations: 1
Those fund choices are obnoxious, but, after maxing out the Roth, I'd probably still go for the 401k over a taxable account.

Things change. Either your husband and his employer will part ways eventually, or HR will wise up and find a better 401k provider (bug them until they do)

A little Excel analysis will show that the tax deferred contribution and growth of the 401k will still usually (not always) beat a taxable account, even if you have to pay an extra 1% in fees for a few years.

Nick
Print the post Back To Top
No. of Recommendations: 0
His employer makes no matching contributions. What should we be doing instead? Do you think we should be putting our money somewhere else?

If I were in this situation I would first max out a Roth IRA. I would then take any additional avaiable investing money and I'd contribute half of it to the 401K, and half of it to a taxable account. The taxable account could be used to buy low-cost index funds at Vanguard, for example. The important thing about a taxable account is to buy-and-hold to take advantage of long-term capital gain tax rates.

The higher your marginal tax rate, and the longer the time to retirement, the greater the benefit of a 401K over a taxable account, but a taxable account affords more withdrawal flexibility and control over taxable income in retirement, hence I see benefits in having bth. Funding a Roth first is a 'no-brainer'.

2old
(who doesn't like to put all her eggs in one basket ;-)
Print the post Back To Top