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If you have reasnable choices in your 401(k) and are comfortable with them, that is surely the easiest way to go. Just sock the money away and forget about it. The "after tax" component will be described in some dusty paperwork as "basis", which means it will not be taxed again, just like a ROTH. (This will involve a bit more time on your tax form and when you withdraw the monies, but not really all that much.)

Understand that the funds that you are offered are charging a fee for their "expertise", and the 401(k) management company is also charging a fee, so you are probably kicking off 3% a year to fees, which ain't cheap. Compounded over your savings-lifetime, that's probably $100,000 you won't have.

Most 401(k)s have pretty limited options, and if you see an impending crash coming (1. Ring me up and let me know, and) 2. You may not have much of an exit strategy, whereas with an IRA of any flavor you would. (You can go to 'cash', which most 401(k)s don't offer.)

$20,000 is a good amount; it's enough to do something with, but not so much that you need to be overwhelmed trying to figure out what to do with it.

If it were me (and it is not, obviously), I would do as much as I could with an IRA (in your income bracket that will be dicey, if not impossible) but I would still open a brokerage account and fund one or two companies each year, until you get a few years down the road and have a semi-diversified portfolio, at which time I'd just plunk the $20k down on one and wait for another year.

Mutual funds have a very nasty habit of buying and selling, and at the end of every year you end up with "capital gains", even if your fund actually went down the for year. Strange, but true; been there, done that. It's irritating, to say the least. Buy a block of a company you like, that's stable, trustworthy, and not some shoot-the-moon thing you heard about at the water cooler and you should be fine.

My history was to start as you are: 401(k)s with limited choices, and some after-tax investments with a broker. After I left the company I rolled everything into an IRA and began making my own choices. Here's one telling of the history, if you care:

As I got more comfortable making these decisions, I took everything back from "the broker" and "the 401(k) manager" and began doing it all myself. No, it's not a full time job, and yes, you can keep up with it with some simple reading of the daily newspaper and perhaps a board or two at the Motley Fool and perhaps BusinessWeek or other business publication that you probably already read.

I was in almost the same situation (salary a bit higher, house a bit lower, but otherwise, pretty close.) And when it was done I was phat.

Incidentally, that $20k a year is a bit less than a year of college, so if you have "kids" and plan on college for them, that $20k won't really amount to anything - and what you'll have is whatever you're socking away in the 401(k). But you likely already knew that.

Anyway, two choices: easiest to just add to the 401(k), a bit more effort, but more flexibility and fewer fees to DIY.

Good luck.
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