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You really get no advantage in investing in the 401k.

Except that using your employers plan allow you to put more money into a tax sheltered account (You indicated about $3200).


With no 401k matching and poor investment choices, let me point out another altrernative. You mentioned putting $2K into a Roth, which is great, since it'll be tax free. The rest of the money could be put into an account that's not tax advantaged (like IRAs, 401ks, etc.). This should be invested in an index fund, like an S&P500 index. Any changing of asset allocation would be done inside the Roth, as would holding any funds that have a lot of turnover or high dividends. The advantages are:

-With the low turnover in the S&P500 index, most of your taxable gains will be in the far future when you sell the fund, not each year like with funds that have huge turnover. This is effectively a "tax deferral." (Although you'll still pay taxes each year on the dividends and any stock trades for stocks that leave the S&P500 index.)

-With the low turnover in the S&P500 index, when you sell, your gains will be taxed mostly at the "long term capaital gains" rate, rather than the higher regular rate...which is the rate your withdrawn 401k money would be taxed.

-Access to the money.

Of course, when the Roth limit goes up, put the max into it. Tax deferred is good, but tax free is better.
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